Debt is a problem, but not one of ethics: finance minister

The provincial government is being asked to have the same debate that households across Canada are having — how dangerous is debt, and what should we do about it?
     
Auditor General Jacques Lapointe prefaced his January update with what he called his personal viewpoint on government borrowing and raised the question of whether whether it’s ethical for governments to spend more than they earn while leaving the tab for someone else.

That prompted a swift and angry rebuke from NDP backbencher Howard Epstein, followed by a more measured response from the provincial Finance Minister, who chided the auditor general for using the term “ethical” in a “thoughtful essay” on debt.

“The word “ethical” is such a loaded word with so much baggage,” said Graham Steele. “It’s possible to say that an issue is a serious issue that needs to be seriously discussed without adding into the debate a loaded word like the one that he used.”
 
Steele says debt is important, and it’s why the Dexter government is bent on balancing the books. However, he balked at Lapointe’s suggestion that Nova Scotia work to pay off its loans – and at a comparison between Nova Scotia and the ongoing debt crisis in Greece.

“It’s not useful to say well, if we’re not careful, we’ll be in the same place,” he said. “We’re not even close to being in the same place. We’re not even in the same ballpark. The same ballpark isn’t even on the horizon, to mix the metaphor. It’s just such a different place.”

PC leader Jamie Baillie said he was disappointed Steele dismissed the auditor general’s comments.

“He’s missed the point,” he said. “The auditor general mentioned Greece for a very good reason and that is that Greece didn’t know where their debt wall was – their lenders told them.”

Steele says none of the government’s lenders or credit raising agencies are raising the alarm at this point, and said it’s impractical to suggest Nova Scotia start working to pay off its debt.

Liberal member Diana Whelan suggested the New Democrats are being defensive because they have raised taxes and cut services while ignoring the debt.

“What I’d like to see is the government have a debt management plan,” she said. “There was one in place some years ago, but we hear nothing about it anymore.”

Baillie said Lapointe is entitled to give his opinion on financial risks facing the province, and said the NDP would do better to listen and then take action.

“Balance the budget and use surpluses to pay down debt so we’re on the right side of that ethical question and not on the wrong side,” he said.  

Steele says paying off the debt at this point would require enormous surpluses of the kind that can only be generated by tax hikes.