Premier Houston should learn from John Hamm’s approach to spending in Nova Scotia

John Hamm, former premier of Nova Scotia, died recently, spurring commentary about his legacy. Many observers believe that Hamm heavily influenced the outlook of Premier Tim Houston. While a full examination of Hamm’s record is beyond our scope here, Nova Scotians would benefit if Premier Houston took a page out of Hamm’s book on deficit reduction.

Hamm took office in the middle of the 1999/2000 fiscal year when Nova Scotia’s budget deficit was $797 million or 3.3 per cent of provincial GDP—tied for the largest deficit (as a share of the provincial economy) over the last five decades.

Hamm and his finance minister Neil LeBlanc understood that the fiscal approach of previous governments was unsustainable. In the Hamm government’s first budget, LeBlanc said: “The irony is, it will be our children who pay the tremendous cost of the debt. They didn’t create it. They didn’t make the decisions that brought us to where we are today, but they will be the ones who pay the lion’s share. Twenty-five years of living beyond our means—25 years of borrowing—hasn’t made us a more prosperous province, it hasn’t made us any healthier, and it hasn’t helped our students reach the top of the class. It’s time we learned from our mistakes… this budget asks all Nova Scotians to accept less today so that we will have more tomorrow.”

This wasn’t mere rhetoric—Hamm and LeBlanc followed through. They reduced program spending by 1.7 per cent, something that’s only been done twice in the 25 years since (Hamm and LeBlanc did it again in 2003/04).

That 2000/01 budget placed a heavy emphasis on Nova Scotia’s government living within its means. According to the plan, the government should separate needs from wants, assess spending priorities, and analyze what was government’s true role versus what could be best accomplished by the private or not-for-profit sectors. In many respects, this approach emulated the successful fiscal approach of the federal Chretien government.

As a result of the initial spending reduction and restraint that followed, the Hamm government balanced the budget in 2000/01 (for the first time in 40 years) and in every year of its term. After Hamm left office, Premier Rodney MacDonald also maintained budget balance, for a total of nine consecutive balanced budgets, something that would have seemed impossible a decade earlier.

The balanced budgets and spending restraint (combined with revenue growth) allowed Hamm and LeBlanc to stem the tide of a debt situation that had been spiralling out of control. Between Hamm’s first budget (2000/01) and his last (2005/06), the government’s net debt increased by just $138 million compared to more than $7 billion in the decade prior to his term as premier. Debt as a share of the economy plummeted from 47.4 per cent to 38.0 per cent during the same time, increasing the sustainability of provincial finances and reducing interest payments on the government’s debt.

Again, Premier Houston would do well to emulate this approach. Despite much rhetoric of spending cuts from unions and others, in reality the Houston government has increased spending every year since taking office in 2021 (on a per-person basis, after adjusting for inflation). The government projects a massive deficit this year, and a consequent increase in debt, with no plan for a return to budget balance.

Finally, in another contrast with Hamm, consider what the Houston government plans to do with windfalls. The Hamm government benefitted from robust revenue growth from the development of Nova Scotia’s offshore oil and gas industry and the Atlantic Accord agreement with Ottawa. Understanding the weight of the provincial debt burden, Hamm used all of this windfall to pay down debt. In contrast, Houston has benefitted from multiple years of unusually high growth in provincial revenue (14.5 per cent in 2021, 11.2 per cent in 2022 and 10.8 per cent in 2024), but in each case simply spent the windfall (and then some) and racked up debt in each of those years.

Among his many accomplishments, John Hamm leaves behind a strong fiscal track record during his time as premier. Here’s hoping our current premier takes a page out of Hamm’s book and changes course quickly.