For release December 6 - Nova Scotia’s economy and finances are rebounding to pre-COVID-19 levels, with several financial indicators on the upswing, according to the Auditor General’s Annual Financial Report.
The government provided reliable financial statements for 2021-22 within the legislated deadline. For the 22nd year in a row, the Province of Nova Scotia received a clean audit opinion. That audit opinion means that all Nova Scotians, as well as the decision makers in Government, have assurance that they can rely on the financial statements.
However, an area of concern highlighted by the Auditor General is the lack of accountability through the legislature over additional appropriations. Additional appropriations are necessary when a department determines it cannot stay within its original budget estimate.
“When it comes to spending beyond the original approved House of Assembly budget, our cross-country comparison shows Nova Scotia’s Finance Act is unique,” says Auditor General Kim Adair.
“It is the only one where extra spending is approved solely by the government of the day and is never required to return to the House of Assembly for review, vote, or approval.”
Over the past 10 years, successive governments have approved $4.7 billion in extra spending. The amounts have significantly increased in recent years.
The Auditor General recommends improved accountability and transparency over the additional appropriations process. She has taken the unusual step of including a recommendation in the Annual Financial Report for Finance and Treasury Board to assess whether changes are necessary to align with the rest of the provinces in Canada.
The large swing from budgeted deficit of $585 million to the audited surplus of $351 million in 2021-22 was driven by an almost $1 billion increase in provincial source revenues, including tax revenues such as personal income tax, harmonized sales tax and corporate income tax; and offshore license forfeiture.
The province’s net debt was fairly stable in fiscal 2022. After increasing significantly in 2020-21 to $16.4 billion, the year-over-year increase last year mapped closer to pre-COVID levels and was $16.6 billion at the end of 2021-22. The province’s net debt to GDP ratio – used to assess the province’s ability to pay its financial obligations and render services – is now below pre-pandemic levels.
The province’s actual debt borrowings in 2021-22 were less than budgeted. In 2021-22, the Province borrowed $1.1 billion, just about half of its budgeted borrowing amount of $2.2 billion. The Province borrowed $2.1 billion in 2020-21.
Nova Scotia continues to depend on federal equalization payments with more than $1 in every $3 of the province’s revenue coming from the federal government.
The Annual Financial Report has three chapters and provides insights on topics of interest impacting the Province including:
- Provincial funding to universities: From 2017-18 to 2021-22, funding to universities rose from $448 million to $535 million, an increase of 20 per cent, the majority of which can be attributed to program grants and assistance between 2020-21 and 2021-22.
- Cleaning up contaminated sites: The liability to clean up contaminated sites including Boat Harbour and abandoned mine sites has grown significantly over the past five years and this year is $454.5 million.
- Healthcare costs: Province incurred $6 billion in health-related costs in 2021-22: Since 2017-18, annual health-related operational spending has increased by $1.1 billion, with $869 million of the increase coming since 2019-20.
- Year-end spending: There was a significant amount of spending during the last week of the year, when compared to previous years. Spending transactions of $1.4 billion recorded during the last week of March were analyzed as part of our audit of the Province’s financial statements.