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MR. CHAIRMAN: Order, please. We will continue with the estimates of the Minister of Finance. The Minister of Finance has approximately nine minutes remaining.
The honourable Minister of Finance.
HON. NEIL LEBLANC: Mr. Chairman, I just want to point out that I have here today the Assistant Deputy Minister, Ramsay Duff; Mr. Hogg is in Ottawa today attending meetings on behalf of the province. I also have Elizabeth Cody, who is the Executive Director of Fiscal and Economic Policy. I'm doing very good, I remembered it twice in a row.
Mr. Chairman, I concluded my remarks on Friday, and I'm more than prepared to take questions from the honourable members.
MR. CHAIRMAN: The honourable member for Halifax Fairview.
MR. GRAHAM STEELE: Mr. Chairman, just for my own notes, my time is starting at - is it 3:37 p.m.?
MR. CHAIRMAN: Yes, 3:37 p.m.
MR. STEELE: The Department of Finance is a very important department. It's usually dealt with over in the Subcommittee on Supply, and this year we're dealing with it here in the main Chamber of the Legislature, in the main Committee on Supply. It probably doesn't get the attention that it deserves. It manages $31 billion, I believe it is, of Treasury balances. The really significant thing about the Department of Finance is that they're dealing with such large sums of money that small changes here or there can be worth millions or tens of millions or hundreds of millions of dollars.
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So what goes on inside the Department of Finance can absolutely dwarf the relatively small changes in other departments, like, for example, cutting $893,000 from transition houses, women's centres and programs for abused men is really very tiny when you compare it to the fact that a very slight change in the foreign exchange rate or the value of the Canadian dollar can result in millions of dollars or tens of millions of dollars to the province's bottom line.
I'm glad that we have the Department of Finance here today. I was not so glad to hear the minister go on on Friday. I know the minister can speak for an hour if he chooses to. The minister knows as well as I do that he was, if I may be unkind but I think not unfair, rather blathering on on Friday just to use up the time. During the significant amount of time that I had to listen to the Minister of Finance talk about nothing on Friday, I had a chance to calculate how much time or what it's worth to this House for the very limited amount of time that we get in estimates. Let's face it, we have a $5.3 billion budget, and we get 40 hours in this House to examine it. So the minister going on on Friday meant that this House has $100 million less time to devote to examining the budget. I just think it's a bit of a shame that the minister can do it, he can waste the House's time, and then he does it when we have so many important issues at stake.
Mr. Chairman, I want to start with this issue of mistakes. As the minister acknowledged on Friday, there was a mistake in the budget. There was an arithmetic error in the revenue coming from the Gaming Corporation. What really surprised me about it was the minister's response to it. The minister's response wasn't, we're sorry, we don't know how this happened; it was, rather, this happens all the time, this is fairly common for there to be mistakes in the budget. I would like to ask the minister, first of all, are there any other mistakes in this year's budget that he hasn't yet drawn to the House's attention?
MR. LEBLANC: Mr. Chairman, I can point out that, obviously, no one is infallible. I am not aware of other mistakes in the budget. If there are, I will bring it to the attention of the members of the House.
MR. STEELE: Mr. Chairman, so his response was, well, mistakes happen all the time. It's not a direct quote, but that was the gist of what he said. If the minister cares to dispute his words, it's the Say What? quiz on CBC Radio this week, what exactly he did say about how common the mistakes were. If there are no other mistakes the minister is aware of this year, in any previous budget that the minister has done, could he enlighten the House about what mistakes were made in previous budgets?
MR. LEBLANC: Mr. Chairman, this seems like an hour-long question that I'm going to be answering, and I'm not going to go down that road. I think the honourable member opposite, I guess in a sense, doesn't understand the budgetary process. We table, in the House, the estimates. They're called the estimates for a reason, because it is the estimated amounts that we will spend in the fiscal year for which the documents are tabled.
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Mr. Chairman, they will move during the year. There may be some more expenditures in one area, and I will use an example. In any year you may have more expenses, let's say due to the fact that there could be an excessive amount of forest fires in a year. As such, my colleague, the Minister of Natural Resources, will have to dedicate further funds to that segment of his budget.
The bottom line is whether or not we as a government have met our targets. We have completed two years, the first year was the 1999-2000 budget, the second one was the 2000-01 budget. On both of those, we exceeded our expectations. In both cases we came in above our expectations, and for that I'm very pleased. Obviously, that means that we didn't add to the debt of this province to the full amount that was being budgeted, we did better. If the member has a specific issue that he wants to talk about, I'm more than willing to talk about it.
MR. STEELE: Mr. Chairman, it wasn't me who said mistakes were made all the time in the budget, it was the minister who said it. I was simply trying to find out what he knew about that. I know that people here and elsewhere will note that the minister didn't answer the question, he avoided it again.
Offshore royalty projections, Mr. Minister. On Page B22 of the budget documents, Schedule 13, there is a four-year forecast of the province's revenue. That must, of course, include, as an element of their revenue forecast, the amount of revenue that's expected to be generated via offshore royalties. I wonder if the minister could let us know, what figure for offshore royalties was included in each of the four years in the forecast in Schedule 13?
MR. LEBLANC: Mr. Chairman, for the information of the member, if he wants to look at the same document that he's referring to on Page B8, Schedule 6, which is the Revenue by Source, he will note that royalties are forecast for this year to be $10 million. As we move out into the other years, they have been incorporated into the totals. I don't have them here, but I will see whether I can get those numbers of the members. How far out are you referring to, to 2005, 2006? I should point out, before I take my place, that royalties under the agreement that was signed by the previous administration work on 1 per cent of the gross revenue that they received. For the first three years, no matter what the price of natural gas is, we will receive 1 per cent of the gross revenues that they receive.
[3:45 p.m.]
Mr. Chairman, subsequent to that, based on the amount of capital that they have recovered, it will move - if my recollection is correct - to 2 per cent of gross revenues, then it will move to 5 per cent of gross revenues. Then, after that, it will work into a net profit equation. This is all triggered on the amount of capital that the proponents of SOEP have recovered at that point in time.
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The member is asking for projections going out beyond 2002-03, and I will take that question as notice and see whether I can give him that information. I don't have it here, at my disposal, but I will try to see what I can do for the member. That comes from the Petroleum Directorate, and my colleague, the Minister of Economic Development, who is responsible for that is following my estimates, and I am sure he may have some more information for the member.
MR. STEELE: Mr. Chairman, I am, indeed, talking about to 2005-06, which, of course, is nothing more or less than what's included in the budget documents. Although, while the minister is at it, I would be very interested in the 20-year projection as well.
Mr. Chairman, there's also a line in the budget documents saying that government, this year, has elected to have offshore revenues included in the equalization payment. I would like to ask the minister what the implications of that are, both now and in the future, and in particular how much money that change is worth to the province, now and in the future, and is this change irrevocable or is it something that the province can change at will, from one year to the next?
MR. LEBLANC: Mr. Chairman, in the agreement that we have with Ottawa regarding the royalties, we are currently able to enter into a generic arrangement whereby we can retain 30 per cent of the royalties. We have to give them notification to do so. Though, I will point out to the member opposite, our position as a province is that, under the Campaign for Fairness, we should receive higher amounts, be able to keep it overall. Within the equalization, notification has to be given to Ottawa in order for us to receive the 30 per cent under the generic formula. That was given this year, and that's why that remark was in my budget speech.
MR. STEELE: Mr. Minister, what is the financial implication of this change for the province this year and over the next several years?
MR. LEBLANC: Mr. Chairman, our intention was to maximize the amount that we could recoup on that, so the implication is, basically, that there's no change in implication. The projections that we had going out were based on receiving 30 per cent until such time as we can - I should point out two things; first of all, the solution to Nova Scotia's predicament with regard to the revenues that we receive for the offshore activity in the province, those revenues are a combination of three things: provincial income tax, corporate income tax and there are also royalties.
When we did the analysis - and I know the member opposite has heard this before, so I will try to do it as quickly as possible - under the modelling that has been performed, Nova Scotia, when we looked at that, receives 19 cents out of every dollar on those three revenue sources. We have stated many different times that under the accord, the intent that was entered into, it clearly said that Nova Scotia would be the primary beneficiary of those
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offshore activities. When you do the modelling, when you receive 19 cents, I don't think anyone would disagree that we're not the primary beneficiary.
With regard to where we go from here, the solution is not to change the equalization formula. The position of the province is to work outside of it. You may say, why is that? The situation is that if we did it within equalization, there would be a negative impact on our other provinces if we were to do it that way. I want to point out for the member's information, our intention is not to improve Nova Scotia's position by penalizing New Brunswick, it is not our province's position to penalize P.E.I. or Newfoundland or Manitoba or Quebec or any other province receiving equalization. I want to point that out to the member. If he has a specific question over and beyond that, I will do my best to answer it for him.
MR. STEELE: Mr. Chairman, during the budget lockup, the minister's staff told us that this change in the way royalties are being treated was worth a specific dollar amount to Nova Scotia this year. What I'm trying to do here right now is just to get the minister to say that number on the record which for some reason, I'm not too sure, he seems very reluctant to do, and also to find out what it means not just this year but in future years. Is it going to be worth more in future years, or is it going to be worth less? There has been a policy change initiated by Nova Scotia. The question is very simple, how much money is this worth to Nova Scotia?
MR. LEBLANC: Mr. Chairman, if we had not done this we would have been penalized 10 per cent, because the option would have been to receive 20 per cent. By opting into this, we basically were able to receive 30 per cent of those royalties. I've talked to staff, and she indicated she wasn't the one who said that. I'm not sure which of the staff told you that or if they did say that and you misunderstood it.
The situation is that for Nova Scotia, we have the ability to receive up to 30 per cent under the generic formula. We want to have overall improvements as to how much we receive as a province, but under the equalization formula we have the opportunity to take 30 per cent but we have to exercise that. We always anticipated in our projections going forward that we would take advantage to the maximum degree of the opportunities under royalties. I don't see anything different. Whether or not the member can clarify one more time, I will do my best to try to answer the question.
MR. STEELE: I don't think so, Mr. Chairman. I think I will have to find another forum to clarify this. I would like to move on to the topic of provincial economic forecasts. In particular, the forecast for gross domestic product growth, because that really is probably the key indicator, the most fundamental prediction of all in the forecast. The minister, in his budget documents, says that there was only one forecast available at the time. Now, we found two. This was before the budget, but the minister said there was only one. I wonder if the minister could now table for the House every private sector economic forecast of which he
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is now aware for GDP growth for Nova Scotia, either in the calendar year 2002 or the fiscal year 2002-03?
MR. LEBLANC: Mr. Chairman, to the best of my knowledge, there was only one that was available when the budget was finalized. I should point out that was Scotiabank. It showed 1.8 at that point in time. The other ones that came out subsequent to that - and I should point out for the member's information, the forecasters have been changing their outlooks two or three times, especially since September 11th. The fact is that immediately after, I don't have to repeat for the House the significance of the events that happened, the shaking of the confidence, not only in the United States but countries across the world, and what impact that would have for Canada, what impact it would have for Nova Scotia.
The fact that Nova Scotia, I guess, in a sense, weathered them as well, I think, as any other province in Canada, spoke well for our economy. We often get criticized for the fact that we don't have an economy that speeds up like white metal when things get going, especially in the United States. We don't seem to go at the same pace. The good part, for once, in a sense, you could point out that although they slowed down considerably, our economy rate stayed relatively constant. One of the reasons, in a sense, especially, is maybe the makeup of our economy, but the other thing is even some of the impacts that were felt in other parts of Canada, especially British Columbia in softwood exports, they had a terrible time. I know I spoke to my colleague, Gary Collins, who is the Minister of Finance in that province, and they are facing some very serious problems in the makeup of many of their communities which are rural.
I will point out for the member, the subsequent ones that we received have been the TD Bank, which was 2.7 per cent; Bank of Montreal, Nesbitt Burns was 2.7 per cent; RBC Financial was 2.7 per cent; and I think Scotiabank updated theirs to 2 per cent after. So those are the ones that we have and there may be some other ones which have come out recently and if there are, I will endeavour to get that to the member, but I will put that in writing for him, I have no problem, but I've given him the information as much as I know today.
MR. STEELE: Mr. Chairman, I would like to table this document from a very fine publication by the name of The Daily News. I say that bearing in mind the audience that we have upstairs. The headline in this document is: Tories Growth Numbers Too High - Experts, and I will table that for the minister. I'm sure the minister saw it.
Now, strangely enough, in the other publication which I often think of as the Tory Party newsletter, The Chronicle-Herald had an article with exactly the opposite headline and exactly the opposite information. I'm not quite sure how the two newspapers reached precisely opposite conclusions because The Chronicle-Herald article cited only those forecasts favourable to the government and The Daily News cited only the ones much lower than the government's, but at any rate one of the ones to which The Daily News refers that I haven't been able to verify is that Nova Scotia Business Incorporated itself which, of
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course, is a unit of government, that their forecast for GDP growth is only 1 per cent, but I haven't been able to verify that. I haven't found any document that they issued. To the minister's knowledge, is it true that Nova Scotia Business Inc., a unit of the minister's own government, has a forecast of GDP growth of just 1 per cent?
MR. LEBLANC: Mr. Chairman, I am not the minister responsible for it, but I will point out to the member opposite I could see that happening very easily and you could say that is because we, as a government, within probably a month and a half or two months before the budget was tabled, were predicting basically the same growth which is around 0.9 per cent, 1 per cent. So Nova Scotia Business Inc. making a statement along those lines was basically in line with what we had said a few months before, but I should point out that Nova Scotia Business Inc. is not an economic forecaster to the degree that the other banks and so forth are. They have considerably more depth and ability to project economies.
There is another one I want to point out that I didn't list with the member the first time. That the Conference Board of Canada subsequently came out with their number which showed growth for Nova Scotia to be 2.6 per cent for 2002.
I should point out, Mr. Chairman, that the numbers I pointed out aren't necessarily for Canada. Those are projections specifically for Nova Scotia and, as much as they try, you know, the forecasters do one nationally, but then they also take into consideration regional aspects and they've tried to do them provincially. We tried as much as possible within Ms. Cody's shop to take that information and incorporate that into our budgeting process. You know we have at our disposal, we feel, a lot of information that we can take into consideration and we try to use that in our modelling, but we have 1.9 per cent growth for this year and we are happy with that number.
I want to say publicly on the record that I hope we blow that number out. I hope we come in with 5 per cent GDP growth. However, I think that would be a little optimistic, Mr. Chairman, but basically we've been consistent in how we've come up with our GDP growth and the information for how that was tabulated was in my Budget Address.
I'm sure that the member opposite would agree that if you look in the past how budgets were prepared, the assumptions on how this one was prepared and my previous two, especially as it gives the reader a lot more information as to how the calculations were done, and I should point out that that was begun by my colleague, the member for Lunenburg West, in his capacity as Minister of Finance before. This is not a recent phenomenon, but I think it's important that we use those assumptions in the budget so that at least people can understand how we came to some understanding and use of projections whether it is for revenue growth, whether it is for the amount of interest that we will pay, whether it is for foreign exchange. That information is included in the document. Nova Scotians should know it, should be aware of the facts and we've encompassed it into the document.
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MR. STEELE: Mr. Chairman, as pointed out in this article in The Daily News, Nova Scotia Business Inc.'s senior economic official is Fred Morley, a respected veteran among Atlantic Region economists, and a senior economist in the Nova Scotia Finance Department until he moved to the arm's-length Crown Corporation. So this is somebody who seems to know what he's talking about, but he's not the only one. There is also the Atlantic Provinces Economic Council which has also forecast GDP growth of 1 per cent and according to the business editor of The Daily News, he describes the Atlantic Provinces Economic Council as the Halifax think-tank with a long record of bang-on growth forecasts for the four provinces in our region.
[4:00 p.m.]
Mr. Chairman, this all wouldn't matter so much, I wouldn't be so concerned except that the process by which the forecasts were made in this budget are different from previous years because all the minister has to do is look back at his previous budget and he will see that if you took all the private sector forecasts that were available, which you might call a conservative average of all of those, now, he says he wasn't able to do that this year because there was only one and, of course, this all wouldn't matter so much except for this razor-thin fictional surplus that the minister has generated.
The minister knows he doesn't have a surplus. We've already pointed out half a dozen fudged figures that show that he doesn't have a surplus, but when you're talking about a surplus, a claimed surplus, that is one-quarter of one-tenth of 1 per cent of the minister's total budget, you know, the minister is walking on a razor's edge as it is. So these numbers that he picks for things like GDP growth really matter because he has made them matter.
My question to the minister is, all other things being equal, if there is a 0.1 per cent change in GDP, what impact does it have on the government's revenue forecast?
MR. LEBLANC: Mr. Chairman, it is a difficult question to answer and I will give you an example. GDP is affected by many different issues and in the past, GDP in some years was quite high and a lot of that was due to the fact that a lot of our exports in natural gas, there was a phenomenon there, the natural gas prices were quite high, and because of that, GDP grew considerably. The fact of the matter is though it did not bear a direct relationship to the amount of revenues that we received as a province because of the fact that it didn't create any more jobs. What happened is that the gas was being exported at a higher price, but the same number of people were working. The same number of suppliers were supplying the platform. The same number of people were manning the pipeline. So there is not necessarily a direct link to the amount of GDP.
I want to point out two things. First of all, the statement that was incorporated within The Daily News is inaccurate. The gentleman who you said was a senior member of the Finance Department, that is not the case, Mr. Chairman. The situation is he has been an
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Economic Development employee and when I read the article, I was thinking about whether or not I would basically write Mr. McLeod or write a letter to the editor to basically put the position of the department because I think that if I would have wrote the article two months before, using the information that was there, then basically we, as a province, would have come up with a 1 per cent, or 0.9 per cent GDP growth for 2002.
Mr. Chairman, that was the information that was available at the time and I've pointed out to the honourable member opposite the changes that were made subsequent to the budget being tabled, but I should point out that those same companies that were doing forecasting were indicating that they were revising their numbers on the change in the economy based on the consumer spending habits, based on the economic situation across Canada. So I think that if you look at the numbers that we came up with, we were reasonable and we used the numbers that were the right ones at the time and the numbers which have come up subsequent to that reaffirm that.
I can't dictate to Mr. McLeod, who writes for The Daily News, how to write his stories, but I do think on that one there, if he had the information that would have come up subsequent to that, that maybe he would have wrote it different. However, that is something that I'm not - I learned a long time ago you don't control what the press write, but at the same time debate is never wrong. The fact that we debate these issues and people challenge us at the Department of Finance, as to how we came up with those numbers and whether or not we're willing to defend it - and we are - is a good thing.
MR. STEELE: Mr. Chairman, I would like to move on to the issue of user fees and taxes. Everybody knows that this government has, contrary to their promise, jacked up a number of taxes - not just the tobacco tax. We know that user fees are going through the roof - these are the fees that disproportionately affect those worse off. They're what columnists call regressive taxes because no matter whether you earn $1 million a year like the president of Nova Scotia Power, or whether you earn $10,000 a year or $1,000 a year, the user fee is the same. So it has a very disproportionate impact on the household income when you impose a raft of user fees because they're the same for everybody.
