The Bees Knees: Prizes for Week Five

Each week the Legislature is in session we give out four prizes for the best and worst moments, as recorded in Hansard.

But this week Graham Steele’s farewell address first set the opposition straight on how budget estimates work, and then had the legislature teary-eyed with his comments about his kids. Instead of doling out the awards, we encourage you to read his remarks in full.

Graham Steele: Since I resigned as Finance Minister almost one full year ago, I have not taken a large part in the proceedings of the House. I no longer speak for the government because only a minister can do that and I no longer speak for the Department of Finance.

My focus is back on serving constituents in the constituency, which is where I started back in 2001. I was a little surprised when the gist of the Speaker’s ruling yesterday was that I had never stood up in the House to state plainly that there was no intention on my part to mislead the House in the presentation of last year’s budget. It’s still not clear to me what opportunity there is for a government backbencher to make such a statement in response to a point of privilege.

Nevertheless and in any event, I’m taking the opportunity to do that now. Let me say plainly and directly, there was in the presentation of last year’s budget absolutely, positively no intention on my part to mislead the House. Building a $9 billion budget is an exceedingly complex process. It was my privilege to play a lead role in that process four times while I served as Minister of Finance. The process takes place over about eight months. There are literally thousands of line items. The economic model used by the Department of Finance has over 600 variables – everything is connected to everything else.

There is new information coming in on these line items and these model variables all the time, every single day. As a result, in the preparation of a budget there has to be a cut-off date. There has always been a cut-off date and there will always be a cut-off date. There is no Finance Minister, ever, who has stood up in this House with a budget that is up-to-date as of the day of the budget. That may be possible with a $9,000 budget or a $90,000 budget but it is not possible with a $9 billion budget, with thousands of line items and hundreds of variables, all of which are inter-connected and on which new information is coming in every day.

In the case of last year’s budget, everyone agrees that the new information came in after the cut-off date. This was explained at length when the Department of Finance appeared before the Public Accounts Committee. Anyone who still has questions about that point should review the transcript of that meeting. The only question left then is whether the new information was material in an accounting sense of the term, and again, everybody agrees that it wasn’t.

I know that $27 million sounds like a lot of money and it is, except in the context of a $9 billion budget. The Auditor General himself attests to the fact that it was not material. Remember that the Auditor General reviews the revenue estimates every year. Last year he signed off on the revenue estimates, as he has every year. He would not have signed off on the revenue estimates if there had been a material change. So, Madam Speaker, we had new information that came in after the cut-off date and it wasn’t material in the context of a $9 billion budget.

The commitment of this province, and indeed, of any participant in the financial markets, is that non-material changes will be incorporated into the next scheduled financial statements, and they duly were in the September forecast update. In short, routine matters were dealt with in a routine way. That’s the end of the story, or it should have been the end of the story.

Madam Speaker, I was flabbergasted to read in the February report of the Auditor General his view that the new information should have been stated at budget time. I did not understand his position then, and I do not understand it now. If the information came after the cut-off and was not material, which everyone agrees on, then what accounting rule says that it needs to be reported anyway? There isn’t one.

The Auditor General says that errors should be corrected, which is another accounting rule everyone agrees with, but this wasn’t an error. It was new information that wasn’t material that came in after the cut-off. That’s not an error or a mistake in any normal sense of the word. If the Auditor General’s interpretation is accepted, then the concept of the cut-off date become meaningless, because any change has to be reported, or maybe it’s not just any change.

The Department of Finance followed the rule of materiality, just like the Auditor General, and just like the department always has. The Auditor General now seems to be suggesting that a different rule should be followed, but he hasn’t said why or what the new rule should be. If the rule of materiality should change so that changes of a certain size should be reported, even if they’re not material, the Auditor General has not said what the new threshold is, nor has he said how close to Budget Day is too close.

