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2012 Letter, Auditor General of Nova Scotia

February 4th, 2013 No comments

2012 Letter to Auditor General of Nova Scotia


Nova Scotians for Equalization Fairness, N.S.E.F., has twice requested you to investigate where over 99% of federal equalization transfers to the Province of Nova Scotia was and is being spent. No action has so far been initiated by you.

There has been no evidence of requests from Nova Scotia MLAs, excepting an op-ed from Mla Geoff MacLellan suggesting an audit, but this isn’t surprising because the political parties in power prior to the present one were complicit in redirecting this funding and capping the amount directed to municipalities and towns.

In 2009/2010 the government’s own figures show that from the $1,571,000,000 transferred by the federal government for equalization a total of $32,050,000 was distributed to eligible towns and municipalities. The actual amount from the federal transfer was $13,500,000, the remaining $18,550,000 (total Foundation Grants of $1,550,000 and $17,000,000 of the total Grants of Entitlement) being wholly supplemented from Nova Scotia Power Inc. Grant-In-Lieu-Of- Taxes.

The use of N.S.P.I. Grant-In-Lieu-Of-Taxes is a separate issue of contention. In 2010 the GILT paid to the Nova Scotia Government was $40,100,000. Since all revenue received is placed in the consolidated fund (General Revenue), it can be argued that the government can comprise its provincial equalization program of $32,050,000 entirely from the NS Power Inc. GILT.  And because the Cape Breton Regional Municipality has 28 percent of the NSPI commercial assets in its municipality, which should mean $11,228,000 represents municipal property taxes, if treated like other commercial assessments.  This would also mean the CBRM actually receives only about $5 million from the the provincial equalization program and not the approximately $16 million the provincial government states.

In 2010/2011 the actual amount distributed from the $1,337,000,000 federal transfer was again only $13,500,000 and In 2011/2012 the same amount was distributed from the federal transfer of $1,344,000.000

From a total $4,250,000,000 federal equalization transfers for these three years only $40,500,000 has been distributed by provincial governments from the federal government transfers. The loss of $4,209,500,000 that creates financial hardship and inequalities in taxation and services for towns, municipalities and citizens demand correction in practice of directing funds.

Regarding the rulings on the CBRM’s constitutional challenge, the courts have not ruled on the merits of the constitutional case but only ruled that the CBRM did not have standing before the court to raise these matters.  A procedural dismissal by the courts merely allows this injustice to fester because only some Nova Scotians are beneficiaries under the terms of section 36 of the Constitution Act, 1982.  That is not what the constitution intended!  Therefore, our committee feels it is incumbent upon you as the accountability gatekeeper for the citizens to account for on what and where these equalization payments were spent after being received by the provincial government.


We ask once again that you initiate an audit to determine where this amount has been spent and we would suggest a meeting between you and our representative where we can provide greater details of the basis for our remarks.

Yours truly,

Rene Halden, Correspondence Secretary, Nova Scotians for Equalization Fairness.


(1)   Equalization Calculations based on Service Nova Scotia and Municipal Relations 2009/2010, 2010/2011, and 2011/2012 figures.

(2)   Service Nova Scotia and Municipal Relations “Helping Municipalities Cope with NSPI Reassessment”.

Cc. Premier and all Mlas

Read reply from the Auditor General here.

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