User fees by their nature are regressive and unfair, but it's difficult for the public or for the Opposition or for the media to get a complete list of all the user fees that this government has imposed. We ferret it out and we add them up, but I don't think we've even come close. Not even to mention things like the Children's Dental Program which downloads the costs on people with a dental plan because the government won't pick up anything that the private insurer won't. So, if there's a deductible or the insurer only pays 80 per cent or if there's any kind of fee or charge of any kind that the insurer won't cover, Nova Scotia families are now on their own for that. The government doesn't even count that as a tax increase or user fee increase, but it is. It's very definitely a downloading of costs.
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Let's go back to this issue of user fees narrowly defined, which is a revenue item everywhere throughout this budget. Does the government have a complete list of all the user fees that have gone up as a result of this budget?
MR. LEBLANC: The answer is yes. The member brings up a question that I think is important. One of the things that I've tried to do as much as possible as the Minister of Finance is if we're going to be making changes in the budget that have an impact on the people of the province, then we should basically make sure that they can understand it. I'm more than willing to be judged on my government's actions as to whether or not we have cost recoveries being imposed and that also we have user fees being charged.
I would point out for the member opposite - I know that he has his document - it shows the fees and recoveries for the fiscal year 2002-03. It outlines the ones that we did address, it also outlines what impacts it has and the revenues that we've received. This was given out in advance of the budget, and there were also some other ones that were encompassed in the budget, but if the member has some specific questions on those, I'm more than prepared to try to answer them.
MR. STEELE: I'm going to ask the question again because I thought the minister answered it and then he backed away from it. Does the government have a complete list of the user fees that have gone up as a result of this budget? I'm not talking about this document because the minister will agree with me that this is not a complete list. Does the government have a complete list and will the minister table that document?
MR. LEBLANC: This is the document that we have. We try to put as much detail in this document so that people will look at it. If there are other issues, I'm more than prepared to talk about them. This is the document that we put forward so that people could analyze it, but we also have the details behind the decisions that we made. Oftentimes one of the criticisms that we have as a government is that we're not prepared to give the details. Well, this document does give those details. If the member opposite has some specifics on some other issues that he would like to talk about, I will talk about them.
MR. STEELE: There are two possibilities here. Either the government knows what it's imposing on Nova Scotians in terms of user fees and isn't telling, or it doesn't know. I'm just trying to clarify which one of those two it is because I talked about the Children's Dental Program. Let me give the minister another example, the abolition of the Residential Tenancies Boards which is included in this budget. Here's something they forgot to tell everybody - the application fee for residential tenancies is $10, but now that's going to be abolished and it's going over to Small Claims Court. The application fee for Small Claims Court is $75. Wait a second now, that's just a big new user fee for tenants, many of whom are not very well off, that's part of the reason why they're tenants and they've just got a $65 - you could call it a 650 per cent increase in the user fee. There is provision - under Residential Tenancies there has been provision for that $10 fee to be waived and the minister has said
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in his own estimates that the same consideration will be given in Small Claims Court, but again, it's Nova Scotians going begging to their government to be forgiven a user fee that should never have been imposed in the first place.
That kind of thing, these hidden costs and hidden downloads, are sprinkled throughout the budget. Sometimes I wonder whether the government even knows itself what it has done. The minister's answers today aren't encouraging me to think that the government actually knows.
I would like to turn to another kind of tax increase - this issue of bracket creep. This is something that the federal Conservative Party was absolutely dead set against when the federal government was doing it. They railed against bracket creep, which is where you keep deduction levels and rates the same, you freeze them - but, because people's incomes are slowly going up by inflation, they can get into a new tax bracket or not qualify for a deduction simply by virtue of inflation. So they end up owing more tax, not because their real income has gone up - that is their income adjusted for inflation - but just because the government has frozen the levels.
There is a hue and cry in Ottawa over this and Paul Martin and the federal Liberals, they got rid of it. They said, yeah, you're right. Bracket creep is a bad thing, it's not fair, it's tax increase by stealth. So we no longer have federal bracket creep. This government comes into Nova Scotia and reintroduces bracket creep in Nova Scotia tax. I raised this issue in the House a little while ago with the case of the gentleman who qualified for the disability tax credit. The government has frozen the disability tax credit at a previous level so that now he finds himself, for the first time in his life and I've met this gentleman, he's a retired senior citizen, he's lived in Canada for a long time, he has paid taxes for a very long time. For the first time in his life, under this government, he's paying more provincial tax than federal tax. I know the minister replied to him, because I saw that reply, but it didn't actually answer the question. So the issue I want to raise with the minister is now that this government has reintroduced bracket creep, has the government calculated how much that is worth to the government by freezing rates and credits at previous levels compared to what they would have received had they not done that? How much is bracket creep worth to this government?
MR. LEBLANC: There were about five different questions in there. I will just try to do a few at a time and then he can come back if he wants some more clarification on the others.
I find it interesting to hear the honourable member opposite talk about Mr. Martin, referring to him as someone who has basically had a change of heart and that he has provided some indexing and brackets and so forth. Last week, or the week before, it became public that the federal government was going to have a surplus - I believe it's $17 billion. That's billion with a B, we're not talking million here. You say, why can Mr. Martin provide tax cuts, let alone indexation, why can Mr. Martin provide tax relief? This is a very valid
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question. The fact of the matter is that he has given these different measures of tax relief to Canadians because of the fact that he has achieved a substantial surplus. I think there is not an individual in this House, not even from the NDP, that could debate that $17 billion is a lot of money. God help me, if I could get $17 billion into our coffers, we wouldn't owe a penny in this province. We would have a surplus, we would be the Alberta of the east. However, I don't think that Mr. Martin's going to send me the $17 billion.
The circumstances are, once he balanced his budget - and I could go into a long speech, I could talk for an hour of how Mr. Martin basically balances his budget and to a great extent it was by reducing contributions towards many of the programs that we deliver as a province, some of them capped and some of them with very little growth, and those are the three major things that they provide: health care, higher education and social transfers. Now, that comes under the CHST, the major thing.
[4:15 p.m.]
The other thing is they have also done some provisions in equalization which has really hurt the provinces. So this is no magic new story that I'm telling the member opposite. But I do want to point out that we, as a province, said that the first thing that we would do is we would balance our budget, we would live within our means and when we did that, Mr. Chairman, we told Nova Scotians that they would pay the same amount of income tax as they paid at the time we came into office. Now, the member opposite brings up the case of a gentleman - and he has corresponded with my staff and I know that I was asked a question in Question Period by the member opposite on this very point - and I did indicate that our staff had met with him, or had corresponded and talked to him by telephone also. In this instance, because of the marked increases in tax credits or indexation that were given, especially to people with disabilities, the case of the gentleman referred to, he does pay more provincial tax than he does federal tax.
So those facts are accurate, I don't dispute them, but I want to point out, Mr. Chairman, that before we could even give consideration to changing how we do the income tax system in this province, the first thing we had to do is the walk. We have walked by bringing forward a balanced budget. The second thing we have done is come forward with a plan as to how do we keep it balanced going out. As we go forward into next year's discussions for our budget, the questions that the member opposite is asking are questions that we as a government are going to be pondering and I indicated that at the time. If the member has some other specifics, and I know that he asked four or five questions, he may come back with the other ones. If I omitted them, I didn't do it purposely.
MR. STEELE: Mr. Chairman, I'm starting to think there's something wrong with the microphone because the minister is doing everything but answer the question that I asked. He seems to be hearing something different. Let me ask the question again. How much is bracket creep worth to Nova Scotians?
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MR. LEBLANC: Mr. Chairman, I know one thing, I'm not going anywhere so if I didn't answer it the first time, the member can ask it the next time. The other issue that we're talking about here, he's asking how much indexation should be. Now, the point that he should also understand is that there is tax on net income. That is the new format that Nova Scotia charges its tax on. That means that in the past how Nova Scotians paid their income tax, it was a percentage of their federal tax. So that's why in the past someone would always be paying less provincial tax than federal tax. The changes that we have made are basically in line with what every other province in Canada has done. This is not a Nova Scotia phenomenon. This is a national phenomenon and if the member were to look across Canada, he would see what happens.
The other thing I should point out is he's asking me if we would have maintained the same system as in the past, how much would indexing have cost the province. Mr. Chairman, I should point out that there isn't one province in Canada that has matched what the federal government has used in the sense of indexing, and all of them have different formulas, all of them have different levels of indexation. All of them have different credits. So to say that Nova Scotia would be the only province that would have maintained that, I tend to think, is probably not a fair assumption for the member opposite to make, but I will point out that the number is in the millions. I don't have the number at my fingertips here, but I will endeavour to get what I can for the member. I'm not going to guess, Mr. Chairman, I will try to find out from staff what it is and if the member wants to keep asking the question on that, I will do my best to answer it.
MR. STEELE: Mr. Chairman, all I can do is ask the minister to do his best to get the information. I know his department has it or can easily generate it so it's not that difficult a question.
I would like to move on to the issue of the Nova Scotia Liquor Corporation. I'm always surprised by the subterfuge of government, if I can call it that, Mr. Chairman, because the crowd over on that side of the House came to power on a promise of no new taxes except for tobacco taxes which we all agree, I think we all agree, have their place as part of a health prevention strategy, but they just raised the liquor tax. They just raised the liquor tax, actually quite substantially, except the minister would say, no, no, we didn't, we don't have a liquor tax in Nova Scotia and that's true because what the government did was they issued a directive to the Liquor Corporation to generate more profit and, of course, the Liquor Corporation, like any business, only has so many avenues to do that - to raise revenue, cut costs. There are really no other choices in any business.
So to meet the minister's directive, and I'm not sure if it's that minister particularly, but it was that government's directive, they raised their prices. To the ordinary Nova Scotian there is no difference between that and a liquor tax increase because it all amounts to the same thing, higher prices on liquor and more revenue to the government and it's all done at the directive of the government, but I was scratching my head over this one, Mr. Chairman.
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So the question I want to ask the minister is this, well, apart from the obvious question, will the minister table the directive that was given to the Liquor Corporation? That's an easy one, but the real question I want to ask the minister is what specific statutory authority does the minister have to issue that kind of directive to the Liquor Corporation?
MR. LEBLANC: Mr. Chairman, I don't have any authority to do that.
MR. STEELE: I think the minister is now playing cat and mouse. Maybe he specifically didn't give that directive, but the Liquor Corporation has been very clear - they got a directive from government to raise their profits. So I will ask the minister, now, it's in the minister's revenues from the Liquor Corporation, who issued that directive and will the minister table it?
MR. LEBLANC: Mr. Chairman, I find myself bewildered. The member opposite knows who's responsible for the Nova Scotia Liquor Corporation and it's the honourable member for Inverness. For the honourable member to say that I, who is not the minister responsible, could issue a directive to another department that I'm not responsible for, well, if you read the Statutes enough, I'm sure you will find within that that I'm not going to do that and I couldn't do that. The fact as a government, we took a decision that we wanted to raise revenues from that, then obviously it would be the member responsible to do that. To say that I'm playing cat and mouse, that's not the case because I'm not the minister responsible and I'm sure that the member opposite, I know he did his estimates and he could have asked the question at that time and I'm sure that the member opposite would have given him the information, but as minister, not as minister responsible, I'm not in a position to be able to table any documents.
MR. STEELE: Mr. Chairman, I'm reminded of something our Premier likes to say, that if you want something from the government, all you have to do is ask. So I know the minister is here in the House, I think I'm allowed to say who is here, I know I'm not allowed to say who is not here, so we will just say generally the minister happens to be here, that we all look forward to that minister tabling that directive in the House.
Now, this minister, the Minister of Finance, expects to get - I think it was an increase of something in the order of $10 million. So the minister is not exactly unaware of what's going on. Does the minister have a copy of that directive in his files and if he does, will he table it so the members can read it, please?
MR. LEBLANC: Mr. Chairman, to the best of my knowledge, I don't have that in my files. What I'm trying to clarify here, the member opposite is trying to give the insinuation that I, as Minister of Finance, run every department. That is not the case. What we have here is the proper protocol and the member opposite, as a lawyer understanding how Statutes work, would know the fact that if a directive was given to increase profits or to reduce
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expenses within a Crown Corporation, that that would be done by the minister responsible. I don't dispute that for a second. He should know that also.
So the fact of the matter is, Mr. Chairman, if there's a question there that should have been directed towards the minister, he knows that. The other point is that this year my understanding is that it's approximately a $15 million increase in the Nova Scotia Liquor Corporation's budget. As to how much of that was due to the fact of expected increases in sales or the fact of increases in prices, or whether or not it was efficiencies and expenses, I don't have that information. I'm sure the minister responsible would be in a better position to give that information to the member opposite.
MR. STEELE: Mr. Chairman, I just want to be clear, the Nova Scotia Liquor Corporation is on the record as saying that the price increase was because of the directive from government, so we're not talking about some mysterious chain of command here. The government ordered them to produce $160 million in profit this year, and so they had to line up their balance sheet so that it produced $160 million, and the only way they could do that in the short time available was to increase the prices, the first across-the-board increase in liquor prices in many years; I forget the exact number of years. At any rate, will the minister table any other similar directives issued by this government to any other unit of government?
MR. LEBLANC: Mr. Chairman, it goes back to who is the minister responsible. I will clarify for the member opposite that as a government we did ask the Nova Scotia Liquor Corporation to see whether they could improve their bottom line. The difference in that, he may agree or he may disagree with that, the fact of the matter is those additional revenues we got in meant that we have more money that we could put into Health, it meant we had more money that we could put into Education, and it meant we had more money to put into Community Services.
Money doesn't grow on trees. We have to find revenues to offset the expenses, and I do believe that the Nova Scotia Liquor Corporation was one of those that we asked to look to see whether or not they could increase it. The member opposite himself stated that it had been a considerable time since there had been an across-the-board increase in those products. If you look at the prices of many of the spirits or many of the beers, it's in line with what's across the Atlantic Provinces. I don't think the increases that were there were unreasonable. I do say that a few of my neighbours weren't very happy with the increases in beer, however they're still talking to me, so I'm still in a pretty good mood.
MR. STEELE: Mr. Chairman, I wish the Minister of Finance had been with me a couple of days after the budget when I went knocking on doors in my constituency; I wish he could have heard some of the things they said about the increase in the gas tax.
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I would like to turn to the question of Health capital costs. According to the budget, there are three major hospital projects slated for this year: there are further renovations to the Yarmouth Regional Hospital, there's the Cobequid Multi-Service Centre, and there's the Highland View Regional Hospital in Amherst. I wonder if the minister could inform the House what the total project cost, in this fiscal year, is for those and any other capital projects in the Department of Health?
MR. LEBLANC: Mr. Chairman, I don't have the estimates for the Department of Health in front of me. Obviously, usually those questions would be directed to Health when we get into it. I do know there were three different components, and rather than try to guess, I will endeavour to get that information for the member. I think the three major components were Cobequid, Amherst, and Yarmouth. Those are the three major, and if I was going to guess, I think it is somewhere in the $40 million range, but I might be wrong on that. If the member could allow me to get that information from the Health Department, I will endeavour to give that information to him.
MR. STEELE: Mr. Chairman, really what I'm getting at here is that it's difficult for me to see where in this budget that money is. Because of a change in accounting policy, the way that the government accounts for capital spending in the Health Department budget is completely different from previous years. They've made this amount of money disappear from the line item where it used to be, and all that's left are items that are so small they don't actually qualify for the tangible capital asset policy, but it hasn't reappeared anywhere else.
I'm sure the minister knows very well that if he's going to appropriate the money in this fiscal year for these projects, there has to be the vote of this House approving it. There has to be an appropriation sufficient to pay for those projects, but I'm at a bit of a loss to suggest where in the minister's budget these items appear. I wonder if the minister knows, if he can point me to any particular page in the estimates where the Highland View project and the Cobequid project and the Yarmouth project appear?
[4:30 p.m.]
MR. LEBLANC: Mr. Chairman, I should point out that in this budget that we have, one of the changes that we brought about is how we dealt with capital projects for DHAs. This was to bring the province in conformity with the Public Accounts. Now Public Accounts, for the information of the members, of course are the final financial statements of the province that are compiled and audited by the Auditor General of the Province of Nova Scotia, who is the auditor of record for the province. The three projects that we're talking about, which encompass the number that was there, the expenses that we show in regard to those three projects will be included in the amortization of the province in this fiscal year, that is if they are completed in this fiscal year; assets are not started to be expensed or amortized until such time as they are completed. Some of those projects will be completed and as such will be expensed in this fiscal year.
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MR. STEELE: Mr. Chairman, this has nothing to do with amortization; it has nothing to do with what year it's going to be expensed. What it has to do with is that the minister needs an appropriation if he's going to make the cash outlay this year for these hospital projects; it has to appear somewhere in the estimates so that this House can vote on it. The only thing that I see is on Page 1.5 of the Estimates, where the Department of Health has allocated $9,387,000 as the Capital Purchase Requirements for this fiscal year. It's in Resolution E34, which is the vote of this House.
To the minister's knowledge, does this line item include enough money for all of those three hospital projects that I talked about, plus any other capital projects in the entire Department of Health? Is that the line item, or where does it appear if that's not the right item?
MR. LEBLANC: Mr. Chairman, I do want to have some information sent down in regard to this. I want to make sure I refer the member to the appropriate section. It's a big question, and we've had some debate on this. I apologize to the member for not having it at my fingertips, but there is information coming down and at that time I will be more prepared to give it to him.
MR. STEELE: Mr. Chairman, if I might, what I would like to do is explain to the minister why I'm pursuing this point, which on some level seems very technical. It's my understanding, and I stand ready to be corrected, that the government is trying to move hospital construction expenses off its books by treating them as a capital expenditure of the district health authorities, and the reason that's significant with the minister's razor-thin, fictional surplus is that it still requires an appropriation of this House, because the DHAs can't raise the money on their own. In one of those bits of accounting magic, the district health authority budgets are not actually included in the estimate books that we have. They're included at the end of the year in the Public Accounts, when everything is rolled up together. So eventually, a year and a half from now, we will find out how much money was spent on these projects.
The question that I want to ask the minister is, is that the way - the way that I've described - the government has capital spending on those hospital projects off its books, by moving it over to the off-book district health authority budgets? Is that how this government has gotten these projects off its books for this year?
MR. LEBLANC: Mr. Chairman, the answer is no, that is not how we have done it. The fact of the matter is that in the past when we had capital projects, when we were building hospitals for any area of the province, under the (Interruptions)
MR. CHAIRMAN: Order. Would the members kindly keep the din down, please.
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MR. LEBLANC: Mr. Chairman, in the past when we showed capital grants going to hospitals, showing on the Department of Health's budget, it appeared as if it was an expense on the Department of Health. On the DHA, which was the entity, which is the hospital board that received it, they basically took those funds and showed them as revenues. We had expenses on the province's Department of Health as an expense.
I will try to use it as a numerical number. If the Department of Health was to give $10 million to district health authorities to build hospitals, they were showing that $10 million as an expense, not as a capital item, but as an expense. The DHA would show that amount as a revenue. Both of them would net out. The fact of the matter is that they were building a hospital. If they were building a hospital, that hospital is a capital asset, it is not an expense in the year that it occurred.
