December 15, 2011
The Province of Nova Scotia is forecasting a deficit of $365.2 million for 2011-2012, a reduction of $24.3 million from the estimate at budget time. This is the result of lower-than-expected expenses offset by lower-than expected revenues.
Total revenues, including net income from Government Business Enterprises, are forecast to be $8.8 billion, a decrease of $80.1 million from budget. Total expenses including consolidation and accounting adjustments are forecast to be $9.2 billion, $104.4 million lower than budget.
There is not much to draw on here, pretty much “stay the course, aren’t we doing a great job”. Well, yes and no. About what one can expect from any government past the halfway point in its mandate.
Much of the “savings” here are in more favourable interest rates on our debt (which is a good thing), not on any specific program initiatives brought in by the government. Personal income taxes are up $29 million and corporate taxes are down $6.8 million, in part due to a smaller share of the national corporate tax revenue. We are still quite reliant on federal tax transfers in Nova Scotia and I will admit that it is difficult to project numbers based on what some other entity is potentially going to give.
GDP is being forecast at 1.7%, slightly higher than the 1.6% forecast by RBC Economics Research. Their report indicates that Nova Scotia’s economy is in waiting mode. Economic growth has been slow in 2011, with ongoing declines in natural gas production and lower major project investment contributing to weak employment growth and consumer spending. Unemployment remains high compared to other parts of the country at 9%, although to be fair, it is the lowest in Atlantic Canada. This should trend downward because capital spending related to the $25 billion 30-year shipbuilding contract awarded by the federal government in October to Halifax’s Irving Shipyard is also expected to begin in 2012, initially with work on new structures required for the contract that is expected to last until 2014.
