Nova Scotia shows balancing budget is possible

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Maybe it's just that somebody else has to say it before we believe it, or maybe we have trouble with the notion that "socialists" are doing what, in theory, business-type governments should do but don't: balance budgets.

But here's the story if you haven't heard it: the Dominion Bond Rating Service has lifted Nova Scotia's long-term credit to "A-High," the province's highest rating since the agency started measuring in the late 1980s. It noted last spring's slight budgetary surplus and our "improving credit profile."

Well, true, you never know what next year will bring, said an agency spokesman, "nonetheless, the fiscal results and the fiscal performance of Nova Scotia do look relatively strong when compared to some of their provincial peers." Dry old financial talk, but if I had a guitar I'd put it to music. Let's admit it: we've been waiting 30 years to hear something like that.

The story is this. There's been some rough and impolitic stuff aboard Premier Darrell Dexter's ship, but he's kept the S.S. Nova Scotia itself on an even keel and he's even pumped out enough old bilge water that it's sailing higher in the water as it clears the shoals visible at port and starboard.

On the rocks to the right there's the appalling sight of New Brunswick's grounded fiscal ship -- with a deficit of nearly a half billion dollars this year -- to be pried off the ledge with tax increases. The New Brunswick crew had been drinking the neocon-laced Kool-Aid for years -- the notion that you stimulate your economy with deep tax cuts. Whatever merit the argument has, it applies to national economies with control of their own fiscal policy. For a small province where mostly everything is run by outside corporations and where we import most of what we buy, it's nuts -- a giveaway to outsiders that gets you sweet talk in the financial press but ruins your public finances.

The shoals to the left are no less beguiling. A year ago, some 45 prominent New Democrats, including economists, sent a stiff letter of rebuke to the party, attacking the NDP's focus on budget cuts and giveaways to corporations, accusing it of ignoring social policy and of being "not a party of change."

As it turns out, the same day as the credit rating article appeared in this paper (July 9), another headline proclaimed: "Number of low-income Nova Scotians drops." The NDP pointed to a variety of initiatives in social policy (income supports, employment training, affordable housing, dental care for children and others) worth some $420 million since 2009 as factors. This, plus several noted successes in health care (plus having the Liberals ahead in the polls), seems to have quieted the internal critics.

Dexter's guiding star, I'm told, is NDP icon Tommy Douglas, who, upon becoming premier of Saskatchewan in 1944, insisted that the budget be balanced, otherwise social programs wouldn't be sustainable in the long run, against his internal left-wing critics who wanted to borrow to expand them.

I can't fault this principle (although Douglas, unlike Dexter, was presumably not pumping money into too many questionable industrial schemes). There's a lesson here for both right and left.

For the right, yes, we are a high-tax province, but if that's the price of having sound finances, you pay it. Lower taxes should only be financed if affordable. Otherwise we'd be on the rocks alongside New Brunswick.

On the left, there's still some grumbling. Some feel that with borrowing costs at historic lows, now's the time to borrow to build energy and other necessary infrastructure. But considering what we've been through over the last 30 years, and that we don't trust politicians, psychologically we need to establish that balancing the budget is actually possible. Politically, big borrowing, even for the most productive reasons, would send the signal that the ship is adrift again. And the debt is too high and has yet to stabilize, let alone drop.

Meanwhile, the world is an increasingly uncertain place, and who knows what next year will bring. University of California economist J. Bradford DeLong, writing in the current issue of the hefty magazine Foreign Affairs, argues that the only difference between now and the Great Depression is the social programs we've put in place since then. Others heavies are saying that having blown the advantage of cheap oil and cheap credit since the Second World War, stagnation is here to stay worldwide. In this little corner of the world, finances under control is a seawall against the storm. Let's hope it holds.

Ralph Surette is a veteran freelance journalist living in Yarmouth County. This article was first published in the Chronicle Herald.

Photo: Waleed Al Madhoun/flickr

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