Cuts not the solution to deficit problems

April 3, 2000

Program spending is not the cause of Nova Scotia's deficit problems, and cuts to spending are not the solution according to the inaugural publication of the Nova Scotia Branch of the Canadian Centre for Policy Alternatives. "A Better Way: Putting the Nova Scotia Deficit in Perspective" analyzes the size and causes of the deficit, and demonstrates that while the government's focus has been on the $767 million "fiscal crisis," the actual recurring amount is a more manageable $300 million problem

CCPA-NS spokesperson John Jacobs reports: "our analysis shows that it is in fact possible to maintain program spending at its present levels and still reduce the deficit in three years. In other words, program spending cuts are not necessary."

"On a per capita basis, Nova Scotia's program spending has been consistently the second lowest among all provinces, 7% below the average for all provinces throughout the 1990s."

The report also notes that Nova Scotia generates less own-source revenue as a percentage of provincial GDP than any other province - a fact which goes a long way to explaining our current deficit and debt situation.

The biggest reasons for our continuing fiscal problems are our weak economic growth over the past decade and the relatively greater costs to us of federal spending cuts. In addition, the increases in Nova Scotia's own-source revenues were the third lowest among all provinces between 1990 and 1999.

"We need a different framework for managing our debt and deficit, one that ensures that social deficits are kept under control as well. By making program cuts the target for deficit reduction, the government risks imposing an unacceptable toll on public services and our quality of life, and making Nova Scotia a much less desirable place to live, work and invest."

The Nova Scotia Branch of the CCPA was formed last fall to produce high quality, independent and non-partisan research, analysis and informed commentary of government policies, and to develop workable and equitable alternatives.