Nova Scotia’s robust economy and growing population help boost government revenue

HALIFAX — For the second time in three months, Nova Scotia’s Treasury Secretary has reported an additional $1.3 billion in provincial revenue, thanks largely to a booming economy.

Allan MacMaster unveiled the latest find Tuesday as he provided details of a favorable budget update for the fiscal year ended March 31, 2023.

“I’ll say that it’s nice to see revenue increasing because we know there are areas where we can spend that revenue to help people,” MacMaster said at a news conference.

With the latest revenue boost, the deficit for fiscal 2022-23 is expected to be much smaller than it forecast when it presented its budget in March. The province now expects a deficit of $142.6 million — $363.6 million less than the original estimate.

According to MacMaster, the better-than-expected outlook is driven by strong economic activity that has helped boost the province’s revenue by $1.3 billion — most of that money comes from higher-than-expected revenue from people-, Corporate, sales and gas taxes.

The Treasury Secretary shared a similarly rosy story in early September when he announced that fiscal 2021-22 ended in a “surprise” surplus of $350.9 million. This figure reflected the final budget total calculated as part of the public accounting process. MacMaster’s original forecast was for a deficit of $584.9 million. The resulting $936 million swing into the black was the largest in the province’s history.

At the time, MacMaster said provincial revenue for fiscal 2021-22 was up $1.3 billion from original estimates due to higher tax revenue, offshore gas license expiry and federal transfers.

On Tuesday, the minister was again amazed at the provincial happiness.

“Our budgetary position is much better with this increased revenue,” he said. “We have committed to deficit spending to fix the health system and we will remain committed to it. I am positive about this increase in sales because it puts us in a much better position.”

According to the government, the province’s real gross domestic product — a key measure of economic output — grew 6.2 percent in 2021 and 2.9 percent in 2022. But those numbers rise to a whopping 10.9 percent and 6.8 percent, respectively, if inflation is factored out.

Growth in 2021 was driven by a rapidly expanding population, a return to pre-pandemic employment levels, a surge in consumer spending and rising wages. And while growth has slowed this year, largely due to higher interest rates and inflation, Nova Scotia’s population, employment, wages and housing have continued to trend upwards.

Still, MacMaster acknowledged that 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 enabled the government to provide more assistance to those in need while increasing investment in healthcare, housing and infrastructure.

In other words, the additional $1.3 billion for fiscal 2022-23 has already been talked about.

Departmental spending is estimated at $13.4 billion, up $949.5 million from the March estimate. In addition, last-minute departmental spend totaling $768.4 million was approved for 16 departments.

Last week, Nova Scotia Premier Tim Houston announced a one-time $115.4 million funding aimed at helping low- and middle-income earners deal with inflation.

By then, Houston’s progressive conservative government had faced criticism from opposition leaders, who pointed out that Nova Scotia was among the last provinces to offer this type of aid.

Budget documents released Tuesday also point to $140 million for households to switch from heating oil to a more energy-efficient source; $135 million for COVID-19 related responses; and $134 million to cover damage caused by post-tropical storm Fiona in September.

This report from The Canadian Press was first published on December 20, 2022.

Michael MacDonald, The Canadian Press