Nova Scotia’s 2024-25 Budget: A Mirage of Progress Amidst the Quicksand of Inequality

sand falls through an hourglass that sits askew on rocky ground

The third budget presented by the Tim Houston government titled “Building Nova Scotia, Faster,” was aimed at addressing pressing issues such as the cost of living, affordability, and healthcare. However, the budget skirts around the root causes of the challenges faced by many Nova Scotians, especially the most vulnerable populations. The framing of the budget suggests a focus on quick fixes aimed at mitigating the symptoms of deeper, systemic problems, rather than addressing the underlying causes. This approach reflects a series of political choices that, perpetuate the suffering of those living below the poverty line. By applying policy solutions that merely soften the harsh edges of this suffering without tackling its roots, the government effectively chooses to allow poverty to persist and fester.

At the heart of the issue is the framing of current challenges as primarily stemming from cost of living and affordability. This perspective leads to policy solutions that, while perhaps reducing immediate suffering, fail to address the more insidious and long-lasting impacts of rising inequality. It’s crucial to recognize that, even as many struggle, a select few have seen their wealth double since the pandemic began. The primary drivers of inflation are not supply issues or rising labor costs but corporate greed and policies that enrich the already wealthy.

Ground-breaking research by scholars such as Richard Wilkinson and Kate Pickett has significantly advanced our understanding of the multifaceted impact of inequality on societies. Their work, notably in The Spirit Level: Why More Equal Societies Almost Always Do Better, presents compelling evidence that societies with less economic disparity experience a host of improved outcomes, including better health metrics, lower crime rates, and higher levels of trust among citizens.

Wilkinson and Pickett’s research draws on a range of statistical analyses to argue that the negative consequences of inequality are pervasive, affecting nearly all aspects of social life. One of the most striking findings is the correlation between income inequality and health issues. The researchers suggest that in more unequal societies, stress associated with social hierarchies and competition for status contributes to worse health outcomes. This stress can exacerbate mental health issues, increase the risk of drug and alcohol abuse, and lead to higher rates of obesity and related health problems.

Yet, the Nova Scotia budget continues on a path of policy choices that disproportionately benefit the rich. For example, the waiving of the HST for new building projects will provide developers with nearly half a billion dollars in tax relief, a move unlikely to lead to more housing but certain to enlarge the bank accounts of the super-rich. Ending bracket creep in income tax systems significantly benefits the wealthy. In a progressive tax system, higher income levels are taxed at higher rates. When tax brackets are adjusted upwards to counteract bracket creep, those at the higher end of the income spectrum see a more significant reduction in their effective tax rate, because portions of their income that would have been taxed at the highest rate may fall into lower brackets. This adjustment can result in substantial tax savings for high-income earners.

Notable there are positives in the budget, such as the creation of a school lunch program, modest investments in childcare and mental health, and reforms to Income Assistance that support people with disabilities. However, these measures still leave many behind and in poverty. The continuation of income assistance freezes for everyone else and insufficient investments in non-market housing, and the lack of investments to support vulnerable children and families are particularly glaring oversights.

The trends of the current government towards the privatization of healthcare and a housing strategy that prioritizes subsidies for wealthy developers poses significant risks to the well-being of vulnerable populations, particularly children and families living in poverty. This approach can exacerbate inequality and undermine efforts to create a more equitable society.

Privatization of healthcare, as discussed in various studies and analyses, often leads to a focus on profitability over accessibility. When public services transition to private management, there is a tendency to prioritize services that are more profitable, potentially at the expense of essential, yet less lucrative, care. This shift can result in reduced access to necessary health services for low-income patients, who are disproportionately affected by privatization.

Similarly, housing strategies that emphasize subsidies for wealthy developers rather than supplying non-market housing will perpetuate and deepen housing inequalities. Such policies often lead to the development of high-end properties that do not meet the needs of the most vulnerable populations. Instead of addressing the affordable housing crisis, these strategies can contribute to the gentrification of neighbourhoods, displacing low-income families and further limiting their access to affordable housing options. The focus on incentivizing developers rather than ensuring a supply of affordable housing exacerbates the challenges faced by families struggling to find stable, affordable homes.

Access to healthcare, meaningful income and stable housing are fundamental determinants of well-being. Without these basics, families face greater difficulty escaping the cycle of poverty. Children growing up in poverty are more likely to experience poor health outcomes, educational challenges, and limited economic opportunities in adulthood, and interaction with the child welfare system. And Nova Scotia’s vulnerable kids still need an advocate; while the budget bill finally establishes the long-awaited commission for children and youth, the scope of its responsibilities and powers is unfortunately not yet defined, it has no actual funding in this year’s budget, and the government still has not committed to a timeline for launch.

Moreover, these policy directions drive further inequality by creating a wider gap between the wealthy and the poor. As the wealthy benefit from increased investment opportunities in the healthcare and housing sectors, low-income families face higher costs and decreased access to essential services. This divergence not only undermines social cohesion but also threatens the long-term economic stability of society by limiting the potential of its most vulnerable members.

What this budget required was the effective framing of the issues around rising inequalities. Had the framing been correct then this would be leading to policies that could provide tax relief for low- and middle-income earners while raising taxes on the wealthiest individuals and developers. Such policies could generate revenue for non-market housing, raise income assistance rates above the poverty line, invest more deeply in childcare and post-secondary education, and create important social infrastructure to empower the voices of the most vulnerable, like a child and youth commission, another longstanding promise that has yet to be fulfilled.

Alec Stratford, MSW, RSW
NSCSW Executive Director/Registrar