Mr. Chairman, are we getting close to the end? I would like to finish this answer.
MR. CHAIRMAN: The Chair will allow you to continue, just for a brief second, if you don't mind.
MR. LEBLANC: Okay, I will try my best to answer the question. The district health authority had that hospital had an asset. It was a capital asset. It is the intention of this government to expense that hospital over its useful life. That is one of the changes that we did when we brought about Generally Accepted Accounting Principles and also tangible capital assets. That is an important change and, as such, what happened is that we amortized that hospital over its useful life. So the fact of the matter is that by making this change that we have in this fiscal year we have shown it in the estimates the same way that it will show in the final financial statements of the province. One of the criticisms the Opposition passed was that the financial statements were different than the estimates, and when we are debating this issue we're trying to debate apples and oranges. Well today, by making these changes, we now have oranges and oranges and apples and apples and I think it's important that I say that.
Mr. Chairman, I appreciate the member will have some more questions on this, and when his turn comes up I will more than prepared to answer them.
MR. CHAIRMAN: Order, please. Honourable member for Halifax Fairview, your time has expired at this point. The Liberal representative will take over the point of questioning, and I want to thank the honourable member for Lunenburg West for allowing the minister to complete his train of thought with respect to the question from the member for Halifax Fairview.
The honourable member for Lunenburg West.
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MR. DONALD DOWNE: The last thing I would want to do is have the Minister of Finance lose his train of thought, so it is no problem at all, Mr. Chairman. I want to revert to one of the issues on the GDP. For every 0.1 per cent of GDP, what does that represent in regard to cost or benefit to the provincial Treasury?
MR. LEBLANC: Mr. Chairman, I answered this question for the member opposite, the NDP Finance Critic. Part of the problem we have is that a change in GDP doesn't necessarily have a direct relationship to the amount of revenues that we receive. I gave an example of the revenues that you get from a pipeline. If gas prices go up considerably this year, our GDP will grow, but the fact of the matter is as a direct contribution to the economy the change will be relatively insignificant, because of the fact that the same amount of people were working delivering that gas on the system, the same amount will work on the platform, the pipeline and so forth. So there is not necessarily a direct relationship of GDP to the revenues. I know the member opposite, as a former Finance Minister, knows that. I'm not saying that it won't have an effect; it will. But whether or not I can give you a direct linkage of a fixed dollar, the situation is, from the staff's perspective, almost impossible to do.
MR. DOWNE: I think it's quite critical, Mr. Minister. I understand the wild fluctuations that you can have on some aspects, if it's gas prices or changes, but on a normal basis there is a number that you have that actually tells you when GDP changes by 0.1 per cent, what effect that has. That's how you are using your formula to deal with this particular so-called plan. So, I mean there has to be a numerical formula that tells you the number that equates to the 0.1 per cent GDP. What does it mean in regard to revenue to the province and/or cost to the province?
MR. LEBLANC: Mr. Chairman, the member opposite brings up a very valid point. One of the things that we did, as we tabled the document last week, which was the debt management paper, was to try to show, first of all, try to make Nova Scotians understand the situation that we're in, try to make them understand the seriousness of the debt levels that we have as a province. One of the dubious distinctions that we have in Nova Scotia is having the highest debt per GDP capita in Canada - it currently stands around 46 per cent. There are two things that we pointed out, one of which it is imperative that we continue to run surpluses. The fact is that in this fiscal year we are having a situation where we have a balanced budget. We have a surplus, though it is very, very minor, and I don't disagree with that but our capital spending that we have is in excess of the amortization expense that we have for the projects that we have, construction. Part of the reason for that is that in the mid-1990s the amount of capital projects that were going on were relatively small, and because of that the expense is down.
The fact is that there are three major things in that paper that we're trying to reinforce, one of which is the importance of balancing the budget. We showed in that a graph that even if we just balanced the budget and had zero surpluses in the next four years we would reduce our debt to GDP ratio considerably. Now that is an important ratio; that is how we are judged
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by the bond rating agencies. But the fact is, Mr. Chairman, that it also stresses that if we could have increased surpluses, that that improvement would be even more. The fact is as we're using these projections going out, we're showing that our GDP is continuing to grow. The member opposite is saying there is volatility; there is a situation. Can we guarantee that these growth records will continue? The fact is of course that I, as Minister of Finance, or any member of this House, can't guarantee that the economy will grow in Nova Scotia, just as well as we can't say it will grow in Canada.
Though our economy is becoming more diverse, the fact is that we have an economy that has been largely fuelled by the investments in IT and also in the offshore. Because of that our numbers this year are relatively robust, a lot more robust than they were a few months ago, and a lot more robust than they were probably six months ago when we found ourselves after September 11th. So for that, I am happy. The growth next year is considered to be even exceptionally higher, with some of the projections going up close to 4 per cent. But I will say, for the member opposite who brings up a point, that we should also bear, I guess, close watch of the fact of not to depend on growth itself. The member opposite, his comments are very valid.
If I strayed off the question, I apologize. If the member wants to come back, I will try to be as brief as I can with my second answer.
MR. DOWNE: Mr. Minister, I will come back. Page 5 of your surplus and debt management program, A Balanced Approach 2202-03, which to me is - and I'm not saying this in a rhetorical sense - not the plan that I expected and I was hoping that there would be a more specific plan, but if you take a look at the Projected Net Direct Debt to GDP Ratio and you take a look at the fiscal year 2001-02, 46.2 per cent, and the next year it's 46 per cent even, but the debt went up approximately $100 million more. Does that mean that 0.2 of 1 per cent of GDP of the net direct debt to GDP ratio is equivalent to $100 million?
[4:45 p.m.]
MR. LEBLANC: Mr. Chairman, I'm just trying to follow the line of reasoning and if I've misconstrued it, I apologize again. I'm trying to do some research on another question and sometimes you shouldn't do that, you should be trying to listen a little bit more. But if you look at the numbers going out, there is not a direct correlation to the net direct debt to GDP ratio from just the growth and the GDP because it also has a correlation to how much your debt is going to grow, and both those factors have to be considered. So it is a formula that basically is dependent on two different growth numbers, one of which is how much the debt will grow and how much the GDP will grow, and if we can do a better job of exceeding even our results in having more of a surplus in this year I'm sure that that percentage will be greatly affected by any change that we have in controlling the net direct debt, even more so probably than the growth and the GDP but, like I said, if the member can be a little more specific, I will try my best and I will keep my answer as short as I can.
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MR. DOWNE: I'm trying to find out if the department itself has a formula or in doing their analysis could equate - 0.1 per cent of GDP equates to how many dollars in revenue to the province, to you as the Province of Nova Scotia? I will try to explain another way. If the interest rate goes up 100 basis points, you know the cost that is to you in debt servicing, I'm trying to find out at 0.1 per cent of GDP, what does that mean?
MR. LEBLANC: Mr. Chairman, we have used modellings that are based on GDP growth. So the member opposite is saying that we obviously are using some criteria for the amount of revenues that are grown. On that I will endeavour, through staff, to see where that would come with some modelling that would be generic, but I should point out that GDP could change even some degree that may not have any impact on our revenues, and I've given the example in two different previous ones, that if it happens there, there will be no impact on revenues, but if it happens in other areas that are perhaps very labour-intensive, let's say like in the forestry, or in the fishery, something like that, or in some manufacturing process, then the impact will be greater both to the negative or the positive, depending on which side of the pendulum that it goes, but on a generic basis we will try our best to do it through our staff here to give you that number. That's a reasonable request, but just with that caveat, you should take that into consideration.
MR. DOWNE: That's what I'm asking for, Mr. Minister, and I realize that there are different factors there. For example, in tourism, for every dollar you invest in tourism you get a $13 return back to the Province of Nova Scotia, and I know the Minister of Tourism wanted me to ask you why you didn't want to have that kind of return on investment. It's something like a 2,000-some-odd per cent return on investment. So, you know, it poses a question.
You made a comment, and you made this comment a couple of times and yet Statistics Canada doesn't back up, from what I understand, your arguments. Prior to September 11th our information is that the economy was slowing down; in fact I was putting press releases out to you saying, you know, watch out. I mean the economy was slowing down prior to September 11th and, in fact, after September 11th the economy grew and that's according to Stats Canada unless your data is - I understand we do different formulae and we track that. Is that statement accurate? That the economy was slowing down prior to September 11th, and from September 11th until now the economy has actually grown?
MR. LEBLANC: The member opposite brings up some good points, one of which is, was the economy of Nova Scotia or Canada expected to slow down in the latter part of 2001. The answer is yes. He brought up another point, that in regard to the fourth quarter, did the economy grow in Canada? The answer is yes again, but you also you have to - in the third quarter it went down a lot more than probably was foreseen, there was an expected slowdown in the third and fourth quarters of 2001, with a recovery being predicted in early 2002. That was the indication.
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When we had this Budget Address and the estimates last Spring, those were the guesses at that point in time as to how the economy would go. The intention was that 2002 would be a good year once it started going. As we got into the Fall the economy was probably slowing down a little further than what people had thought. September 11th threw obviously a major obstacle into the economy, but the fourth quarter actually grew from the third quarter, but you've got to take into consideration the impact of the events of September 11th.
MR. DOWNE: Mr. Chairman, I was referring specifically to Nova Scotia. I think our information was accurate - and the answer was yes? Well, I will let you say that into the record.
MR. CHAIRMAN: The honourable Minister of Finance, and please bring the question through the Chair.
MR. LEBLANC: Sure. Do you want me to give the long answer, or do you just want me to say yes.
MR. DOWNE: Say all of it.
MR. LEBLANC: My staff tell me that the answer is yes, it applied also to Nova Scotia.
MR. DOWNE: Just so the record is straight then, my comment that the economy was slowing down prior to September 11th and actually it has picked up since September 11th is accurate, and the statements the minister was making were not accurate at the time?
MR. LEBLANC: Mr. Chairman, I will point out that the statements that I made in the Fall were at that point in time where we believed the economy was going. The fact that it actually grew in the fourth quarter didn't come out until probably some time in late January or February, and actually it surprised most Canadians that actually the economy had grown because all the projections - and I also believe the Governor of the Bank of Canada was saying, and although I shouldn't quote him directly because I don't have it here, he had said there will be two quarters of decreases in growth, or losses, which basically equates to a recession.
When the numbers came in, actually the situation was one that was pleasantly a surprise, so I think that I was not the only person in Canada who was surprised with the fourth quarter being better than what it was and, obviously, I'm sure the member opposite is very pleased to see that the situation is a lot better. That's one of the reasons why we have projected our GDP growth at 1.9 per cent in our budget here rather than probably 0.9 per cent that we had even about a month and a half before the budget was tabled.
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MR. DOWNE: So the answer is I was right and you were wrong, I guess that's what you're trying to say, but anyway . . .
MR. LEBLANC: It isn't often I will admit it.
MR. DOWNE: It could be a first. Actually the whole front bench over there, Mr. Minister, are all hoping to have you announce that you possibly made a mistake.
I want to go back and comment on growth. I differ from my colleague in the New Democratic Party. I believe that your assumptions with regard to growth in the economy are prudent and they will change, as we're in a very fluid time economically across the board. I don't believe that you're highballing your numbers; if anything you're probably being as conservative as you possibly can to hedge your position. (Interruption) I didn't mean that just because you're a Tory, I just meant conservative in regard to . . .
MR. CHAIRMAN: Order, please. There's a Chairman here and I would greatly appreciate it if members would bring their conversations through the Chairman. Thank you very much.
MR. DOWNE: Mr. Chairman, it's that Minister of Health over there, as if he's not in enough trouble, he's trying to create more in the House here.
MR. CHAIRMAN: Excuse me, honourable member, you could ease that by directing your question through the Chairman.
MR. DOWNE: All right, let's get back to business here, Mr. Chairman, thank you very much. The issue of growth. So anyway the growth - can I look? Can I even look?
MR. CHAIRMAN: Sure.
MR. DOWNE: I can look, okay. The growth of (Interruptions) I just all of a sudden got sick to my stomach, but really the growth numbers, if anything, are prudent and the assumptions are there. I noticed that last year the numbers that came in were substantially low, in fact last year the GDP or the growth of the economy was at the end of the year substantially higher than was originally projected. Is that accurate?
MR. LEBLANC: Mr. Chairman, I'm taking a lot of time, I apologize. I was getting some information on other questions and a lot of times I'm behind and the questions have been coming forward and I apologize for that. If I recall, I don't have my numbers there, I believe that we had anticipated 2.3 per cent last year for growth in 2001. The numbers that came down - I'm sure we can get them here - the number that came in is 1.7 per cent.
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I should say that perhaps some of that impact is in natural gas revenues, I mentioned two or three times that when natural gas revenues come down, that has a direct impact especially on the GDP and a lot of times it doesn't have the same correlation to the revenue-generating capacity of the province. I will take my seat if the member wants to pick up on this. I will try to keep my answers as short as possible because I'm giving a long answer to a relatively short question, that the amounts that we had last year basically we didn't meet and the fact of the matter is a lot of that is due to the events that happened.
There was supposed to be a slowdown the latter part of the year. It was higher than what we had anticipated, but the fact is that in this year, I go back, we're anticipating 1.9 per cent this year and actually higher than that next year. So the outlook is positive, but the fact is that we went through a difficult year. I think in everyone's mind it was a year that I think that we would all rather forget and hopefully we will never see again.
MR. DOWNE: Mr. Chairman, the reason I asked that question is that I understood that the growth numbers were substantially higher at the end of the year than what was anticipated and my question to you, Mr. Minister, could you have balanced the budget last year with those new revenue numbers?
MR. LEBLANC: Could we have balanced the budget last year if the numbers were - are you talking about the 2001-02 year? (Interruption) Well, as it sits here, Mr. Chairman, that's a question I guess in a sense I would have to sit down and take a look at, but I do know that in this fiscal year that our revenues are up and that is a good thing, but we also have considerable pressures into the system and for that, those are difficulties that we have. We have put ourselves on a timeline when we would balance the budget and this is the year that we had told Nova Scotians that we would do that.
Obviously, Mr. Chairman, the fact is that could we have basically made more changes in past years, or taken all the revenues and made sure that every cent of it was applied to the deficit. The situation is that maybe the circumstances could have balanced the budget, but the fact is though that we made some decisions in some of the program areas that we consider as priorities: that is Health, Education, Community Services and Transportation, and the fact is that we told Nova Scotians when we would balance the budget and that's the year we balanced it.
MR. DOWNE: Mr. Chairman, so it is possible that you could have balanced last year and the issue comes back to the Auditor General's comments, that it's a spending issue by the department. I will go into this issue a little later on, but I want to go to the liquor tax. In fact, I did ask the minister responsible about the increased costs of the liquor, why the Nova Scotia Liquor Commission increased the fees for alcohol, and as I understood from the meeting that we just came from in the other Chamber, fiscally they had some targets to meet and they wanted the Nova Scotia Liquor Corporation to increase its revenue and one way of
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increasing its revenue was to have those cost increases go into effect. It has been 10 years since the last increase.
[5:00 p.m.]
They are basically somewhat in line with other jurisdictions and that it was a measure from the budget negotiations to find an additional $12-some million from what our calculations are and it seems to me that the minister concurred that that was, in fact, roughly the number that was used, plus the fact there's a cascading tax. There's a tax on top of that of HST which comes to about $14 million or $15 million additional revenue from that. Well, $12.6 million, what's 15 per cent of $12.6 million, it's somewhere around $1.86 million. So it's around $15 million. So I guess the issue is, Mr. Minister, and the question I asked the staff was were they were losing money, that they had to increase those costs, it was administrative, and the answer was no.
So my comment was that it was a tax. The minister couldn't confirm that. He wouldn't go so far as to admit to that, but he did admit to the fact that they did it because of a budgetary issue. They did it because they had a target to meet and they increased the revenue. One way of increasing the revenue was to increase the costs by the Nova Scotia Liquor Corporation and those costs, in fact, it wasn't that they were losing money, they had to do it, it was a chance for them to meet a budget target. So it was a tax.
MR. LEBLANC: I'm not sure there's a question there, Mr. Chairman, but I do want to point out, let's go back to the one you said before as to whether or not the increase in revenue could have balanced the budget last year. Now, that's the one ending March 31, 2002, and I'm looking at the changes in revenues from the estimate to the forecast and it's only $12,792,000. So the increases in the revenues that we had last year over what we had predicted would not have balanced the budget.
Two years ago there was a situation - I think it was two years ago, yes, two years ago - that we had some exceptional growth in that year. It was way over what was expected, that if we would have perhaps made some changes and really cut some programs and done some different things, maybe we could have achieved. But, Mr. Chairman, it's also important that we do what we said we were going to do in the year that we were going to do it. Nova Scotians find this budgetary process difficult. I don't for a second say different.
The fact is though, 40 years, we keep saying why we couldn't do it, you know, because it's going to be difficult, and let's do it next year, or we can use the NDP slogan which is do it when the time is right. Well, I mean 40 years is like how long do you want to wait and when is the time right? Is it going to be after an election that you win a huge majority of seats and then you will do it then or do you tell people, do you stand up and tell people that you can do it and when you're going to do it and stand by your convictions. It's just not stand and agree to everybody who comes through the door and say yes because that
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is easy to do, but the fact is it doesn't help for you to live responsibly. I know as Minister of Finance that people come through my door and come through the doors of my colleagues every day asking for more money and programs, asking for new programs, asking for extension of programs, and the fact is, you know, when you get down to it, the fact is that we have to make decisions collectively and oftentimes you have to say no because you should learn to live within your means. We ask our children to be responsible with their allowances, you know. Maybe we as government should be setting the standard.
In regard to the Nova Scotia Liquor Corporation, I go to that, Mr. Chairman, and I do say that as a government we made a determination to review that. The member opposite mentioned the fact that prices hadn't been raised in some considerable time and the fact is that is one option that is available to government as a source of revenue. Is it reasonable to periodically review prices that we charge on liquor products? I think the answer is yes.
MR. DOWNE: Your comment just a minute ago is interesting and there's another comment here. The minister also told the Chamber of Commerce that it's time to look to a more distant horizon to ensure generations to come, Nova Scotians are not restricted by the debt that robs them of one-fifth of their financial clout. It is our moral responsibility to the next and future generations of Nova Scotians to put our house in order. Mr. Minister, why is our debt still able to climb, and climb for the unforeseeable future, even with this plan - well, I don't call it a plan - this document here. How can you say on one hand that we should never grow the debt and we can't continue to grow the debt for our children yet in fact, since you've been in power, the debt has increased a minimum of $100 million each year that you've been there?
MR. LEBLANC: The member opposite brings up some good points and some, I think, that bear clarification. The fact is, in this fiscal year, that the debt of the province will increase. The document that he refers to was a speech that I made at the Chamber of Commerce and he also made reference before that to another document that referred to the debt management plan that we have as a province, which was entitled A Balanced Approach to Surplus and Debt Management. We made a change in accounting as to how we account for the province's financial statements and, when we did that, it was a major change in how we account for the operations of the province and we moved to Generally Accepted Accounting Principles. I know, from speaking to the member opposite, that he doesn't disagree with the change to GAAP and even in a document that he had tabled prior to that, that was something the department was saying we should look into in the future. So I don't think he's averse to it.
