Nova Scotia’s debt limits government’s ability to deliver services, auditor says

HALIFAX – Nova Scotia’s auditor general is warning that the province’s debt is limiting the government’s ability to deliver public services.

In a report released Wednesday, Jacques Lapointe says the poor fiscal state is a drain on current and future resources.

Lapointe says while the government has the ability to spend in excess of its revenues, to do so is financially irresponsible except in exceptional circumstances. He says those would be in times of emergency, borrowing for large-scale capital projects that could not proceed otherwise and to maintain services during an economic downturn.

“In all other cases, I believe government has a responsibility to its citizens to live within its means,” he says in his report.

Lapointe says the habit of governments to spend more than they earn raises ethical questions. He asks whether it’s fair to saddle future generations with debt accumulated from today’s services.

“Those making the spending decisions are not fully accountable to those who, in the future, will be required to pay for those decisions,” he says. The report makes no specific recommendations on the matter. Lapointe says he merely wanted to raise the issue out of concern for the province’s well-being and financial health.

He said he wasn’t singling out the NDP government, but raising concerns about what is a long-established problem in many provinces.

“I’m not making comments about a particular situation today in Nova Scotia or commenting on the actions of this particular government,” he told reporters. “That’s outside my mandate and I won’t talk about those things. I’m making these comments to generate some thinking and some other viewpoints around this issue.”

But government backbencher Howard Epstein said Lapointe moved himself into the realm of economics and politics, which he described as “unfortunate.”

“I want to assure everyone that Nova Scotia is not going bankrupt,” he said. “His language, I think, and his analysis was beyond really where it should have been. He is not an economist and really tried to give us economics advice and that was inappropriate.”

He accused Lapointe of offering a “glib” analysis on debt that made Nova Scotia appear as though it is in crisis, lamenting that the report made no mention of the government’s plan to tackle its financial problems.

Lapointe responded by saying he wanted to stay away from commenting on government policy.

“I made the comments that I did simply to get people thinking about what should our approach be to government borrowing, but without getting into the argument about whether … this government is on the right track or the wrong track,” he said. “That’s not for me to say.”

Liberal member Diana Whalen said the New Democrats are being defensive because they have raised taxes and cut services while ignoring the debt.

“They have been adding to the debt. … We need to see a plan to stop doing so,” she said.

“Balanced budgets alone won’t guarantee that the debt doesn’t grow.”

Last July, the government reported that the province’s net debt fell to $12.8 billion for the 2010-11 fiscal year — a decrease of $217.8 million over the previous year. But it also forecast the net debt to grow to $14.1 billion by March 2013.

Last week, New Brunswick’s auditor general released a similar report, warning that debt will affect that province’s ability to meet public demand for services if it’s not addressed.