Madam Speaker, I could go on about this, but the point is essentially this: the Auditor General in his February report is applying a new rule that he hasn’t spelled out, that is different than what has been applied before or that he applies himself, and that nobody in the Department of Finance, including me, could have anticipated at the time the budget was delivered.

There is another aspect of this matter that I think is relevant, and I think can only be understood by somebody who has sat in the chair of the Minister of Finance. The Province of Nova Scotia is a participant in the bond markets. As a public issuer, there are certain rules and conventions that apply. There is a process for the release of financial information of a public issuer. The Auditor General is suggesting a change in well-established rules about the release of information. The markets would consider this to be very peculiar behaviour. When you have a budget with thousands of interrelated line items and hundreds of interrelated economic variables, you cannot be dribbling out information just because one of those items has changed on a given day.

Madam Speaker, in closing, let me say that I am proud of the work I did as Minister of Finance. (Applause) I am proud of the Back To Balance process, and I’m proud that my successor as Minister of Finance was able to deliver a balanced budget to the people of the province this year. I have never deliberately misled the House, and I did not in delivering the budget last year. I respect this House and all that it represents, although I do believe that the level of posturing and partisanship on all sides should be a concern to all citizens of the province and all members of the House.

I am proud of what I have been able to accomplish as a member of this House for the past 12 years. The older I get, the more painfully aware I am that I could always have done more, and I could always have done better. I say all this knowing that these may well be the last words I say in the course of debate in this House, because this sitting will end soon, an election is imminent, and I am not reoffering as a candidate. One day, perhaps when my children grow up, they will look at Hansard for the period 2001 to 2013 and see what their father did and said while he was here. They are still young and it may be many years from now when they do that and if I am not around when they read these words, I want them to know that I love them, I am proud of them, and I hope that what they read here in Hansard makes them proud of me. Thank you very much.

Graham Steele’s Jobs Budget

People tend to be more concerned about a deficit of jobs than a deficit in a budget. And rightfully so.

That’s why we think the Opposition calls to balance the Nova Scotia budget immediately are wrong-headed. Graham Steele’s 2012 budget marches the province towards a balanced budget right on schedule, while continuing to keep the economy humming with fiscal stimulus dollars, including record investments in capital and training.

The Nova Scotia Budget is a Jobs Budget.

Austerity budgets do not create jobs, as the economies of Spain and Greece prove daily. Fiscal stimulus budgets, on the other hand, put people back to work, as can plainly be seen in the United States right now. Capital spending raises capital. 

Unemployment is the biggest barrier to deficit reduction. Getting people back to work means they begin to pay income taxes again, they shop more (supporting local business) and they are happier, healthier and more empowered (especially if their shop is unionized). As economist John Maynard Keynes said: “Look after unemployment and the budget will look after itself.”

Home construction will also get a boost with the NDP doubling their First-Time Home Buyers Rebate to $3,000 on newly constructed homes. And investments in shipbuilding, farming, forestry, fisheries, and manufacturing are key to ensuring the economies of small town and rural Nova Scotia recover as well.

Many political pundits have looked at the fiscal discipline of the Nova Scotia NDP and suggested they are a provincial copy of Chretien’s federal Liberals. In an interview on CBC’s Maritime Morning, Graham Steele explained how steady economic guidance and social democracy are complimentary, not mutually exclusive:

Graham Steele: I was born and raised in the Praries, I grew up in Manitoba which had NDP governments throughout the time I was growing up. They weren’t perfect of course, but they were pretty good governments. And that kind of responsible, thoughtful social democracy is emblematic of our entire government starting with the Premier on down. You do the right thing for the province but you do it in a fiscally responsible way. There’s no contradiction between those two things…

Lets look at another icon, Tommy Douglas. Tommy Douglas balanced the budget and he did while bringing in things like public healthcare. We believe deeply, fundamentally, in the necessity of quality public services… in order to continue to deliver those sustainably in the future, the finances have to make sense.