The fact is, in this budget, we've invested in what we consider to be the priorities in Nova Scotia, both in the operating side but also in the capital side. In the capital side we've invested in roads, hospitals and schools and some other smaller capital projects. In those we are going to be building and buying certain equipment that we will amortize over its useful life. We are expensing that every year on the statements of the Province of Nova Scotia. That
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is a change that moving to Generally Accepted Accounting Principles brought about. The fact is that though we are adding to the debt, and I don't dispute that because I think if we're going to make these changes we have to be willing to stand up and be counted and I am, the investments that we're making are not - and I will use an analogy - to buy the groceries. They are to buy assets which have a significant value to the province, both in dealing with the cost pressures we have in the future, and to provide the things that we consider to be priorities.
We've had this discussion numerous times, the member and I, both in a private setting and also in the public setting here in the House of Assembly. For the province, I make no apologies whatsoever for the path that we have taken. The capital projects that we are building are needed both in the sense of the safekeeping of our children, whether they are in schools, within the hospitals that we're building or the roads that we're building. They are investments which will also drive our economy.
The paper that we referred to about the surplus and debt management has put forward a plan that will basically reduce the debt to GDP ratio of the province. The challenge that we have as a province is to increase our surpluses whereby having a big enough surplus, we would be decreasing the actual debt of the province. That is a challenge that the member opposite is saying here today, it's a challenge that we have as a province as we go forward. I want to point out that the plan that we brought forward is using basically a balanced budget with no surpluses. It is not the intent of the province to go forward with just the balanced budget, we were going to try to generate as big a surplus as we can in the years forward. If we do that, the debt to GDP ratio will improve significantly but our debt will also be smaller than what it is and that's very important if we can do that.
MR. DOWNE: I do think what you have is a credit card by this document. It is a credit card and in reality the Auditor General said the biggest challenge facing Nova Scotians is our debt. The biggest worry that he has about the Province of Nova Scotia is the debt. He goes on to state that every dollar borrowed will add even greater to the risk of the Province of Nova Scotia. In this document, you would have to have $100 million surplus per year and have 100 per cent of that go to the debt for 40 years before you even come in line with where we should be in the Province of Nova Scotia. So, you have in this document - and this was the question that was asked - when in this document or when in your mandate or when with your government are you going to even start to pay down the debt of the Province of Nova Scotia?
MR. LEBLANC: Mr. Chairman, we have stated many times on many different occasions that we will basically be doing this one year at a time. The member opposite brings up the challenge of how big a surplus we can generate next year and the year after and the year after that. One of the things that we should do collectively in this House oftentimes is to try to work collectively. Now, I say that as a member of the government. The fact is that we're all asking for increases in spending. Nova Scotians have two things, one of which is to look at their expectations and the programs that we have and which of those are priorities.
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We made a decision in this budget that we would make our spending priorities in Health and also in Education. The other thing we talked about was roads and we made the investment in roads this year through a 2 cent increase in motor fuel tax. All of that increase will be going to capital projects this year plus an additional $10 million. The fact is that we cannot continue to defer maintenance on our roads in Nova Scotia, for too, too long; we have done so and part of the reason is we are also asking for Ottawa to basically partake in that fund.
I will repeat for the member opposite something that I've said many times on this floor, the federal government receives somewhere in the vicinity of roughly $143 million in federal excise tax on motor fuel in this province. I think last year we received $5 million or $6 million, this year we may have received a bit more, but when you look at that equation you're asking yourself, what is the role of the federal excise tax at all if basically they're going to be receiving close to $140 million and giving $5 million or $6 million to the province. We've been waiting for the federal government to come forward with a national plan because we don't anticipate that this will be singly Nova Scotia's Mecca or salvation. If they come forward with a plan, we anticipate that it will also affect other provinces and we have not yet seen that.
Those are the types of things that we look at - Ottawa with a $17 billion surplus and sort of saying, when are you going to step up to the table and when are you going to make those investments in areas that you've received revenues for? I guess we're waiting for Mr. Martin and Mr. Chretien to come forward with those initiatives. But, the bottom line is that I don't disagree with the member opposite. We have to increase spending. Hopefully, he will talk to a few of his colleagues and also ask them to be more reasonable in some of the requests that they have of government for increasing spending, which is part of the equation.
MR. DOWNE: Mr. Chairman, I don't know if he has to worry about this side of the House asking about money - I think he's got enough problems with his own backbench and his own front bench about acquiring money for programs that they promised Nova Scotians they could deliver within the mandate that they had.
If the minister did not move to GAAP and Ottawa - and we've all argued with Ottawa to put money into an infrastructural program, whether it's a road rehabilitation program or whatever, we've all been on the same page of that issue. We've lobbied and it seems to me, you guys are saying, you're not lobbying good enough, leave it to us, we will be able to fix them up, we will straighten them up, we will go up to Ottawa and we will pound sense into them, we will get money just like that. Anyway, we're still not seeing it. But, if you didn't have GAAP and you weren't able to deal with capital the way you are doing now under tangible capital assets and you went ahead with that same program, you're borrowing the money now under GAAP to do the road work, you would be under the previous system. We tried to, we brought in ordinary and capital under one budget, right, under the previous accounting procedure? We had ordinary and capital as one, you would have had to go into
[Page 507]
a deficit and borrow the money to do the road work or the $100 million capital allocations you're doing this year. Is that not true?
[5:15 p.m.]
MR. LEBLANC: Mr. Chairman, I should point out that this is a question that I find perplexing because when we moved to Generally Accepted Accounting Principles, what it did was bring into account all the activities of the Province of Nova Scotia, which meant that they would be shown in a consolidated form, which means that everything went in. We sometimes forget. You look at Sysco. I know the members opposite are very familiar with Sysco, and we're all very familiar with the results and they are not flattering because the fact of the matter is that under government direction, and I won't disagree, that in trying to run a steel mill, Nova Scotia has not been a success. I should point out there are very few governments in Canada, of any political stripe, that have done very well at running steel mills? Why is that? The fact is that we don't belong in that industry. So that was one of the things, that under the old accounting system, the member was referring to. Sysco was not included on the financial statements of the province. So the losses that were there weren't included.
The other thing that happened is that there was also Nova Scotia Resources Limited, a government gas and oil company, which had considerable losses every year. That, for some reason, was also not in the financial statements of the province. When we came into government, one of the first things that we said we would do was to bring about a consolidated financial statement, which everything would be in and accounted for, which meant that we had to show the losses of Sysco. We had to show the losses of NSRL. You could say, what's so important about that? Those are Crown Corporations, should they be in? Well, we've had a lot of debate today about Crown Corporations that are making money and one of them was the Nova Scotia Liquor Corporation. Well, under the old system, we included the money that we made from the Nova Scotia Liquor Corporation, but we weren't including the ones that were losing money.
You can say, why is that? Well, one of them is good and the other ones are bad. If you keep the ones that are bad off the books and you just put them directly to the debt, when you prepare your financial statements, it looks better. Well we said that was not acceptable so we moved to Generally Accepted Accounting Principles and we moved to a form of showing our assets under tangible capital assets. By making those changes, Mr. Chairman, we have made investments which make sense. I am going to bore the members one last time in regard to the investment that we made in a building that is adjacent to Province House and that is the Johnston Building. The Johnston Building is a building that we didn't repair for many years. We didn't repair it under the Tories and we didn't repair it under the previous Liberal Administration to the point that it was leaking like a sieve. Occupational Health and Safety shut the building down and said it was uninhabitable.
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People had to move out and my colleague, the Minister of Community Services, and his staff moved up to the Lord Nelson complex and they've been located there since. The fact is that we're paying rent downtown at a time when the oil and gas industry is in big demand and they want a lot of space. So prices have gone up and we're trying to find space in close proximity to Halifax to provide those services. So under the old system, we didn't fix it because if we fixed it and it cost $8 million or $9 million, we would have to expense it all in one year, so we just put it off until the point that the building virtually fell apart. Well under the new system, we have done that and we looked at that as being a capital project. We've invested in it, we've repaired it and we're going to amortize that building over its useful life. Now I don't know the exact number, whether it's 25 years or 30 years, but it's in that range. By doing that, we're running it as a business. That's the way that we should do it. You don't buy a home and expect people to pay it in a year and government should use the same philosophy.
So, by making that one change, what will happen this year is that the Department of Transportation and Public Works, which currently occupies Purdy's Wharf, because that's where they've been for the last five or eight years, their lease is coming due and they will move out of that building and they will move into the Johnston Building. My understanding is that they're going to save about $1 million in lease costs this year. Governments should makes those types of decisions and the changes that we have made will allow us to make logical business decisions that in the past we weren't making because of the accounting that was being used before. So I stand as committed today on the changes as the day that I met with my staff, shortly after becoming minister, had discussions with them and we agreed to move forward on Generally Accepted Accounting Principles. I'm proud to say that our Premier and our Cabinet agreed that it was the right thing to do, that Nova Scotians should have that type of accounting and we put them in place.
AN HON. MEMBER: Did he answer your question, Don?
MR. DOWNE: No, he never answered my question. I think he wants to start giving speeches here. I'm asking a simple question. I guess the answer to the question is that it would have been borrowed money. You would have had to go out and borrow it off the balance sheet to be able to do that. Somehow or other, you would have had to find a vehicle to put off the balance sheet to do the Johnston Building or any other capital investment like you have now under GAAP. Under GAAP, we can do under tangible capital assets because we're using it as a depreciated base. But you're still borrowing $100 million more than you're bringing in. That was the question I thought I asked you, Mr. Minister (Interruptions) You talk about the assets you're building, does a road appreciate in value, even though you take the depreciated value to the operating expense side? Is a 10-year old road worth more now than it was 10 years ago when it was paved?
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MR. LEBLANC: Mr. Chairman, under Generally Accepted Accounting Principles, assets will be recorded at cost less the amortization. We don't do appraisals and raise them up basically for the value is higher today than that. That would not be in accordance with GAAP.
MR. DOWNE: I agree, Mr. Minister, and yet you continually talk about the fact that it's an accreting asset. I mean, it's a growing asset. So you talk about the Johnston Building over there going to grow in value (Interruptions) I just wonder if you have another Minister of Finance over there now trying to ask a question? Maybe you can ask a couple of questions there. Mr. Chairman, the other aspect I want to mention about this document that I was disappointed in. I was happy to see that your surpluses go to debt, but I was very disappointed in the fact that in this document, as I see this document, it does nothing more than to say, and this graph says it all, that number one, you don't have a specific plan to deal with debt reduction, except you're going to control, hopefully, your spending base as a percentage of GDP. So it allows you to increase the net direct debt of the Province of Nova Scotia each and every year beyond the year 2006 and you're going to say, we're doing that and we're going to increase spending and we're going to do it on the basis of the fact that the gross domestic product on the current dollar basis is going up.
So what I see, at some point in time, those credit cards get used up and you have a problem. Now you're not projecting any surpluses, per se, although you probably, hopefully, at some point, will have some surpluses, but there's nothing here that sends a signal that you, as Minister of Finance, are seriously going to start taking a look at the debt and the escalating debt of the Province of Nova Scotia, not even establishing a line expenditure within the budget as to how you want to go at this. To me, this is not a plan. This is a ticket for you to do and spend more. You talked about it earlier and some of your friends over there, you know, Sysco and NSRL. NSRL was started by the Tories and that created $0.5 billion of operating deficit in the Province of Nova Scotia, unfunded liability by $0.5 billion. Workers' Compensation had $0.5 billion unfunded liability. The Teachers' Pension Fund had a $1 billion operating deficit in its fund. The list goes on and on and on.
It was done that way based on all sorts of reasons, none of which meet the targets of what we're trying to establish today. I was hoping that you would have come forward with a more specific plan in debt reduction no matter what anybody says on this side, what anybody is saying on your side, I'm talking from me to you. I was hoping that you would deal with that because you talk repeatedly about your kids in every speech you've given from one end of this province to another, at a cost of whatever, you talk about your children. You talk about the curse of debt. You talk about the stranglehold that debt has on the future of this province. You talk about the debt being the one issue that will affect us for generations to come and yet there's nothing in this document except showing that you're going to borrow more money every year.
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There's nothing in here to show me how you're going to specifically tackle the issue of debt and I wanted to be able to stand up and say, Mr. Minister, congratulations. You know you can't do it overnight. This took 40 years to get to this point. It took a long time. I think the total debt of the Province of Nova Scotia was $500 million when John Buchanan took over and the debt has been growing for a long time. This does not reduce or turn back to start paying it down and I don't expect it to be done overnight. You can't afford it. You don't have the cash flow to do it. You can't meet all the social requirements and expectations that Nova Scotians have, I understand that, but you do have an obligation to live up to what you preach - every speech I've heard you give - and that's why I'm disappointed in this. I want to ask the simple question why have you not addressed that particular aspect of the debt reduction program?
MR. LEBLANC: Mr. Chairman, there are two or three things in here, one of which is that he talks about the fact that we have not indicated a specific surplus which would actually reduce the debt. We believe that this is an important document and you can't have the discussion about surplus and debt management before you have a surplus. We haven't had a surplus in 40 years and the fact of the matter is that you've got to walk before you can run. Now, the fact is if you read this document, the major foundation of the document or the crux of it is to ensure that you continue its surpluses. There are those in this House who believe a surplus is not important. I will let the NDP speak for themselves. However, I want to say that the situation is that by putting off decisions and basically saying yes to everyone, it doesn't solve the problem. The problem becomes compounded.
In this document we are putting forward, that is the major point of this document, is to continue with a surplus. That is the foundation. The second one is to work on increasing the amount of the surpluses whereby you can reduce the debt. The member opposite says I speak about my kids often in my speeches and I do and I speak with passion. I have three children, Mr. Chairman, and they're 19, 17 and nine and I know one thing, when I leave politics - and I learned one thing the hard way in 1993, you don't always leave at the time of your making, but when I left - I had things I had left to do and I hadn't done them. One of the things that I said when I came in this time was that we would change the way that the province operates. We would operate in an open and a transparent process and we did that. We brought about GAAP. We brought about some standards. We brought about the inability of me to modify things and I shouldn't have the ability to do that. Nova Scotians should know that what they see are the facts. They should know, whether they're a citizen on the street, whether they're a chartered accountant, or whether they're a CGA, that the numbers that they are getting are the facts.
Mr. Chairman, I believe that those principles are important. We, as a government, believe that they're important. The fact is that those three kids whom I hold dear to my heart, I want to make the right decisions for them. I have made them and I am not wavering in the principles that I speak of every time I speak about this situation when I refer to my kids. I
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want to make a difference, I am making one, and for that I will never apologize. (Interruptions)
MR. DOWNE: Mr. Chairman, one of the quotes, "Borrowing is borrowing." There are quotes in here that go, "Debt is debt. Borrowing is borrowing." Mr. Minister, what you just said is great, nobody would disagree with that, but that is not what I'm asking you. The rhetoric is one thing, the fact is there's nothing here to reduce the debt. Now, all the platitudes and all the comments you just made and all the emotions and sincerity and everything else that's there, I don't disagree with, but you're still not answering the fundamental question.
[5:30 p.m.]
The debt is continuing to grow and you don't have a plan to deal with the debt and that question I go back to you with, Mr. Minister, not for a speech, but what you say and what you do are two different things. I expected a man who has been, you admitted in this House, with a government that spent its way into the history books in a bad way, that you were going to turn the corner. What you've implemented is a program that I tabled in the Legislature, but at the same time you are now allowing the debt to continue to grow similar to what we had during that time when the debt of the province continued to grow, that you, yourself, feel bad about, and I respect you for that, but you know there's nothing here that stops that. The rhetoric is great, but, you know, the actions are more important and you want to leave this province in a better place. I do, too.
I will give you a couple of examples. The DHA debt, the DHAs have debts and they're going to have more debts this year. (Interruption) Well, I'm not a big betting person, but I would bet you on that one a pound of lobster that the DHAs will have a debt and if they don't have a debt, then you're going to have to give an appropriation of funds to make sure that they don't have a debt, but they've never lived within their means yet. (Interruption) Maybe a couple of pounds of lobster, a one pound lobster is not much to eat and I will trade you a couple pounds of chicken for a couple pounds of lobster, Mr. Minister.
But the DHAs, you know, the capital, the debt of those areas, we've got school boards. We've got liabilities within school boards. We've got Family and Children's Services that are a wing of government that have debt and they're growing that debt. They have unfunded liabilities with some of the homes that they run and the list goes on. So it's not all perfect what you talk about over there. It's not that you've got a big white paintbrush that says everything is perfect over there. You've got stuff in there that's not on the table that is your responsibility, or somebody's responsibility, that will fall back to government and you know that and I know that.
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So all the rhetoric in the world does not answer this fundamental question that, number one, it's not a plan for debt reduction as I would see it and I just want to tell you, Mr. Minister, I thought for sure you would have sent a signal to your colleagues and all Nova Scotians that from this day forward there will be some number in a budget that each year you will put money against the debt of the Province of Nova Scotia even though you're growing the debt, just to send a signal that you're serious about it. I don't know if you couldn't convince the other guys, you know, I mean the Premier stated repeatedly the debt will not grow. You said that the debt would not grow. Well, the debt is growing.
I want to ask you a question, Mr. Minister, in regard to your Budget Address where you talk about for the first time in 40 years the budget is fully in balance; 40 years ago was capital and ordinary fully in balance?
MR. LEBLANC: Yes.
MR. DOWNE: Well, Mr. Minister, how can you say in this House that for the first time in 40 years, if 40 years ago ordinary and capital were in balance, how can you say that this is the first time we've had a balanced budget like we've had 40 years ago when, in fact, the debt is continuing to grow at a rate of $273,000 a day? How can you say that and be factual?
MR. LEBLANC: Because, Mr. Chairman, the honourable member knows very well, if you look at the statements that go back, accounting has changed. Accounting has changed in the 1960s, probably to the 1970s, 1980s and 1990s, but the most dramatic changes that really have come is in regard to the 1990s and how the Public Sector Accounting Board, which is a part of the Generally Accepted Accounting Principles concept, came about as to how public institutions should account for their financial statements and in the past, Mr. Chairman, that wasn't there.
The fact is that if you look back at the history of Nova Scotia, for 40 years basically we have not tackled the difficult problems that are there and no matter what happens is that we as a province have basically suffered from it. The member opposite has said a few things, one of which is that I was part of a government that contributed to the debt and I will say the answer is yes and the fact of the matter, I was a member of John Buchanan's Government and we contributed to it. I don't argue for a second. We, as a government, basically made decisions at that time, they were probably in line with many other provinces in how we did that and looking in hindsight, we lived beyond our means and if I said differently, no one in this House would believe me anyway because we all know that isn't the fact and the significance of that, Mr. Chairman, especially with the effects of the high interest rates that we had which followed after that, added to the debt and added to the difficult decisions that we have here in Nova Scotia.
