Monday, April 12, 2010

NDP budget in Nova Scotia

I saw the NDP in Nova Scotia released their first budget.

All in all it's not too bad really. The NDP seem to grasp that these three things cannot coexist.

  • insane government spending
  • insane government borrowing
  • low and declining taxes
So predictably the NDP chose to raise taxes. No surprise there, what did anyone who voted for them expect? And lol at the bogus shock and anger about the defecit and tax increases. With the government finances the NDP realized it's better to ask forgiveness than permission. If they can make good the promise to eliminate the defecit in four years they may stand a chance when they have to answer to the voters again.

One important thing about the defecit. It's not $212 million, it's $712 million. There was an extra $500 million borrowed and poured directly into the civil service pension fund - nice work if you can get it. That's $50,000 per existing civil servant today. I'd like to see my RRSP topped up with a $50K catch up contribution.

Overall though on the civil service pensions they did take some important steps to reign in an excessively generous pension scheme. Indexing seems to be out, retirement ages have been increased a tiny bit, the survivors benefit is cut from 66% to 60% (a 9% pay cut, brave of the NDP to pick on that group). Plus a 10% reduction in active head count over the next four years the government has made a good faith attempt to share the sacrifice around the civil service pension fund.

The teachers pension remains insolvent but in the past around 10 years ago the province bailed them out with over $1 billion. So it would be entirely inappropriate for any new taxpayer money to go into the teachers pension fund. The cuts there will have to be on the educators as the taxpayers have done their fair share and more. We'll see what the NDP does in the coming years about that, I'm not confident they'll do the right thing.

This NDP budget reminds me of the first John Savage liberal budget. During the 1993 campaign Savage ran against the defecit. Claiming that it was more important to create jobs, we can't worry about it at this time, we have to deal with the recession, blah blah blah. Although once elected the good man Dr. Savage suddenly made the defecit a top priority, infuriating many of the big spenders who expected him to ignore the defecit and go on a spending and borrowing binge. He did the right thing for the people and eliminated the defecit. So maybe there's hope for this NDP government. Nothing focuses the mind quite like being broke eh Graham Steele.

One thing I couldn't help but notice. I recall back in high school in the mid 80s people were rightfully alarmed that health, education, and the welfare system had grown to the point where they consumed 57% of the provincial budget. Today a generation later and now health and education alone consume 60% of the budget. Wow. This spending growth in these two programs can't be sustained much longer before it collapses the entire government.

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