Nova Scotia premier says public sector wages not supported by economy

HALIFAX – Nova Scotia can’t support high public sector wages that outpace the province’s lagging economic growth, Premier Stephen McNeil said Thursday upon the release of a new fiscal forecast.

McNeil said the government will have to have “tough conversations” with public servants as it tries to reduce the deficit and meet budget targets.

“We have one of the worst performing economies in the entire country, yet our collective agreements have outpaced every other province,” he said. “How does that make sense? … That’s a recipe for disaster.”

The tough talk came as Finance Minister Diana Whalen issued the latest financial update, which forecasts lower spending and a $54-million reduction in the deficit since the last projections.

The update for the 2014-15 budget forecasts a deficit of $220.6 million, down from the $274.5 million that was estimated in September.

Whalen said total revenues are forecast to be $9.7 billion, an increase of close to $100 million since the last fiscal update. She said the increase is due mostly to higher corporate income tax and petroleum royalty revenues.

In August, she introduced a mid-year spending reduction in a bid to meet budget goals.

McNeil said his Liberal government would continue to push for fiscal restraint, despite its unpopularity.

“Every Nova Scotian is going to have to share in some of the pain to bring this province back to fiscal reality,” he said. “We can no longer continue to be operating at a cost model that whenever there is a bump in the road drives us to huge deficits.”

Progressive Conservative Leader Jamie Baillie said this latest fiscal forecast indicates the government is facing a “jobs crisis” without a plan to fix it.

“Liberal fiscal policies aren’t working and neither are too many Nova Scotians,” he said in a statement. “If the premier wanted to be truly accountable to Nova Scotia families, he would cut up the credit card and get serious about reigning in spending.”

He slammed the Liberals for missing a target of a one per cent reduction in overall departmental spending.