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But what I should point out for the member opposite, is that many of the provinces also had the same circumstances and also contributed to their debt, but what happened is that they perhaps put their fiscal house in order quicker than Nova Scotia did and so that reinforces again as to why we have to do the difficult things that are here. I should point out, as Minister of Finance or as a member of Cabinet, that it's a hell of a lot easier spending more money than it is living with less. These are difficult decisions that we make. They affect many people. They affect many areas of the province and we have to give a lot of thought to it. The fact of the matter is that you have to make decisions in different areas no matter what happens, that is the reality of it, and we have made decisions whether or not, it was making a very conscious decision as a government that we're no longer going to stay in running Sysco. As much as that was difficult in the Sydney area, and it was difficult there, there were a lot of people affected by the situation. I think many people in that area knew that government did not have a role in the steelmaking industry and as such they basically had to remove themselves from it as much as it was difficult.
We tried to be responsible on how we dealt with many of the people who worked there in trying to deal with them compassionately, but the situation is that we did make the right decision and as a Cabinet we also had to stand up and defend it. Am I out of time, Mr. Chairman?
MR. CHAIRMAN: Yes, I was just allowing you to finish replying to the question by the member for Lunenburg West, but the Liberal caucus time has expired and now I would like to recognize the NDP caucus.
The honourable member for Halifax Fairview, it is 5:37 p.m. you have one hour in turn.
MR. GRAHAM STEELE: Mr. Chairman, there are lots of things that I don't understand about politics. There are lots and lots of things that I just don't understand and one of the things - I will let other members list all the things I don't understand about politics - but I will tell you one thing I don't understand. I don't understand how it is that politicians can't seem to deal with what their opponents are actually saying. I don't understand how it is that people think it's acceptable to stand up and make things up about what their opponents are saying. Democratic debate is about, you know, an interplay of ideas. We may not agree on things, but we have that interplay of ideas and the best ideas come to the surface. I mean that's the theory anyway although there's precious little real debate in this House because, as we all know, our system of government has come to be dominated by an executive that makes the decisions elsewhere and then all this is is a place for them to fold their arms and wait for the time to run out, but the minister attributed to me and my Party something that we have simply never said.
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I know the Premier likes to say it. I long ago gave up on the illusion that the Premier was a person who was above politics, okay, I gave up on that. He's a very political animal and I don't put it past him to make things up, but I was disappointed to hear the Minister of Finance say the same thing and this is a position that he attributes to the NDP which I have never said, the Leader has never said, the Party has never said. In fact, what I did say - well, I will table these documents for the minister so he can read what we actually did say - and my challenge to the minister is, I will have a debate with anybody any day, but make sure it's over what we're actually saying and not things that you're just making up, Mr. Minister, and that's over this idea, Mr. Chairman, that the NDP says that, you know, the budget should be balanced at the right time and now is not the right time.
Here's another document. You said it, Mr. Minister, and it's on the record and if we get a transcript, we will see it. We did not say that. What, in fact, we did say was - I specifically was complaining about the way the minister has not been forthcoming with information. I will say and I will assert again that the minister has not been forthcoming with information to the people of Nova Scotia so that nobody in the process leading up to the budget has been in a position to judge the rightness or the wrongness of what the government is doing and what we have said and what I wish to heavens the minister would actually address at some point is the fact that this government has put a political imperative ahead of doing what is right for the province.
Mr. Chairman, the reason that I am involved in politics at all is very simple. I just want good government. That's all I want. I just want good government and we sure as shooting have not gotten that out of the two old-line Parties. We have not had good government and it just makes me mad, it makes me so angry when I think of what governments did 15 years ago and 20 years ago that my generation is still paying for and what makes me even angrier is that my children are going to be paying for it because any reasonable projection of when we're going to tackle this debt problem has us looking at something like the year 2020 when we bring ourselves back into line with other provinces.
Mr. Chairman, that's what we're talking about when my toddler son and my yet to be born son are taxpaying adults, that's when we're going to talk about bringing Nova Scotia back into line even with the rest of Canada and so let's at least have a debate about what the right direction is for Nova Scotia and not have the Minister of Finance make things up about what we are here saying on this side of the House because if the minister wants to know, I will defend every word that I've ever said and every word I've ever written, but I will not put up with a minister who just makes things up. Let me table this letter to the editor which the minister made me think of and I'm complaining about that minister holding information back from Nova Scotians. Let me table this. Here's the NDP's paper that we issued before the budget which the minister may find very interesting because there's one heck of a lot more in it than the paper that he released last week where he may as well have issued blank pages for all that it said.
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Mr. Chairman, I will defend everything I've ever said and everything I've ever written, but I will not put up with a minister who just makes things up or a Premier who just makes things up. I don't think that is going to get us anywhere close to good government. The Tory Party has got a lot to answer for. It was that crowd who was in when this debt problem was created. It was that crowd who was in. In fact, it was that minister and the Government House Leader who sat around the Cabinet Table making the decisions that I and my generation are paying for and that my children and their generation are going to be paying for. I would think that I would see a little less arrogance from that side of the House when we're talking about how we're going to solve this problem. I would think we would see a little less arrogance from that side of the House.
Mr. Chairman, I would think that they would want to be maybe a little bit sorry for what they did and maybe apologize for how they got us into this debt problem in the first place, but instead we see that government putting politics ahead of what's good for the province again, just like the Buchanan Government did. They put the politics of spending ahead of doing the right thing. Well, this government is doing something different, but it's just as wrong because what this government is doing is saying that the only thing that matters is a balanced budget. Never mind the fact that the debt is going up this year and next year and the year after and the year after and never mind that interest payments on the debt are going up this year and next year and the year after and the year after and the year after.
[5:45 p.m.]
Anybody who thinks this budget has solved Nova Scotia's debt problem is wrong, because it doesn't. It does not do anything to solve the problem. In fact, what it does is make it worse, because what this government is doing is ignoring the future costs and the future problems that they are creating in this budget, like Seniors' Pharmacare. If the minister wants to talk to people who are mad at him, I have lots of people who are; I will take him to the door of any senior in my constituency who is enrolled in the Seniors' Pharmacare Program. What this government is doing is increasing the co-pay and the premium on seniors so that many of them are now making choices not to enrol in the program or they are making choices not to take medically necessary drugs because they can't afford it. They can't afford it, and absolutely reputable studies from Quebec show that when you do that there are higher health costs down the road. You're not saving any money by doing this, you're costing money.
How about schools? Internal Department of Education documents show that the cost of deferred maintenance in Nova Scotia schools is $0.5 billion; $0.5 billion that it would take to bring our schools up to standard. It's almost an incredible number, Mr. Chairman, but this government doesn't care about that because that's in the future; that's past the next election, so they're not going to deal with this. In fact, they've cut the budget for school renovations. So I would have thought that this government would have maybe a little humility about how they're going about balancing the budget, but perhaps that's a little bit too much to ask.
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Mr. Chairman, I would like to ask the minister about financial guarantees or contingent liabilities. I wonder if the minister has a list of how many guarantees we have out there and specifically an itemized list of what they are? I don't mean a list rolled up to the high level, I already have that. Will the minister table an itemized list of the province's guarantees?
MR. LEBLANC: Mr. Chairman, I thought it was listed in the speech, but it's not. I will get that, that's no problem, but I want to go back to the member. The member says that he's ready to debate issues all the time and that I said something that was not true. I'm ready to stand by my convictions and the fact that the NDP has said they will balance the budget when it's right, and the problem is with the NDP that the time will never be right. The member can say that any time, any place, but that's not the case. (Interruptions)
MR. CHAIRMAN: Order, please. The Minister of Finance has the floor. (Interruption) Order, please. I would ask the member for Halifax Fairview to save the question for an appropriate time. I would say once again that the Minister of Finance has the floor.
On a point of order, I recognize the member for Halifax Fairview. Order, please. Order from both sides. The member for Halifax Fairview has the floor.
MR. STEELE: The minister again has attributed a comment to me and my Party and what I'm asking him for is to table the document where he claims that this thing has been said.
MR. CHAIRMAN: Once again, that was a question.
MR. LEBLANC: Mr. Chairman, the member brings up a good point. The NDP say different things in different areas - try not to write it down because when you write it down, people will notice it more. The fact of the answer, if you listen to the debates, if you listen to the comments from whichever Leader is standing up, the fact is they always say that they are the compassionate ones, they would always wait until the time is right, that we are preoccupied with balancing the budget.
Forty years, Mr. Chairman, 40 years is a long time; we told Nova Scotians when we would balance the budget and we have delivered that. The member opposite can say it any way he wants, the facts speak for themselves. In regard to the direct guarantees that he is referring to, if you look in the Public Accounts Book, at the back there is a list of the direct guarantees that are there which are, of course, the Public Accounts is the ending financial statements of the previous year. The member opposite is asking in regard of this year, if he could clarify that question I will try to find out for him, and if I can get him that information in advance of the Public Accounts I will endeavour to do so.
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MR. STEELE: Mr. Chairman, I noticed the minister backed off pretty quickly when I challenged him to table a document where this thing has been said, because apparently now he's saying, well, it's not actually written down anywhere, you've got to read between the lines. The simple fact is that the Tory Party is making it up. I've given the minister the documents and if he wants to base what he says on the documents I've given him of things we actually said, he's welcome to do that.
So, Mr. Chairman, on the financial guarantees, what I was asking for was a specific itemized list which is not in the Public Accounts, and will the minister table a specific itemized list, it's rolled up at the high level, Mr. Minister, for example, under industrial assistance there's like $85 million, I'm not asking for the rolled up number, I'm asking for the itemized item-by-item list of financial guarantees that have been given by the Province of Nova Scotia?
MR. LEBLANC: Mr. Chairman, I will refer the member to Schedule 6. He is saying that he would like to have even more detailed analysis than that. I will endeavour to see what I can do. I want to point out that in the past these are things which were not disclosed in financial statements whatsoever. Under Generally Accepted Accounting Principles these guarantees should be and have been shown. There was also a reference beyond that and the member knows what I'm referring to. On Page 29, Schedule 6 of the Public Accounts of the Province of Nova Scotia for the fiscal year ended March 31, 2001, the situation is there is also some additional information subsequent to that on Page 30 and Page 31 which talk about Direct Guarantees, but I will endeavour to get some details from him.
But we have situations here, even the Department of Education's Student Loan Program, I have no intention of listing every student loan that we have guaranteed for the Province of Nova Scotia. There would have to be some reasonableness in what we're going to be showing here, Mr. Chairman. Otherwise, the amount of resources dedicated to providing this list would be considerable. I will endeavour to be reasonable in what we can provide, but the information is being shown here. The level of detail that he wants I think perhaps would be a bit cumbersome for government to provide, but I will try to do what I can.
MR. STEELE: I think the minister knows very well I'm not looking for the name of every student with a student loan in Nova Scotia. Why can't the government just be reasonable? The minister knows that's not what I'm looking for. So why would he suggest that that's what I'm looking for.
Mr. Chairman, my next question for the minister is, are these guarantees included in this year's budget and, if so, where specifically in the budget documents do these guarantees appear?
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MR. LEBLANC: Mr. Chairman, the guarantees are not necessarily the debt of the province. The guarantees are information that is provided to the financial statements, and the fact is if you're going to prepare financial statements in accordance with GAAP, the Generally Accepted Accounting Principles, it is important not only for Nova Scotians to know that, but it is also important for the bond rating agencies and other people who look at our financial statements to understand what guarantees the province has given. If we have guaranteed debt to a student, and I use that example, then the fact is that if that student does not pay that debt, then the Province of Nova Scotia will have to do it on their behalf.
The same thing - I will use an example - within this harbour, some of the vessels that are being built by the shipyard for the offshore have some guaranteed provisions from the province. They were started under the previous administration. There has been some modification subsequent to that. Those are guarantees, that if they were not paid, the province would have to basically step in. These are things which have a relevance to the financial statements and as such should be disclosed. The fact is, Mr. Chairman, we have shown them in the statements. That is something that in the past was not done, but I think it's important that it would be done.
Reference to the member opposite, if I'm going to give an endeavour of releasing information, then I think it's important that I clarify what I will endeavour. If he thinks I'm being picky on that, I think it's important that if I say something that I accomplish it, otherwise the member opposite may very well say that I'm not as forthcoming as I should be, and the fact that I tried to clarify it I think is only reasonable.
MR. STEELE: Mr. Chairman, perhaps the minister could have a word with his colleague, the Minister of Health, whose department has appeared before the Public Accounts Committee and has repeatedly failed and/or refused to deliver on information that representatives of the department have promised to the committee. So if the minister is trying to clarify just so he can deliver the information, perhaps he should have a word with his colleague.
One of the other things I don't understand about politics is why simple questions get such complicated answers. I think the minister just said, no, that loan guarantees are not specifically in this year's budget although they're contingent liabilities; they would be a liability if certain events happened. So the province could very well be called upon to make good on these loan guarantees. That's why it's important, I think, for Nova Scotians to know exactly what they're on the hook for.
In the document the minister referred me to, it's referred to at a very high level. For example, under the Industrial Development Act, we're on the hook for $99.5 million in loan guarantees. That's under the Authorized column. Under the Utilized column, $85 million. That's $85 million that we might be liable for, but I don't see it anywhere in the budget estimates. I think Nova Scotians have a right to know who it is that we've promised this
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money to, what events would have to happen before we are liable for this money. To just roll it up at the level of saying, well, our total is $85 million, without knowing how many accounts it is, I don't think is enough information.
So, Mr. Chairman, let me move on then to another one of my favourite hidden government funds. I know this is a small item, but it is one of my favourites. The Nova Scotia Government Fund, which was a creation of some bright spark under the Liberal Government in the mid-1990s. It was designed to be a fund to take the funds of immigrant investors and invest them in Nova Scotia. This would all be by way of qualifying them for immigration to Canada. Now I was intrigued to see in this year's business plan of the Nova Scotia Government Fund, specifically on Page 131, that this fund is still active and that there are two projects currently being moved forward in order to qualify these funds under federal immigration rules. I wonder if the minister could let the House know what exactly are the two projects on which these funds are being spent?
MR. LEBLANC: Mr. Chairman, on this one - I'm trying to go by recollection - this is a problem that we inherited from the previous administration. So there was a fund that was administered - this is a national program that provinces could take advantage of. The purpose of the fund was to encourage immigrant investors to come to Canada and make investments whereby the funds could be invested for certain very pre-defined purposes. One of the big problems we have in Nova Scotia is the previous Liberal Administration made the window so small on this issue that they found it virtually impossible, or very, very difficult to find investments they could put to use by the people who did come to Nova Scotia or who invested in the fund. We found ourselves in a position of virtually being non-compliant with this issue and finally found an investment whereby we could qualify.
I will say, Mr. Chairman, that it was a difficult fit, a lot of meetings and a lot of effort. The fact of the matter is that basically it was the way that the project or the fund was drafted that made it very difficult. My understanding of this is that there were two different investments that were made. I would like to make sure that I have it right before I would give the member the points. It wouldn't take that long to find out. I will tell the member opposite I will provide those two investments. The other issue that is here is that, as we move forward, as the investments go forward, we are to reimburse the people who invested in this fund. People may ask us whether we want to have more of these in the future if the federal government comes forward. I would like to say that if we do, we would probably like to have it a little better thought out, both for the investors and for the Province of Nova Scotia because this one was poorly designed. I can tell you that staff spent considerable time and effort trying to find a way to comply with it, and we did not receive very much co-operation from Ottawa; basically, exactly what you sign is exactly how you have to do it. I can tell you in all honesty that it was a difficult one for staff and a lot of time and effort was spent to try and move this along. But there were two investments that we made and I will get that information for the member. I'm sure that my staff can get it in short order.
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[6:00 p.m.]
MR. STEELE: Mr. Chairman, just for the record, I'm referring to Page 131 of the Crown Corporation Business Plans book where it says, ". . . the NSGF has been able to identify the two investment projects required to meet the federal program requirements, with the second project being finalized at this time." So somebody in the department is working on it. Somebody knows the answer to my question. It's a very interesting fund because it was created to try to provide some kind of opportunity for immigrants to invest in Nova Scotia and it just doesn't seem to have gone very well. So I was interested to see, in reviewing the business plan, that it's still alive and kicking and, in fact, new plans are being created for this pool of funds taken from immigrant investors. If you read the business plan of the Nova Scotia Government Fund you find out that it hasn't actually done anything. That really what it has done is it has taken the investors' money and then held it and invested it, and that's all it's done. So my question to the minister is, to the minister's knowledge how many people have qualified for immigration to Canada on the basis of their investment in this fund?
MR. LEBLANC: Mr. Chairman, I'm not aware - most of this happened before my coming to the department, but I'm sure that's a matter of record. Without giving names, I'm sure the member doesn't want to have the names, but I will endeavour to do that at the same time I get him the two funds. I should point out, just for the edification of the member, my recollection of this is that the two have been finalized; that differs with the business plan on that but at the same time I will clarify when I give him the information of the two funds as to whether they have or have not, just to make sure that you're perfectly informed of the issue.
MR. STEELE: Mr. Chairman, I would like to move on to a couple of very specific line items in the Department of Finance's Estimates. The first is on Page 12.10. It's on the subject of prior years' recoveries, which sounds very technical, and in some sense it is, but as I said, because the minister is claiming so much for his fictional surplus of $1.3 million, which, as I said, is one-quarter of one-tenth of 1 per cent of the government's overall budget - the page that I'm going to refer to is 12.10 - so the only reason that I would focus on this particular line item, which is a few million dollars, is because the slightest change in the minister's numbers and he doesn't have a surplus anymore. In fact, if I could just get the minister to admit that the Health Research Foundation estimate is fudged, just straight out fiction, then his $2.3 million surplus has disappeared. Of course, in the budget documents it was $1.3, but I found $1 million for the minister and gave it all back to him - which I thought was very generous of me - so now the surplus is $2.3 million. If the minister would only just admit that the Health Research Foundation item is just pure fudge, then his surplus has disappeared.
Now I couldn't get the Health Minister to admit that, but I'm sure I can convince the Auditor General to take a look at it, Mr. Chairman, because I've heard no reasonable explanation at all from anybody about how an item can have $2.5 million allocated to it year
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after year, and $5 million spent year after year, including this year, where the Department of Health acknowledges that their commitment is $5 million, the Health Research Foundation says that the obligation from the Department of Health is $5 million, but if you look at the budget it says $2.5 million. So I don't think it's an exaggeration to say that that's just a made up item. It's just made up. It's just fiction. There are a number of items like that sprinkled throughout the minister's budget, but I digress, because the item I really wanted to talk about is on Page 12.10.
Prior years' recoveries, which since then have been moved in the ongoing game of cat and mouse that I know the minister likes to practice of making sure that one year's Estimate Books are never quite comparable to the previous year's Estimate Books. In fact, the main thing they did this year, Mr. Chairman, was they took the wage settlement, not just for this year but retroactively over two years and then imbedded that in the wage costs in each line item for salaries so that this year's numbers are perfectly incomparable to previous year's numbers. Anyway, again, I digress about the way the minister talks about moving to Generally Accepted Accounting Principles, which he has done. I know that was in our Party's platform in the last election. I'm not sure if it was in yours. I'm not sure if you included that, Mr. Minister, in the 243 promises in that book, but it was certainly in ours. Then the minister will do things like that. They will do things like the Health Research Foundation or, for the second year in a row, arrange the estimates so that they're not directly comparable to previous years.
