Nova Scotia Finance Minister Allan MacMaster presents the 2022-23 provincial budget at the legislature in Halifax on March 29.Andrew Vaughan/The Canadian Press
For the second time in three months, Nova Scotia’s finance minister has reported $1.3 billion in additional provincial revenue, thanks mainly to a surging economy.
Allan MacMaster revealed the latest find Tuesday, as he released details of a favourable budget update for the fiscal year ending March 31, 2023.
“I will say that it’s a pleasant thing to see increased revenues because we know there are areas where we can spend those revenues to help people,” Mr. MacMaster told a news conference.
With the latest revenue boost, the size of the deficit for the 2022-23 fiscal year is expected to be much smaller than was forecast when he tabled his budget in March. The province is now expecting a $142.6-million shortfall – $363.6 million less than the original estimate.
Mr. MacMaster said the better-than-expected outlook is based on strong economic activity, which has helped increase the province’s revenue by $1.3 billion – most of that money coming from a higher-than-expected take from personal, corporate, sales and gas taxes.
The finance minister told a similarly rosy story in early September when he announced that the 2021-22 fiscal year ended in a “surprise” $350.9-million surplus. That figure reflected the final budget tally calculated through the public accounts process. Mr. MacMaster’s original forecast was for a $584.9-million deficit. The resulting $936-million swing into the black was the largest in the province’s history.
At the time, Mr. MacMaster said provincial revenues for the 2021-22 fiscal year had increased by $1.3 billion compared to what was originally estimated, due to higher tax revenues, the forfeiture of offshore gas licences and federal transfers.
On Tuesday, the minister again marvelled at the province’s good fortune.
“Our fiscal position is much better with these increased revenues,” he said. “We were committed to deficit spending to fix the health-care system, and we continue to be committed to that. I feel positive about this increase in revenues because it does put us in a much better position.”
According to government figures, the province’s real gross domestic product – a key measure of economic output – grew by 6.2 per cent in 2021 and 2.9 per cent in 2022. But those numbers jump to a whopping 10.9 per cent and 6.8 per cent respectively when inflation is factored out.
The growth in 2021 was spurred by a rapidly expanding population, a return to pre-pandemic employment levels, an increase in consumer spending and a rise in wages. And while growth has slowed this year, mainly because of higher interest rates and inflation, the trend continued upward for Nova Scotia’s population, employment, wages and residential construction.
Still, Mr. MacMaster acknowledged this has been a difficult year for many Nova Scotians, given the rising cost of living. But he said the province’s stronger-than-expected economic activity has allowed the government to provide more support to people in need while also increasing investments in health care, housing and infrastructure.
In other words, the extra $1.3 billion for 2022-23 fiscal year has already been spoken for.
Departmental expenses are projected to be $13.4-billion, which is $949.5-million more than estimated in March. As well, last-minute departmental spending totalling $768.4-million has been approved for 16 departments.
Last week, Nova Scotia Premier Tim Houston announced $115.4-million in one-time funding aimed at helping low- and middle-income earners cope with inflation.
Until then, Mr. Houston’s Progressive Conservative government had faced criticism from opposition leaders, who called attention to the fact that Nova Scotia was among the last of the provinces to offer that kind of assistance.
The budget documents released Tuesday also point to $140-million for households switching from heating oil to a more energy-efficient source; $135-million for COVID-19-related measures; and $134-million to cover damage caused in September by post-tropical storm Fiona.