Growth, Austerity and the Future of Nova Scotian Prosperity - Jordan Brennan

This basic identity tells us that the source of national income (Y) is, necessarily, the sum of expenditure by the household sector (C), the busi- ness sector (I), the public sector (G) and the external sector (X - M). [...] Figure 1 compares the budgetary deficit in Nova Scotia with the weight- ed average of the Atlantic Canada provinces and the weighted average of all 13 provinces and territories.11 The blue bars capture the 2014 fiscal year (the most recent data year in the Fiscal Reference Tables) and the grey bars 16 Canadian Centre for Policy Alternatives FIgure 1 Budetary Deficits as a Percent of Total Governme. [...] Figure 2 reinforces this finding by plotting the account balance as a per- cent of revenue for each of the ten provinces and the weighted average of the provinces and territories for the 2014 fiscal year. [...] Why? The simple (and arithmetically unavoidable) answer is two-fold: the aver- age rate of growth of government spending — the numerator — increased in the period after 2003 (compared to the preceding 13 years), and there was a marked slowdown in the average GDP growth rate — the denominator — which fell from two percent between 1990 and 2003 to less than one percent be- tween 2003 and 2014, the c. [...] More distressing still is the chronically weak job creation in the private sector (0.08 percent per year, on average), Growth, Austerity and the Future of Nova Scotian Prosperity 35 one-half the rate of the overall labour force (0.15 percent) and one-quarter the rate of the working age population (0.32 percent).