Last year it was because there was so much restructuring. It was literally impossible to say whether a particular allocation for an item had gone up, down or sideways. It was simply impossible but, again, I digress, because what I'm really talking about are prior years' recoveries, which are forecast for the last fiscal year, $857,000. Once you take into account that they've been shifted to another line item, this year clock in at $3,018,000. That's significantly higher, in relative terms, than anything that's happened over the previous two years. I wonder if the minister could explain why this particular item has ballooned by well over $2 million?
MR. LEBLANC: Mr. Chairman, the honourable member opposite is saying that we're playing with numbers. There was no such number of $3 million. Can you refer us to where you're talking about the recoveries this year being $3 million, because in this change - before I tabled the budget, I answered questions in the Red Room and I indicated that in my Department of Finance that recoveries that were shown in the Department of Finance in this budget would be shown in the restructuring, rather than in my department. I want to point that out because of the fact by doing that, it seems that my expenses in my department overall are going up, which, if you are to compare apples to apples, that is not the case. So the member opposite is saying that the recoveries we're scheduling to be $3 million. Is that what you're saying?
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MR. STEELE: Mr. Chairman, I'm starting to think that maybe I know this budget better than the minister does, because if the minister looks down at the foot of Page 12.10, there's a note that this particular item has been moved over to restructuring costs as unallocated recoveries. So you flip to Page 1.7, which is the new home for this particular item, and you see that it's set at $3.018 million. So my question to the minister is that according to the budget documents this is the same line item simply moved to a different place, so why has it grown by over $2 million?
MR. LEBLANC: Mr. Chairman, this is not only coming from my department, there are other recoveries in that and the member opposite is not aware of that and that is the situation; the member is indicating that this comes only from Finance, and that is not the case. So when he's trying to compare apples to apples, there are a few oranges mixed up in between.
MR. STEELE: Mr. Chairman, I sincerely apologize to the minister, but I was having a necessary conversation with a colleague. I wonder if the minister could simply repeat his answer? For heaven's sake, don't elaborate on it, just repeat it.
MR. LEBLANC: Mr. Speaker, four years and seven years ago (Interruptions) I should point out to the member opposite, the $3 million that he's indicating in the restructuring is not only from the Department of Finance that is there, there are other recoveries beyond what our department has. So for you to be trying to compare that just to the Finance number, it does not compare. I don't disagree, however, that is not how it was tabulated.
MR. STEELE: Okay, my question, Mr. Minister, was - no, I can't resist, Mr. Chairman. I'm going to make a comment first. It's not my job to figure this stuff out, Mr. Minister. It's your job to explain it to the public so that they understand line items and how they're comparable from one year to the next. It is not my job to figure that out. It's your job to explain it. Now according to the budget documents this is the same line item that's been moved to another line. Now the minister says, well, we haven't just moved it, but we've made it different. So my question to the minister is this, how does this compare to the previous year's number? How much of the $3 million is what used to be in Finance, and what else has he thrown in there for the purposes of confusion?
MR. LEBLANC: Mr. Chairman, I find myself perplexed. It is not his job to do it. We're in the estimates. If he has a question, I will do the best I can to answer him. The fact is whether or not were getting into speeches. If you ask a question, I will try my best to answer it.
The other issue that is in here, Mr. Chairman, and I believe I'm accurate when I'm saying this, is there was a $2.5 million recovery under the offshore from the federal government that we were entitled to - it's called the Sable Benefit Plan. It is $2.018 million that we were qualified for. That is part of the component that is in that. The other issue is that
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the fees on the FOIPOPs are in here, $0.25 million; and the last one is a prior year's recovery of $750,000. Those are the three items that are there.
MR. STEELE: Mr. Chairman, it's my job as a legislator to debate with the government the public policy implications of what its doing, of the choices that its made. It's not my job as a legislator to try and chase line items from a previous year and see where they've ended up in the current year. That's the job of the Minister of Finance. The minister knows very well that part of the job under Generally Accepted Accounting Principles is to ensure that the statements for one year are comparable to the statements for previous years because otherwise members of this House spend their time just chasing down what the correct figures are, never mind the policy implications of them. So according to the minister, if I understand him correctly, a new item has appeared - $2.018 million. I wonder if the minister could elaborate on that and explain exactly what that item is?
MR. LEBLANC: Mr. Chairman, we have qualified this year for funding under the Sable Benefits Fund. I do know that my colleague, the Minister of Economic Development, the Minister responsible for the Petroleum Directorate could probably go into more detail. I could try to elaborate, it's going to take me some time to get that information. I do want to say that we qualify for those recoveries in this year. So if the member could get the answer from my colleague or I will endeavour to get it to him at a later date, otherwise it will take me a little longer here and I think he probably has some other questions he wants to get to, or I can give few more details.
MR. STEELE: MR. Chairman, I will get that information from his colleague because, as the Premier said, all we have to do is ask and we will receive it.
[6:15 p.m.]
I would like to turn to Page 13.2, if I could, of the minister's estimates. This is under Debt Servicing Costs. There's another item that caught my eye because of the substantial change year over year, and that is under the item Foreign Exchange, which is the very last item on Page 13.2. The forecast for the last fiscal year is $56.2 million, actually $56.3 million. This year it's down to $27.9 million. I wonder if the minister could please explain what exactly that item is and why has it gone down by $28.5 million in one year?
MR. LEBLANC: Mr. Chairman, I'm going to give the answer as clear as I can to the member, and if my staff have anything else to send down on this one here, I will add to it because I want to make sure that I give the member as full an answer as I can. Part of the situation regarding foreign exchange is that the debt reduction that we have in our foreign exchange will have a positive impact in regard to improving a lot of our expenses, because we've had some problems in the past with a lot of our debt being in foreign currency and the fact of the matter is that our currency against it has usually not improved, it has gotten worse.
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The banks keep telling everybody every year that the dollar is going to improve. Usually if you bet against the banks on foreign currency exchange rates, you would probably end up making money. On this issue, my understanding of it is that as they become due in any one year, you would have to record the foreign exchange loss on that, but on this issue, if my deputy would have been here I could probably give you the answer today and that's no reflection on my assistant deputy minister, but I will try to get a very clear answer on that. I am sure there's one I can give; rather than hold up the committee's time I will endeavour to do that for the member.
MR. STEELE: Mr. Chairman, it's a good example of how the stuff in the Department of Finance's estimates, which on some level is very technical and hard to understand, and Heaven knows it's hard for me to understand, it absolutely dwarfs other items in the budget. That one item, the change in that one item on foreign exchange is bigger than most departments. When you're talking about a government that's cutting less than $1 million to transition houses, or purporting claiming to save a minuscule amount of money by abolishing the Arts Council, or imposing real hardship on seniors through the increases in Seniors' Pharmacare, or downloading costs onto the poor through higher user fees, this is absolutely dwarfed by this one line item where just like that in the snap of a finger, $28.5 million of expenditure gets dropped off for reasons that are not entirely clear to me even after the minister's explanation.
I take the minister at his word that he will have one of his staff people explain that to me fully and in a way that I can understand so that we understand why it is that this particular line item, which the citizens of Nova Scotia would never see, accounts for $28.5 million in lower expenditures. It's another sign to me, Mr. Chairman, that the tiniest change in the world economics makes changes in the minister's budget that can either increase the minister's fictional surplus or make it disappear entirely and that these kind of things deserve a lot more debate than they get.
So I have one more question before I turn things back over to my colleague from the Liberal caucus. In reviewing the salaries of people in the Department of Finance - and I know there's a good explanation for this, I just forget what it is - the minister will be aware that at least four of the highest paid civil servants in Nova Scotia are in his department, including a person who, in last year's Public Accounts, was earning $190,000 which is more than the highest paid deputy minister. I wonder if the minister could remind me what it is exactly that the people do who are earning well in excess of $100,000 and who exactly it is that we would be competing with in bidding for their services?
MR. LEBLANC: Mr. Chairman, the member opposite brings up a good question. It's the one about $194,000. That is a deputy minister who was seconded to the Nunavut Government. When he's there he is being paid and we are being reimbursed fully for that salary and, as such, this is a former Deputy Minister of Finance who went to Iqaluit to work there, and so that amount was what was paid, however, he was fully reimbursed.
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There are three other individuals who have significant salary levels, Mr. Chairman, and the situation is that this is in our Investment and Treasury Services. These are all people who have done extremely well in that division. They work with a committee of many different people, especially in the investment side. There's good labour representation. There's David Peters. There's also Greg Blanchard. There are two other individuals, who are here, and we've done extremely well. I discussed this at length the other day. We also have Jim Kavanagh and also Bill Redden from NSTU and also the deputy is on that. We've done very well, and the fact is that was one of the changes that I think really has helped turn around the Public Service Superannuation Fund and also the NSTU because both of them basically are invested as a group.
I was mentioning the other day in my opening comments how well we've done overall, and that's really attributable to the people we have. They are competing against the private sector. There was a report done in 1997, I believe, by the former administration, and the Auditor General had also said we should review performance especially in that section and we have done that. This is basically a base salary and also performance-based pay. If the member has any more questions over and above that, I will endeavour to answer them.
MR. CHAIRMAN: The honourable member for Lunenburg West, with 16 minutes, I believe - I will check that anyway. You have the floor.
MR. DONALD DOWNE: Mr. Minister, you made a fair amount of fanfare about the fact that we can amortize capital spending over the lifetime of the tangible capital assets. Could the minister tell the House how much has been budgeted for maintenance specifically on issues such as schools?
MR. LEBLANC: Mr. Chairman, I would have to look at the Estimates of Education. I'm sure I can find that. I don't know the number here, but if the member wants to take that as notice, I will do my best. If he wants to get to another question, rather than hold up the committee of the House.
MR. CHAIRMAN: The member for Lunenburg West, you do have an hour in turn. I apologize for that. So you have the floor.
MR. DOWNE: I have an hour?
MR. CHAIRMAN: It's your turn and you're allowed to go one hour. I thought the member was giving you the remainder of his time, but indeed that's incorrect. You have the floor for up to an hour.
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MR. DOWNE: Thank you. Mr. Minister, could you also tell me the numbers, besides schools, for hospitals and for highways under the capital. (Interruptions) Well, on the whole issue, we're amortizing - we're doing it for buildings, so it's Education and hospitals as well, what the budget numbers are for the maintenance and upkeep of those facilities?
MR. LEBLANC: Mr. Chairman, first of all, I just want to make sure that I understand the question because he also talked about capital. The first one you were talking about the repairs and renovations to schools. The second time you talked about hospitals, you're talking about capital, and I know if you're talking about renovations or capital. I wanted to point out that there is a TCA, tangible capital assets schedule that also talks about the amount that would be amortized in this year. I will try to find that and bring it to the member's attention, and rather than hold up the committee's time, I will do that.
I should point out also that if you're looking for - could you just clarify, I'm sure I can find the amount for renovations for schools, that should be relatively easy, the other issue in regard to Health, could you just clarify what you want?
MR. DOWNE: Mr. Chairman, the issue is that under the capital, when we build a building or make major renovations to a building, then there's a life expectancy to that building. Maybe it's 10 years, maybe it's 20 years, whatever the period will be, but during that time there has to be money allocated not only to service the capital portion of the depreciation but there also has to be money there for renovations and repairs because undoubtedly you're going to have renovations and repairs to schools and hospitals. My question is, is there any money allocated in those budgets for those specific issues?
MR. LEBLANC: The answer is yes, there are monies there for repairs. I should point out that there are criteria for whether or not an issue, repair or renovation to a school is a capital item. In last year's budget we had put issues of capital on schools, that when we did the work the Auditor General - after some discussions with him - said they were of an operating nature rather than a capital. That was one of the issues - that we spent the same amount of money that we planned on repairing schools, however how it was reported changed, because the Auditor General said that had to be an operating expense rather than a capital, and that had an impact on our financial statements last year.
I should point out that for every budget that we table, we are trying to make refinements. The critic for the NDP says that we should try to make them comparable, and his point is well taken - the fact is every year we're trying to make improvements and every year we are, and eventually we will get to the point that they are much more comparable. That will make it a lot fairer for the Opposition, but it's also better for us to be consistent in what we do and I should point out that we've changed many different issues, whether or not it's tangible capital assets or pension valuation - those are all issues which are major accounting changes that as you move forward the staff will probably be making some
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refinements. I appreciate from the opposite side a lot of times that trying to understand all the details can sometimes be difficult and we will do our best to explain them.
MR. DOWNE: It's hard to understand as much as hard to follow. It certainly allows a certain amount of latitude by the minister to change direction in the middle of the stream sometimes and move things around and possibly find places to hide some money or this or that - not that this minister would ever, ever consider doing that - may he get hit with a bolt of lightning for even suggesting that, but nevertheless there is a problem with trying to get you down to a set of guidelines that you're going to stay with all the way through.
Could the minister table in the House his calculations as to how he arrives at the idea that this is the first truly balanced budget? When I asked the question earlier today and we talked about capital and ordinary was balanced 40 years ago, and this budget is not balancing capital, can you explain to me how you can justify saying this is the first time in 40 years that we're fully in balance?
MR. LEBLANC: By today's accounting rules, that is exactly what we have done. If you want to go back in time, there were many charges that were put directly to the debt. I'm in no way trying to diminish the important roles of ministers in the past, whether or not they were Conservative Governments or whether they were Liberal Governments. The fact of the matter is that the accounting of the day differed very much from where it is today. A lot of the details that we're talking about here are things that would never have come up during the estimate debates. Many of them were just basically off record and put just directly to the bottom line of the province without putting them through the books. What we have done here today is basically show an all-accounted-for type of budget. Under those rules we have balanced the budget. For that, I stand as committed today as I was when we first took office in August 1999.
MR. DOWNE: When a person refers back 40 years, most Nova Scotians think of Robert Stanfield and talk about comparing to 40 years ago. It's the first time in 40 years that we're fully in balance. Most people are referring to the fact that they're comparing apples and apples, and the minister is comparing apples and bananas and he's asking Nova Scotians to believe him. I think that's misleading to some degree, Mr. Minister, with the greatest respect. I think Nova Scotians are reading, from what you're saying, something different from what you're telling us now. We changed the accounting procedures and we can't compare the same things. The simple question that Nova Scotians ask is for the dollars we take in and the money we spend out, do we have to borrow to pay those bills? The answer is yes. You say the rhetoric so well, but in reality what you should be telling Nova Scotians is that we've balanced ordinary - we haven't balanced capital and the debt will continue to grow. It isn't the first time in 40 years that we've been able to do it because we've changed the accounting procedures.
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[6:30 p.m.]
I think you're using a little bit of political leverage there, Mr. Minister, and I think it's time you came straight with Nova Scotians. That's what we've been asking for and I think it's a fair comment to expect you to be that forthright with Nova Scotians, because the impression that you're leaving - and I've heard you give this speech three times - and I asked people, what do you think about that, isn't that great, we're fully balanced. And I said do you realize that we're still borrowing more money? No, no, no we can't be and, I said well we are.
He compares it, 40 years ago, that was Robert Stanfield. Stanfield didn't borrow any more money, he paid as he went. So I'm just saying that I think you've used a lot of latitude, you've spent some $65,000 sending information around the province, you've videotaped all your speeches and so on and so forth, and you certainly are leaving Nova Scotians with an impression that I'm saying isn't quite accurate. I think it's as important for a Minister of Finance to show the books right, but it's also equally important in the rhetoric of selling a budget to compare apples to apples. That's the point I've tried to make with you time and time again and I know you don't want to do that, but that is really the truth of the matter. Am I right or wrong?
MR. LEBLANC: When the member opposite talks about gentlemen such as Robert Stanfield, a man who is held in reverence by all Nova Scotians, I don't disagree with him. The fact of the matter is that the changes that we have brought about in this promise is basically the first step. The second step was to bring about a balanced budget, and we have done that. The fact is that when I spoke even to the Chamber of Commerce, in the same notes that he referred to, I also indicated in that speech that in this year as we balance the budget we would still be adding somewhat to the debt. I've been forthright and up front with people with regard to that. You quote a speech when it pleases you, but you should also quote it when maybe it talks against you because I said that also in my speech at the Chamber of Commerce. So what's good for the goose is good for the gander.
However, I want to go back. The amount of time, the 40 years that we have gone to where we are today is not something that we should look back and say it doesn't matter. It does matter. I was part of a government that also took part in adding to that debt. The fact is though that doesn't change as to whether or not we should fix it. The answer is the problems are here and as much as we want to talk in the past - and I've mentioned the 40 years - to reinforce why it's important that we make the decision, how long do you wait? I think we've waited long enough.
MR. DOWNE: You claim that you're getting less money from Ottawa. I've heard Ottawa blamed for many of the woes of your time in managing the affairs. I was minister, I think 12 months, you've been there about three years, but Ottawa's blamed. Will you tell
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us how much you received from Ottawa in 1999-2000, and how much you received in 2000-01, in each consecutive year how many dollars you've received from Ottawa?
MR. LEBLANC: All the numbers are here, however I would have to add them up. I'm glad the member opposite asked me this question. I'm just trying to do it here as to - well I'm going to get the calculator out because I think it's important to have this. The issue is that I've heard the member opposite speak on numerous occasions, and I've heard some of his other colleagues say that we've basically done this all because of Ottawa. (Interruptions)
Mr. Chairman, I want to put the facts on the table. The fact is that the amount of revenues coming in from Ottawa year after year over the last four or five years have not changed that much. I hear the member for Cape Breton The Lakes saying he didn't believe it. The fact is if you listened to your critic enough you probably believe what he's telling you. I refer you to the numbers in here for the sources of revenue we get from Ottawa. What are they? They are equalization, CHST, they're also other federal sources that we get which are relatively insignificant, and the other one is prior years' adjustments. Those are the four. If you can think of some other ones, you tell me what they are, because they're there.
MR. DOWNE: . . . tax points.
MR. LEBLANC: Tax points are not in these issues that are here.
If you add these things up, from the year ended 2000-01 the difference is $120 million in that year. The change this year, we're probably going to be down. In this fiscal year, we're probably - actually, that number I gave you is incorrect. I will tabulate these numbers, and when you bring the question again I will discuss it. I don't want to hold the member's time up, because I think it would be an improper use of the committee.
MR. DOWNE: Mr. Chairman, I believe the number is somewhere around, the province received $600 million revenue from Ottawa, about $600 million over the last three years from Ottawa, if you take a look in there, at prior years' adjustments and tax, CHST, you add them all up there, Mr. Minister, and we will see where we are. How much more money have you taken in in income taxes, both corporately and personally, since 1999?
