HALIFAX -- On the day last week that Nova Scotia's Liberal government unveiled its first budget and its plan to run deficits for another three years, hundreds of nurses set up picket lines outside the province's largest hospitals.
It was not the best way for Premier Stephen McNeil to mark his sixth month in power. But the collision of events -- a union demanding more from a province with little left to offer -- underlines the serious challenges that lie ahead for his government.
The budget Finance Minister Diana Whalen tabled April 3 forecasts a $279-million deficit. While that's far better than the $562-million shortfall for the fiscal year just ended, it will bring the provincial debt, already one of the country's highest per capita, to more than $15 billion.
Whalen projects more deficits before Nova Scotia turns a corner and posts a $13.6-million surplus sometime in 2017, about the time the Liberals will have to ask 950,000 Nova Scotians for a second mandate. The previous NDP government fought and lost the 2013 election on a dubious claim to have balanced the budget and now it's McNeil's turn to try to deliver the real thing.
April 3 was also the day more than 2,300 nurses went on strike to back demands that Capital Health, which operates most Halifax hospitals, hire more nurses. For months, their union has been hammering home a message that staff is stretched too thin, putting patient safety at risk, and a new contract must specify the number of nurses required per patient.
With health care already accounting for 40 per cent of total expenditures of just under $10 billion next year, McNeil's government can make a strong case that there's no money for more nurses.
But the events of last week suggest the government was ill-prepared to make the case for restraint, let alone deal with the fallout.
With the strike deadline looming, McNeil introduced essential-services legislation requiring unions and employers in the health and community-care sectors to work out emergency staffing levels before a strike or lockout. Capital Health nurses, who had no staffing agreement in place, were legislated back to work before they even walked off the job.
The move sparked a brief illegal walkout before a labour board ordered the nurses back to work. With the union-friendly NDP stalling the legislation as long as possible -- triggering marathon sessions at the provincial legislature -- the nurses regrouped and staged a one-day strike before the new law came into effect. Emergency rooms and other essential departments remained open despite the lack of a formal agreement on staffing levels, but hundreds of surgeries had to be cancelled.
The nurses could still stage a more limited strike but the next battle will be over the essential-services law itself. It applies to more than 30,000 civil servants, from employees of hospitals and special-care facilities to paramedics and emergency dispatchers, and Nova Scotia's largest public-sector union is vowing to challenge the legislation in court.
The labour strife was something of a blessing for the Liberals, deflecting attention from the grim budget news and the government's limited room to manoeuvre. Income and sales taxes are already among the highest in the country, so finding money to keep election promises and improve services could only be accomplished by adding to the deficit and debt.
The budget included almost a half-billion dollars in new spending, including almost $200 million more for health care. And there's a boost for public education -- 180 teachers will be hired to reduce class sizes for the youngest students.
Nova Scotia, Whalen admitted, has "a steep hill to climb." Last month a task force on economic renewal issued a report with the alarming title Now or Never, which calls for action to grapple with stagnant economic growth and an aging population. The province needs to attract immigrants and young people to inject new life into the economy, but Whalen's budget sent a mixed message by axing a $50-million tax credit offered to university graduates who remained in the province.
As if to underline the urgency, the province lost 3,400 jobs in February, nudging the unemployment rate above nine per cent. Tire-maker Michelin, a major employer, is shedding up to 500 jobs and financial pressures are forcing three towns to surrender their charters.
The government, meanwhile, is reviewing its tax regime and calling on public-sector unions to temper their demands for pay increases. After last week's turmoil, the Liberals' biggest challenge may be proving they are setting the agenda and not just scrambling to keep up with events.
Dean Jobb, an associate professor of journalism at the University of King's College in Halifax, is the Winnipeg Free Press East Coast correspondent.