Change to N.S. Finance Act would clarify cabinet's borrowing power

·3 min read
Finance Minister Labi Kousoulis tabled the Financial Measures Act on Thursday, the document that ultimately enables spending outlined in the budget. (CBC - image credit)
Finance Minister Labi Kousoulis tabled the Financial Measures Act on Thursday, the document that ultimately enables spending outlined in the budget. (CBC - image credit)

The provincial government is clarifying in law that it has the ability to borrow money any time without having to first bring the matter before the Nova Scotia Legislature.

Finance Minister Labi Kousoulis tabled the Financial Measures Act on Thursday, the bill that effectively grants the government the authority to carry out the spending itemized in the provincial budget.

Within the act are also several policy changes, including an amendment to the Finance Act related to borrowing. The government already has the ability to borrow money outside of the budget and those additional appropriations, based on an approved borrowing plan for the year, are regularly reported.

The amendment announced Thursday would see the finance minister be able to go to cabinet for approval to borrow even more money in a year, should the approved borrowing plan not be enough.

Govt borrowed an extra $1B in December

That's what happened in December when then-premier Stephen McNeil and his cabinet signed off on borrowing an additional $1 billion because of the strain COVID-19 had placed on the previously approved $1.7-billion borrowing plan.

Finance Department officials said Thursday they had a legal interpretation at the time saying it was fine, but the suggestion was made that language should be added in the act for clarity.

Kousoulis said such decisions should be at cabinet's discretion because of the need sometimes to act quickly.

"We've seen over the last year the nimbleness that we had to do in terms of COVID," he told reporters.

"Not having that ability to act quickly, I think, would do more harm to the people of Nova Scotia than to not have that."

Responding to market shifts

Requiring such decisions to go before the legislature could also mean missing out on opportunities, said Kousoulis. As evidence, he pointed to a recent decision by the government to borrow $500 million to take advantage of low interest rates, which have since increased.

"We're now going to be getting, over the next seven years, the benefits of saving $5 million a year in interest," he said.

"So not having the flexibility as we go to capital markets, for our professionals, I think would actually undermine the ability to raise capital, to time it, to look at investments. The markets are a lot more fluid than we can be in terms of reconvening in [Province House]."

But Tory Leader Tim Houston said he thinks common sense would suggest the government should have brought the decision to borrow an additional $1 billion before the legislature for discussion before moving ahead.

Prior to the current spring sitting, MLAs had not been at Province House for more than 15 minutes since the pandemic started in Nova Scotia in March of 2020.

"We had proposed plans on how the legislature could sit safely, pretty much a year ago," Houston told reporters. "The legislature should have been sitting [and] there should have been some legislative oversight on those types of appropriations."

Voters hold government in check

Houston said the move is another example of how the Liberals have eroded the transparency the House is supposed to facilitate, referring to the changes the government imposed in 2018 on the public accounts committee.

"They're just not a government that likes to be held accountable and that's a bad thing for democracy and it has the potential to be a very bad thing for Nova Scotians," he said.

Kousoulis disagreed with the notion that the move allows the government to avoid the scrutiny of the legislature for long stretches of time.

Ultimately, if people are unhappy with the way the government is operating, they have the ability to voice that displeasure at the ballot box, he said.

"With elections, people can judge a government in terms of its fiscal and financial performance and that is really what keeps government in check."

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