MR. LEBLANC: Mr. Chairman, I will get to the question that he asked me. From the year 2000 to the year ended March 31, 2001, the increases in federal revenues that we received were $128 million. (Interruptions) I should point out that we came to office in August 1999, so if we're going to compare something let's compare from March 31, 2000, to March 31, 2001. The additional federal resources that came in were $128 million. From that year to the next year, the one forecast that we just tabled, our federal revenues went down again, $95 million. That means that from March 31, 2000, to March 31, 2002, our federal revenues have increased $33 million - the member opposite can laugh all he wants, the figures speak for themselves.
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Over the last two years the increases in revenues that we've had have been provincially driven. That is why, Mr. Chairman, there is a graph in here that shows that the federal revenues have basically been levelled and that the revenues of the province have grown. The facts speak for themselves. Do you want to total up the numbers on Page B8 of my Budget Speech? You will find that what I'm saying here is true; the fact is that our provincial revenues have grown.
Now you're asking me how much they've grown. We haven't made subtotals for the province and the feds - that's why this process is taking longer - I know that they've grown considerably and that's where our revenue growth has come from. It has come from the provincial side and not at the federal side. A lot of people say that's good because you're less dependent on Ottawa. Well there is some truth to that; I also say that I would like to have Ottawa basically stepping up to the table too.
CHST - they have not yet come through and those are issues that we have that are problematic. When you talk about CHST losses, from 1993 to this point, if you want to look at the amount that we've lost over each of those years, in actual losses it's $884 million. If we had been frozen at 1993-94, if we had received the same amount with not one penny of increase - and you know this because I know you had my portfolio before I did and you faced the challenges from Ottawa that I did - if we had received level funding from that point until now, we would have received another $884 million as of March just past. That's a lot of money for Ottawa to have removed from the province. Mr. Chairman, those are some of the problems that not only Nova Scotia faces, but other provinces also.
MR. DOWNE: We will compare these numbers that we're talking about here, and it gets confusing, and most people kind of glaze over. The bottom line, Mr. Minister, is since you've taken power Ottawa, either through prior years' adjustments, CHST funding, or equalization - and I'm talking about in terms of from when you took over to today - the total amount of money each year adds up to more than what you just finished saying in regard to Ottawa's transfer payments to this province.
My second question was how much money have you taken in in regard to the corporate and personal income tax since 1999, and you said you couldn't give me those numbers?
MR. LEBLANC: In regard to the corporate income taxes, those numbers are Page B8 of the Budget Address. It shows how corporate income taxes have grown, and they've grown considerably since March 1999, where they were $119 million. This last forecast, last year, they were $188 million, so they've grown considerably. Most of the growth was in the first year basically, when I took over the budget from you after we defeated the government; most of the growth was in the first year, $30 million of it. I should point out from last year's forecast, this year's budget estimate is actually down somewhat, approximately $5 million.
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MR. DOWNE: The economy grew by over 5 per cent in the year 2000. The government had a lower deficit than what was projected; in fact it was a surplus, and again it got back to how you designated the issue of NSRL. Some people would say that NSRL was a one-time issue of $149 million, some people say it's a one-time initiative of $250 million - depending on which person you talk to, there are different numbers that are kicked around there. It's clear to say that the government could have, if it wanted to, under GAAP, declared that as a revenue, and you could have actually been in surplus that particular year. That's after throwing everything in from the kitchen sink, if we want to compare everything.
My question is, with the fact of the revenue increasing in those years, and certainly the revenue from the economy has shown growth, corporate tax has been a growth, personal tax has been a growth, you don't have a revenue problem. It seems to me the Auditor General stated just a couple of days ago that you have a problem with spending money, you spend more than you take in. How much did the debt of the province grow since you have taken office?
MR. LEBLANC: Mr. Chairman, if you look at what it is, you would have to judge that by March 31, 2000, to now. So you would look at that - I have to go back one because the first year that we inherited the budget, we inherited it from the member opposite, that year was one that when we tabled it under Generally Accepted Accounting Principles, it was basically $0.5 billion deficit. In that year there was an extraordinary item, the final outcome, I think it was a $321 million deficit. There was an issue there, there was an extraordinary item and that was the provisions that we made for the Sysco and Muggah Creek remediation, which was a considerable number, over $300 million. That is an item that would not have been repeated.
If you look from March 31, 2000, to the point where we are here, I will try to get that, but I think the number is $408 million, but this is a rough calculation.
[6:45 p.m.]
MR. DOWNE: So your revenue is up from Ottawa, overall, your personal and corporate income tax is up? (Interruptions)
MR. CHAIRMAN: We will recess for two minutes. The minister is going for some information.
[6:46 p.m. The committee recessed]
[6:48 p.m. The committee reconvened.]
MR. CHAIRMAN: I call the committee back to order and recognize the honourable member for Lunenburg West.
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MR. DOWNE: Mr. Minister, with federal revenues up, with the corporate tax up, with personal income tax up, and the debt of the province grew - I think the overall number is $680 million in revenues across the board - I agree that there wasn't $630 million just on federal, it was more a combined revenue, and the debt grew by $408 million, our numbers say that the total revenue from the estimates of 1999 to the estimate is $680 million and the debt grew by $408 million. That's a little over $1 billion that you had extra revenue and the debt grew by $400 million at the same time. You talked about inheriting debt when you took over. According to a letter from your department and senior staff, when we took over, using a similar kind of accounting procedure, we actually had an operating deficit in excess of $1.1 billion, minimum. So, Mr. Minister, that's not dealing with Sysco the way you handled that.
I would say that it becomes pretty evident that no matter how hard you're trying there, you still had additional revenue more than we've had during that same period of time. You've had good revenue numbers, you can't argue with that, and you grew the debt, yet you kept saying to Nova Scotians that you're going to be fiscally good managers; you were going to manage better than any previous government. How can you say that you're managing better when you're revenues grew faster than in any other time in recent history and the debt continues to climb at a rate in excess of $100 million a year? How can you say that's good management?
MR. LEBLANC: Mr. Chairman, if you look at the budgets that we've tabled, our expenses have been less than our revenue growth. The member opposite has said that the economy has been good and that has helped us considerably, and I don't dispute that for a second. Obviously, those are the facts. I should point out that the revenue growth, even during your administration, was also good. When you came in in 1993, basically things were as bad as they were and it kept going on. But I should point out that in 1993 and the letter that he refers to, which was a tabulation done by the department, in that there were considerable write-offs for NSRL and also Sysco. I believe it was over $300 million that was written off in that year, downgrading the evaluation of the assets. That would have been considered virtually the same type of extraordinary item that we had in the other ones. Since you brought it up, I wanted to make mention of that. I think it's important that we do that.
Just to give an example from forecast estimate in this one here we have a revenue growth of 3.1 per cent and overall growth of 0.9 per cent. I'm not arguing that we have challenges, and the member opposite knows as well as I do that the biggest challenge that we have is health care. Health care is not only a Nova Scotia phenomenon, it is a phenomenon that we are seeing right across the country and it is the one that is the most difficult to try to come to grips with. The fact is that Nova Scotians see that as a priority. If you look at where we put our money, we put it where Nova Scotians consider it to be a priority.
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MR. DOWNE: Mr. Minister, during this same time of being prudent fiscal managers of the purse strings and trying to build an economy, build self-reliance, you've increased taxes and user fees more than we've seen in the last seven years. Is that accurate? Under your watch, have taxes and user fees gone up more in the last three years than the subsequent three years before you took over that job?
MR. LEBLANC: Well, Mr. Chairman, I haven't sat down and done a comparison, so for me to answer that question would be hard. Have we looked at sources of revenues? Have we looked at both sides of the ledger? The answer is yes. I've said that in so many speeches that I don't think I have to repeat it. Have we asked Nova Scotians to contribute more? The answer is yes. Why is that? Because they collectively will also benefit from it. It is everybody's problem, and collectively we have come to grips with it and we have put forward a balanced budget. So the member opposite, his questions as to whether or not we have increased our revenues and whether or not we have looked at user fees, the answer is yes.
MR. DOWNE: You know, it's so easy when you're taking a look at being able to grow the debt and at the same time spend more money, and the only way you're going to do that is just by simply increasing user fees and taxes. That's not the most creative way to manage state affairs; in fact the more you increase those taxes and user fees, you know we're going to be right back to when we took over in 1993 when the GDP of the Province of Nova Scotia was at 0.7 per cent of 1 per cent under a previous administration. The growth was nothing; the economy was flat. Clearly, we had positioned ourselves so that we were not in a community that was conducive to economic growth, and we had to work very hard over the next period of time to restructure the economy so it would continue to grow. You're seeing the benefits of that. My concern is that if you continue to go after the taxes and user fees, we will soon start pricing ourselves back into the same scenario we were only a few years ago.
Mr. Minister, it was brought to our attention by the Minister of Health that there is some $15 million budgeted for medical equipment from the federal government, but it is not in the Health budget. The Minister of Health says that the money is in your department. Where is it and what equipment will be bought this year?
MR. LEBLANC: Mr. Chairman, in regard to this, it is not in my budget per se, it doesn't come under the Department of Finance budget. I do know that there is a fund that has been established to deal with this issue. We will endeavour to get some more information for the member, but it is not a line item in the Department of Finance.
MR. DOWNE: Mr. Chairman, we couldn't find it either, but the Minister of Health stated, not only to the Health Critic but also to myself, I believe, that the Minister of Finance controlled this $15 million fund for capital purchases and that it was under your control, where that money is. If it's not in your department, you control it somewhere. I don't where
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you have it hidden or controlled. My question then to you is, where is it? Secondly, what equipment do you have lined up to purchase that costs $15 million?
MR. LEBLANC: Mr. Chairman, I do know that this is a program that was put forward by the federal government. My understanding is that that program that was put forward has expired. I do want to get some further clarification from the member, because I think it's a serious question and I want to make sure that I answer properly. It is done in conjunction with the Department of Health. I also want to assure the member that I'm giving him as accurate an answer as possible. The fact of the matter is that I'm just trying to get something in more of a written form, that I can come back to him. If you want, I will try to get something sent down. I can try to answer. If you want to move to another question, I will do that if that's agreeable to the member opposite.
MR. DOWNE: I don't know. Maybe Ramsay could explain it. Do you want to read that, Mr. Minister?
MR. LEBLANC: Mr. Chairman, on this issue, I am going to try to get staff to get a little more detail on this matter. I will come back to the member opposite. I don't have any problem with answering the question. It's a valid question. I will endeavour to the member opposite that I will come forward with the information and make sure it's as clear as possible to make sure that the question is answered fully. I have no problems with that.
MR. DOWNE: Yes, we would hate to have a $15 million slush fund not being used in health care where I understand the Minister of Health says it's going to be used. Mr. Minister, it was interesting - your document. We talked about it before, the issue of your management plan. Prior to that plan coming out, you had talked about debt reduction, the surplus being used to pay down the debt, the debt overall going down. This is the page out of it. I actually read the budget that was presented by the Canadian Centre for Policy Alternatives. Ironically enough, they actually use the same methodology in dealing with this so-called balanced approach in deficit reduction.
I believe that you referred to them as a somewhat left-wing think tank. I'm just curious to know - they've been preaching this now for a couple of years - is this the group that is guiding you in regard to debt reduction in the Province of Nova Scotia? Why wouldn't you acknowledge them in your document as being the body that gave you the direction for how to deal with debt reduction in Nova Scotia?
MR. LEBLANC: Mr. Chairman, I should clarify for the member opposite that I did not use the alternate provincial budget plan to prepare our document or prepare this document. This is a left-of-the-centre type of plan that comes forward. Actually I tried to read it. I told labour representatives that I would read the document and I would give it some consideration, because I think any government should at least have the time to read these documents and to go through them. But when you look through it there's - what's the word
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I want to say here - a lot of assumptions that they use that are very much incorrect. I find that a lot of times these are representatives who are very closely aligned with unions and so forth, also with our Party to the left.
[7:00 p.m.]
The situation that comes in is that some of the assumptions they are using for growth, expenses and so forth aren't realistic. If you read a lot of the comments in it, they talk about issues such as you should remove the GST because it's consumption based, you should freeze tuition. There's a litany of different commitments that they use in there, and if you ever wanted to price them, the cost of it would be horrendous, as to how in God's name we would ever fund these programs.
The other thing is they talk about the fact that we should be increasing income tax. I'm not sure whether the member opposite would be trying to go in that direction. Their position is that we have all kinds of room to move in taxation, and that's where we should go. One thing that we don't want to do is drive jobs out of the province. We need a strong, vibrant private sector in our province. If you read this, the one fundamental problem that I had with it is that.
Plus the plan they have, there isn't any discussion here as to what kind of capital program they would use. I don't think there's any talk about borrowing for capital, which is a major flaw that I see in the plan that they put forward. The bottom line is I haven't used this. As much as I try to have an open mind and to listen to things, that is not where we're going.
MR. DOWNE: Mr. Minister, that particular group, last year, indicated that there was a surplus. They actually backed up - actually the Chamber of Commerce said the same thing. My point is that that body recommended this approach that you now have before Nova Scotians in dealing with debt. I wonder how the Chamber of Commerce would feel with regard to your adopting their policy in debt reduction and saying no to the Chamber of Commerce approach to debt reduction, especially after receiving all that black ink of recent. Can you explain why you're not going to deal with the debt?
MR. LEBLANC: Mr. Chairman, I believe the honourable member opposite has a bit of tongue-in-cheek in that question. I do want to say that for us as a province to move forward we have to have a plan. The plan that we have was to balance the budget. We did that. The fact is that the member opposite is bringing up another valid point, to grow our surplus whereby our surpluses will overcome any change between our capital purchases and the amount of amortization we have on capital assets. Once we do that, then we will be in a position to actually reduce the amount of debt we have in this province.
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That is a challenge. The fact is, though, this document is an important first step to Nova Scotians understanding how serious the problem is, and how we're going to deal with approaching it. I should point out to the member opposite that debt to GDP is an important ratio. Any Minister of Finance, past or present, knows that the bond rating agencies look at that ratio. You can say why, what is debt to GDP mean? I used an example the other day. When my wife and I built our home back in 1979, we owed $43,000. I remember my wife and I saying - I won't tell you everything we said - one of the things we said was how in God's name are we ever going to pay this back, based on the income that we were making at that time. The situation is that today, if we could build the same home and move in with a $43,000 mortgage, we would build it like that. Why is that? Our earning power has grown, and because of that, that ratio is important.
It is the same thing for bond rating agencies. The debt to GDP ratio is an important factor when they consider how good or how high our credit rating should be. That makes sense. Whether or not you're giving a credit rating to a company or to government, the ability to repay it has to be considered. How does government repay that? Well, one thing they look at is how their economy is doing, because the economy to a large extent will have a direct relationship on how much revenue they collect.
Though we differ somewhat as members of this Assembly and what we're talking about here, both of us agree that debt to GDP ratio is an important ratio. The fact is, the other challenge that we have, we have walked, now it is time for us to move to the next step, to grow those surpluses whereby we can actually grow them to the extent that we actually reduce the debt. That is an important next step that we have to take as a government. We've taken the first one.
MR. DOWNE: Mr. Minister, what you've done is taken Nova Scotia one step closer to the cliff. You talked about you and your wife building a house. Let's face it, this document is growing the debt every year. It's predicated on the fact that you have cash flow coming in. Let's put it in layman's terms, you take home $100 a week salary and your costs are $60, you have $40 left over, so that means we can spend $40 more on capital items. So we'll go buy another car, and that's going to cost us $10 more a week; we'll go buy a cottage, that's going to cost us $10 more a week; we'll go and buy a boat and some other four-wheeler, there's another $10 a week. Then we'll do some other odds and sods, you have to buy the gas and everything. So my $40 is all used up.
Now I have my $100 totally expensed. Well, what happens if you happen to lose your job? What happens if the economy goes sideways? What happens if all of a sudden interest rates fly up through the roof? What happens if all of a sudden things change economically? You have brought Nova Scotians fully out there in debt, and you have no plan to deal with it. If the economy goes sideways, you have now put Nova Scotia further at risk.
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How can you justify that as a Minister of Finance? It's scary enough talking about how you worried about your debt when you first got married, but if you were that leveraged when you first got married and lost your job, you would have had a heck of a lot more problems than you did. If this economy goes sideways, Nova Scotia is going to be in a lot more trouble than what you ever dreamt that you and your wife could ever have been in, financially. My question to you is, how can you justify pushing Nova Scotia that far to the limit?
MR. LEBLANC: Mr. Chairman, I'm listening to the debate, and I'm listening to the member opposite stand on his feet and say how dare I put us at risk to the extent that we did. If you look back to when we inherited the budget from the honourable member opposite, the situation was much more severe than it is today. (Interruptions)
MR. CHAIRMAN: Order, please. Order, please. The Minister of Finance has the floor.
MR. LEBLANC: Mr. Chairman, I make the point to stress to the member opposite that we have made progress. The fact is, as we go forward - the member opposite says, well, what happens if the economy goes into the drain, what happens if interest rates go up as high as they want - governments, whether it's our government or any other government in any other province, will have to react. That is the fact of the matter.
The fact is, though, we have still brought this province to a balance. It took a long time to do it. Do we still have work to do? Is it over? Is it finished? The answer, of course, is no. We still have $11.5 billion of debt. The fact of the matter is, how do you deal with it in the long term?
I've met people on the streets - and I said this the other day in my opening comments - who keep telling me, Mr. LeBlanc, we have $11 billion of debt, why do you want to pay it all back in one year? What we want to do is balance the budget. As much as that sounds unbelievable to say, many people feel that we want to pay the complete debt off in one year. What we want to do, of course, is to stop the drain, ignoring the problem. We have done the first step.
Do we still have work to do? Do we still have challenges ahead? Of course the answer is yes. We have a challenge this year. We have 365 days that we have to monitor to make sure that we stay in balance. We have a very small surplus. I don't argue that for a second. That means that we have to be diligent in how we monitor it. If there are going to be changes this year in how and what we do - I will use the example, if we have more firefighting, if there are a lot of forest fires, we're going to be spending more money. That means we're going to have to change something.
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If we did that in the past, collectively, we would have been better off. I don't argue that for a second. If we have challenges in the future, does that mean changes in how we operate the provincial government? The answer is yes.
MR. DOWNE: The $100 million additional borrowing this year will cost us how much money, Mr. Minister?
MR. LEBLANC: I'm sorry, can I ask the member opposite to repeat the question, if he would be so kind.
MR. DOWNE: The additional $100 million this year, how much is that going to cost taxpayers this year?
MR. LEBLANC: Mr. Chairman, it will probably cost somewhere in the vicinity of $5 million. It depends on whether or not it is short term or long term. In the assumptions we have in our budget, we have both long-term rates and also short-term rates.
MR. DOWNE: Every dollar that we increase the debt, interest is added to that debt. Mr. Minister, that extra $5 million or $6 million additional costs this year is $5 million or $6 million out of some other department's budget. This goes on to the year 2011. Can you tell this House, what year do you anticipate that the debt will actually stop growing in the Province of Nova Scotia?
MR. LEBLANC: Mr. Chairman, you're asking me to make a guess. It could be this year. Hopefully when we get to the end of this year, we will have a surplus in excess of $100 million. That is not unbelievable and I hope that it happens. We have put forward a plan. In this debt management document that we have, we have shown projections going out with no surplus. We say right in the document that we're using the worst-case scenario. First of all, it upholds the principles of having balanced budgets. At the very minimum, with not $1.00 of surplus, are we making improvements in the debt to GDP ratio? The answer is yes, with not one single dollar of a surplus.
