The Conference Board of Canada’s Senior Economist Daniel Fields offers the following insights on Nova Scotia’s 2019 Budget:
“Budget 2019 was focused on maintaining a balance position over the forecast period. With that in mind, there was little room for tax changes or major initiatives. The province did, however, manage to increase program spending on health care and education.”—Daniel Fields, Senior Economist, The Conference Board of Canada
- The 2019 Nova Scotia budget, released on March 26, focuses on many of the same themes found in last year’s budget—maintaining a surplus position while providing some small increases in spending. Areas that saw a sprinkling of new cash were the health care and education sectors.
- The budget allocated additional funding for collaborative care teams as well as more money for residency spaces. Overall, health care spending is expected to grow 4.3 per cent in 2019–20.
- The province is expanding its pre-primary education program, which initially launched in 2017. Overall, education spending is set to grow by 2.4 per cent in 2019–20.
- There was also new money for immigration (although relatively minor at $620,000). This is a positive development as immigration will play an important role in Nova Scotia’s long term economic and demographic prospects as the province’s population ages.
- Despite the new spending announcements, spending growth is expected to remain moderate (although higher than last year’s budget) over the forecast period. According to the budget, spending is slated to grow 0.4 percentage points faster than last year, increasing at an average annual rate of 2.7 per cent between 2019–20 and 2022–23.
- The 2019 Nova Scotia budget is based on a real GDP forecast of 0.8 per cent in 2019 and 0.9 per cent in 2020. This is weaker than the Conference Board’s current economic outlook.
- Overall, the budget projects revenues to grow by 2.4 per cent per year between fiscal year 2019–20 and 2022–23.
- We expect that there may be some upside risk to their revenue projection. Our own forecast includes a stronger outlook for total revenues based on higher equalization payments, the result of strong economic growth in Ontario and the phasing out of equalization payments to that province.
- Overall, the government expects to maintain a surplus of $34 million in 2019-20, which will gradually grow to $73 million by 2022–23.
- Despite maintaining surpluses over the forecast period, net debt is expected to grow by $660 million by 2022–23. However, net debt as a share of GDP will fall considerably according to budget estimates, from 34.3 in 2018–19 to 31.6 in 2022–23.
- Slower growth in net debt has lowered government projections for debt repayment charges, which as a share of revenues are expected to fall from 8.0 per cent to just below 6 per cent in 2022–23.
Overall, solid revenue growth, combined with a reasonable spending plan, has set the province on a sustainable fiscal path going forward.