No one in the House believes that we're going to have exactly balanced budgets. We're all going to anticipate having surpluses. As we go forward to prepare next year's budget and the year after that, the work that we have to do is to increase the amount of surpluses. Those are the facts.
MR. DOWNE: Mr. Minister, you just said it's not inconceivable that you would have $100 million surplus. Can you explain to the House why you tabled a budget with a $1.3 million surplus, and now you're saying it's not inconceivable to have a $100 million surplus? Can you tell me how it's not inconceivable for that to happen?
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MR. LEBLANC: Mr. Chairman, the member opposite asked me which year we may balance the budget. We may have a surplus of that in vindication. The facts are it's very difficult to project into the future. I gave an example to the member that this may turn out to be an exceptional year. The facts are we have used assumptions that we think are prudent and reasonable in the circumstances. What will happen throughout the year has to happen. We don't know the facts before they happen, but the assumptions that we have used we think are reasonable under the circumstances, but we always hope that we will exceed them. We hope that the economy this year, rather than growing the percentage that we have of 1.9 per cent, I hope that we have a growth rate of 5 per cent. That is not what the indications say now.
The only way we, as members of this Assembly, will know or the people of Nova Scotia will know is that we have to experience it. We're hoping that our economy will be resilient enough that it will exceed the estimates that we have put in place.
MR. DOWNE: Can you tell me, we used to get quarterly reports and now we get bi-yearly reports at best, after the third quarter - and that would be in the wintertime - we have major snowstorms, the Minister of Transportation and Public Works is plowing every road they can if they haven't privatized it, but they're out plowing and salting and all of a sudden you've got a $10 million or $20 million problem and you don't even know it on the basis of a quarterly report because you don't know the full year-end. How are you going to guarantee you're going to have a $1.3 million surplus unless you've got money buried somewhere else and are hedging your position? How can you possibly come forward without having some money buried? Can you explain that?
[7:15 p.m.]
MR. LEBLANC: Mr. Speaker, obviously, under the legislation that we have, we table quarterly reports, and the fact is that the third-quarter report comes forward as part of the estimates in our Forecast. We also do monthly reporting as a government to try to keep track of those numbers; it's important that we do. One of the things that we're doing is that a lot of the changes that we have are in regard to district health authorities, to keep in touch with that; also with school boards, we made some changes. This year, we're implementing the SAP system which we believe will have some benefits in keeping on top of those issues. I want to point out for the member opposite, if you want to look at the performance of this government, the first two years we've exceeded our numbers. That was the March 31, 2000 year, the March 31, 2001, and we'll wait to see what the final results are on March 31, 2002.
In the first two years we did better than we predicted and, this year, obviously until the final statements are in, we don't know those numbers. It is important that we as a government say what we're going to do. We told people we would balance the budget this year; that means if we have changes to make during the year, then we will do it.
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MR. DOWNE: That's right, Mr. Minister, and the prior years' adjustments that you got from Ottawa were quite substantial and without them you wouldn't have done as well. Corporate tax was up, and you wouldn't have done as well. It has nothing to do with your ability to manage spending. Your individual departmental spending estimate to estimate is growing. In fact you spent over $400 million more in Health and Education since you've taken over. (Interruptions) Pardon me, Mr. Minister? How many Ministers of Finance have we got here? We've got a senior minister over there who wants to talk on behalf of the minister, both of them Buchananites at one point in time in their life. They know all about finance, so lots of experience here.
Mr. Minister, I guess the reality here is that you (Interruption) I am going to change for another set of questions here because you haven't really answered the issue at all and I don't believe you've been able to manage so far. You've spent more each and every year. Your comments were that if any budget goes over expenditure in the current year that you would reduce their budget the following year. You haven't lived up to that promise. We have departments that are spending more and more each year. You're trying to throw money at a problem. The reality is that you don't have a plan. You don't have a plan in health care. It's evident from what we've seen. We haven't got plans in a number of departments and it's evident there. This is not a plan; this document here is not a plan.
Mr. Minister, I want to ask a question about the public pension funds. Can you update the House in regard to the Public Service pension fund, its current status and at what level is it funded right now?
MR. LEBLANC: Mr. Chairman, both of those financial statements as of December 31, 2001, should be coming out relatively shortly. My understanding is that the Public Service Superannuation Fund is roughly or a little over 100 per cent. It is not higher than that. Obviously, the events of the last year had an impact on it, although we've done some recoveries on that. My understanding, and if that differs from it, I will get that clarification to you. I believe I'm relatively accurate on that. The other issue is that the Teachers' Pension Fund is in the low 90s. I don't have the exact number, but those are both things I can get to you in relatively short order. I know that if Mr. Stratton is up in the gallery that he will be sending it down and when he does, I will give you those numbers, if you want to get to another question.
MR. DOWNE: Mr. Chairman, is it a rate of 120 per cent you have to declare and do something with the funds - I believe it's 118 per cent, 120 per cent, we're not anywhere near that this year?
MR. LEBLANC: Mr. Chairman, I believe it works that at 111 you have to acknowledge that that's what you've reached. If you reach 118, then you must come forward with a plan to reduce the amount of the overfunding within a pension plan. That is a federal Act that we have to comply with and I'm sure the member opposite knows that.
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MR. DOWNE: We're not at that point at this stage. Mr. Minister, can you tell me, you've written off the debt for Seagull Pewter - as a province?
MR. LEBLANC: No, we haven't written off the debt.
MR. DOWNE: Can you tell me what the debt is for Seagull Pewter?
MR. LEBLANC: Mr. Chairman, I'm not privy to that. I can only say in regard to Seagull Pewter, obviously that would be directed towards my colleague, the Economic Development Minister. I should point out that there is a difference between provisions and also write-offs. We sometimes provide for doubtful accounts on some of these accounts, and that may have been a company that they made some provisions for, I would be surprised if they didn't. I'm not sure that my colleague can speak to that when he gets to his estimates. We never do a write-off until such time as it comes to that there is no recourse for us to collect that debt. That happens not only from Economic Development, it would come from the housing department for people who have had mortgages with the department of housing or even small fines that people haven't paid whereby it gets to the point that you can't collect them. We do those write-offs usually once a year and it's usually a very public event, because the press get the information and they usually go through it in fine detail. So there's a difference between write-offs and provisions and I just want to clarify that for the member opposite.
MR. DOWNE: Theodore Tugboat, are you aware of the financial situation of that?
MR. LEBLANC: Mr. Chairman, I'm in the same situation, I am not privy to the details of that. I'm sure the Minister of Economic Development could tell you whether provisions have been made for that, but I believe that there are no write-offs that have been made for that, but that would never happen until such time as after it becomes absolutely clear that there is no recourse for recovery.
MR. DOWNE: Mr. Minister, in your budget I believe you have $6.5 million set aside for loan loss provisions and you don't seem to know the numbers, the Department of Economic Development obviously has those numbers. Don't you think it would be prudent for you to have an idea of what the potential liability will be against the province with a $2.3 million surplus and a $6.5 million loan loss guarantee there? You don't have a lot of room to move. I would think that you would be very concerned about the potential losses associated with bad debts.
MR. LEBLANC: Mr. Chairman, in regard to that, of course we're concerned. I should point out on this issue that these are matters which go up and down during the year. They may have set up provisions for that which are higher and then some of them are recovered in the following year, but I do think that probably the two accounts that you are referring to have been in some difficulty for some length of time and, as such, I'm sure that
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the department has probably set up some provisions as to what the exact amount is for that, Mr. Chairman, I'm not privy to. I'm sure my colleague, the Minister of Economic Development, would be more than pleased to answer those questions and I will punt it to him because he has those details available to him.
How much time is left, Mr. Chairman?
MR. CHAIRMAN: We have a minute and 15 seconds left in this turn.
MR. LEBLANC: So do you want me to speak fast? In regard to the Public Service Superannuation Plan as of March 31, 2001, it was at 98.1 per cent. That is as of March 31 of last year. The Teachers' Pension Fund as of December 31, 2000, which is the last one that we have, was at 94.7 per cent. I should point out that there have been some changes since that time, and these may go up or down. I want to point out that the financial statements as of December 31, 2001, should come out within a reasonable period of time and those are our public documents. So, as such, at that time, it will talk about what the funding provisions are so that you will be in a better position to know that. Mr. Chairman, I don't know any more than that on those two issues, and if the member has any questions, in less than a minute it is pretty difficult to answer any questions.
MR. CHAIRMAN: Thank you, Mr. Minister. The time allotted for the Liberal caucus has expired, for the sake of 15 seconds. I will turn it over now to the NDP caucus with 14 minutes left for tonight's estimates.
The honourable member for Halifax Fairview.
MR. GRAHAM STEELE: Mr. Chairman, I do hope the minister and his staff are taking due note of all the promises he has made to produce material because the answer so far to most of the questions that I have raised is that the minister will check and get back to us. I noticed that not only has he taken on a number of obligations that regard himself, but he has tossed one over to the Minister responsible for the Liquor Corporation, that's the second one he has tossed over to the Minister of Economic Development. So my colleague for the Liberal caucus and I are expecting a substantial amount of information as a result of this debate in estimates.
MR. CHAIRMAN: Order, gentlemen.
MR. STEELE: Mr. Chairman, while we've been talking here, an exceptionally well-run province has released its budget for 2002-03. I'm talking, of course, of Manitoba, which has delivered a truly balanced budget, and over the last three years, they've increased spending on health, education and community services by $500 million; $244 million in personal tax reductions. For all those over on the other side who are prone to caricature the NDP, I just wanted them to make note of that. The NDP Government in Manitoba has
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delivered $244 million of personal tax cuts over the last three years, while this government has delivered at least $223 million of higher user fees and taxes since they came into office. If the Minister of Finance doubts me, I have an enumerated list. It's in black and white. It's beyond dispute. Those are just the straight-out increases in user fees and taxes. That doesn't even count things like the downloading on Nova Scotia families from the Children's Dental Program, or the downloading on tenants from the abolition of the Residential Tenancies Board, or the downloading on so many other Nova Scotians as a result of this budget that doesn't even get counted as part of an increase in user fees and taxes. There's a government who knows how to run a province.
I will add for those unsure of the point I'm trying to make, that's an NDP Government delivering sound financial management, delivering tax cuts, delivering good government to the people of Manitoba. Mr. Chairman, it's not a province blessed with an abundance of natural (Interruption) I hope the members on the other side are kidding. I really hope they're kidding when they say that that's a coalition government because the coalition government, of course, is in Saskatchewan, next door.
MR. CHAIRMAN: Order, please. The honourable member for Halifax Fairview has the floor.
MR. STEELE: The coalition government, Saskatchewan, and I'm sure they were just kidding over there when they said the coalition government was in Manitoba. Mr. Chairman, if I had their record in government I would want to talk about other provinces too. I would want to talk about what happened in B.C. and in Ontario. I would want to talk about that too because I don't want to talk about anything except what I'm actually doing in Nova Scotia, which is a province that they were elected to govern. I would want to talk about anything but Nova Scotia. The truth in Nova Scotia, Mr. Chairman, is that this government has delivered $223 million in higher user fees and higher taxes. That's what this government has delivered.
Mr. Chairman, the member for Dartmouth South continues to talk about other provinces. Like I said, if I had his government's record I would want to talk about other provinces too. I wouldn't want to talk about Nova Scotia and about what this government is doing to the people of Dartmouth South. I wonder if the member for Dartmouth South has talked to many of the seniors in his constituency lately who are having to pay the higher co-pay and premium on Seniors' Pharmacare. The ones in my constituency aren't very happy about that, but apparently the member for Dartmouth South seems to think that that's just fine and probably just what the seniors in Nova Scotia wanted. I just want it to be clear for the record, while I'm talking about Seniors' Pharmacare in Nova Scotia, that member wants to talk about what's going on in British Columbia. Like I said, if I were him I would want to do the same thing too. But what I really want to talk about, Mr. Chairman, is Nova Scotia, because that's the province in which we were elected.
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So let me ask something about Nova Scotia. I have at several points, today and on other days, referred to the fudged figures in this year's budget. I mean that absolutely. There are some figures in this year's budget that are just out and out fiction. They're just made up. My colleague in the Liberal caucus has just focused on one and that is the provision for doubtful accounts, which everybody knows is going to be close to what it has been for the last number of years, it's going to be in the range of $15 million to $20 million and this government hasn't set aside anything close to that because, if they did, they wouldn't have a balanced budget.
[7:30 p.m.]
So I want to direct this question to the Minister of Finance because I kind of see him as the guardian of good accounting in the province because Heaven knows he preaches that song a lot, Mr. Chairman. So I kind of see him, not just as the guardian of good accounting, but also as the guardian of the overall budget process in Nova Scotia, that if things are going wrong, he's the one who can make it right. So I want to ask the minister if he will make right the Health Research Foundation line item, the fictional amount of $2.5 million, which everybody on all sides of the equation agrees should be $5 million? Will the minister correct his budget so that that figure reflects the true commitment of the province to the Health Research Foundation?
MR. LEBLANC: Mr. Chairman, we made provisions in the budget for $2.5 million for that line item and that's what it is.
MR. STEELE: Mr. Chairman, the funny thing about that is that the Minister of Health has said in this House that the commitment is $5 million. The Health Research Foundation has said, not in this House but outside the House that the obligation is $5 million, and there's no amount of fancy dancing or fancy accounting that can change the fact that that number is just made up, the $2.5 million that's actually in the budget. So I want to ask the minister again, your colleague, the Minister of Health, says the commitment is $5 million, the Health Research Foundation says the obligation is $5 million, will you correct your budget so that it truly reflects the commitment of the Province of Nova Scotia, and if the minister won't, why not?
MR. LEBLANC: Mr. Chairman, at least he's asking Finance questions and that's good. The fact of the matter is, under that fund, they can spend up to $5 million. The member should also be aware that they already had $2.5 million in their account before this year. If they get another $2.5 million, they will be able to spend up to $5 million and they are not required, they are not mandated to spend $5 million in that fund. They have the latitude to do so. They cannot spend more. That is a very simple answer to a very complicated question.
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MR. STEELE: Now the minister knows very well that that's nonsense. That's just sheer out and out nonsense because every single line item in the budget is a maximum, every single one. Nobody is obligated to spend their full appropriation. The minister knows that. I know that. Everybody here knows that. So it doesn't excuse fancy accounting to say, well, that's the maximum amount they can spend. So what I would like to ask the minister is will the minister - now, I have to give credit where credit is due, first of all by way of preamble. When the Liberal Government ran into financial accounting hocus pocus, and I'm talking specifically over P3 school leases, which unleashed a bit of controversy needless to say, because, as the Auditor General found, it was motivated entirely by their desire for the bottom line to show a particular number. In order to resolve the controversy, they referred the matter to the Auditor General for a special audit and a special report. I have one, two, three, four, five items that I say are just plain out fudged.
Now, if the minister wants to prove me wrong, he's going to have to do it through the Auditor General because his last answer was just nonsense, Mr. Chairman. If he wants to resolve this once and for all - and I will stand behind what I'm saying, that those numbers are fudged, and those are only five that we found, never mind the ones we haven't found yet - if the minister wants to prove me wrong, he has got a solution. It's the one pursued by the Liberal Government. Unfortunately, they didn't get the answer they wanted, but at least it was the truth. Will the minister refer these accounting items that the NDP has raised, to the Auditor General for an opinion as to whether they are in keeping with proper accounting practice?
MR. LEBLANC: Mr. Speaker, the Auditor General will give his opinion on these issues when he reports on the financial statements. I want to go back to the one that he quoted previous to that which is in regard to the Health Research Foundation, I think that was the terminology. They already have $2.5 million in their fund. They are an arm's-length agency. In this budget we have a contribution of $2.5 million; $2.5 million and $2.5 million makes $5 million. They have the authority to spend up to $5 million. We will live within our budget. The member opposite is saying - well, obviously, he doesn't want us to make investments in that area, Mr. Chairman. We have the capacity to live within our means and it's important that we do.
With regard to whether the provisions for doubtful accounts is sufficient, I will say, Mr. Chairman, that it is always difficult in coming up with a number that is accurate, because the fact of the matter, before you go through the actual year and know what happens, you're not going to know what provisions should be set up. I will say that in the last year that was there, that we just went through, Nova Scotia Business Inc. took over the large portfolio out of Economic Development and one of the things they did is they reviewed the accounts and they reviewed them in great detail. If I was Nova Scotia Business Inc. I would have demanded nothing else other than that. They want to be judged by their performance, not by the performance of their predecessors. If they're taking over those loan portfolios they wanted to ensure that the provisions were accurate, and they went through that.
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So the issue is that when you look at last year's numbers, they were up. The member opposite may say that overall, if you look at experience, the situation is that the experience has shown that provisions have been higher than what is budgeted this year, because this year it's $3 million, in the past it has been as high as $15 million or $18 million. A lot of those, Mr. Chairman, were loans that would be written off if certain criteria were met. In other words, a lot of times they weren't actually write-offs in the sense of the pure form. People look at write-offs and they say what happens here; they're saying, well, what this means is that we lost the money, but a lot of these were loans that were given if the provisions of the agreement were met. In other words, if they reached investment criteria, if they met employment criteria, then the situation would be that the loans would be written off.
A lot of those types of loans, Mr. Chairman, have come to an end and we've moved, as did the previous administration, to performance based. I will give them credit, that we moved towards performance based not only by this government but the previous one, and many of the incentives that were given have been to companies that if they will meet certain employment criteria, we will pay them after they created the jobs. I know that Nova Scotians are much more comfortable with that approach. It doesn't mean that every one of them will stay forever. However, up until now, the experience has been very good and I don't complain about that for an instant.
So to go back to the point that the member talks about, the budget that we have put forward is reasonable and we will stand by the results as audited by the Auditor General. For this to be referred to, Mr. Chairman, is nothing but grandstanding by the members opposite.
MR. CHAIRMAN: I would like to recognize the member for Halifax Fairview with 30 seconds.
MR. STEELE: Mr. Chairman, the minister knows full well that the Auditor General is not going to be releasing the Public Accounts until 18 months. He doesn't care what those say because that's after the next election. So we have these items here, the allowance for doubtful accounts, the Health Research Foundation grant. The minister knows that what he's saying is nonsense; he knows it and he's still saying it. There's a national income stabilization chair in Agriculture, Canada-Nova Scotia infrastructure programs, social housing, why won't the minister refer these matters to the Auditor General so that we can get an opinion today?
MR. CHAIRMAN: Order, please. The time has expired for today's estimates leaving 46 minutes for tomorrow's estimates and the NDP caucus.
The honourable Government House Leader.
HON. RONALD RUSSELL: Mr. Chairman, I move that the committee do now rise and report considerable progress and beg leave to sit again on a future day.
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MR. CHAIRMAN: Hearing that, the committee will rise and sit tomorrow, Tuesday.
[7:40 p.m. The committee rose.]
