According to a book co-authored by late economist Alberto Alesina, austerity is a “policy of sizeable reduction of government deficits and stabilization of government debt achieved by spending cuts or tax increases or both.” But the term is being widely used to describe fiscal policy in the region, in total contradiction to the facts. 

For example, a simple Google search reveals that many media outlets and activist groups in Nova Scotia characterized the Houston government’s latest budget (released in February) as an “austerity budget.” 

In New Brunswick, prior to the Holt government’s budget released in March, government-sector unions conducted a widespread public relations campaign warning of “austerity.”

With an eye on his government’s upcoming budget, Prince Edward Island Premier Rob Lantz recently said “I don’t believe now is the time for fiscal shock therapy or severe austerity.”

And not to be left out, media outlets in in Newfoundland and Labrador have questioned whether the Wakeham government’s upcoming budget may rely on “austerity,” with one academic claiming that a recent reduction to the size of the cabinet “makes it seem like the government is focused on austerity.” (But don’t worry, while in opposition Premier Tony Wakeham said “any time we talk about austerity, it usually means the people of the Province of Newfoundland are going to pay for it.”)

With so much concern over austerity, one might think that governments in the region are slashing spending, cutting deficits and paying off debt. Yet that couldn’t be further from the truth. 

The Houston government’s “austerity” budget in fact increased spending by a projected $762 million in 2026/27, will result in Nova Scotia’s second-largest deficit on record (in nominal terms) and increased the debt by $3.9 billion this fiscal year.

The Holt government’s budget substantially hiked spending, projected four large deficits until at least 2028/29 and a historically-large increase in New Brunswick’s debt.  

According to last year’s P.E.I. budget, government spending has reached near all-time highs, with projected deficits as far as the eye can see, coinciding with a rapid increase in debt. Premier Lantz’s comments suggest this month’s upcoming budget will deliver more of the same.  

And Premier Wakeham has already said his upcoming budget would not include “dramatic cuts,” and his government has not committed to balancing the budget, so it will likely increase spending and debt in Newfoundland and Labrador.

Again, against this backdrop, it’s remarkable to see so much talk of “austerity.” Instead, Atlantic Canadians deserve an honest conversation about government finances.

All four governments in the region plan to increase spending such that it substantially outweighs revenues, producing budget deficits and driving up debt—that’s not austerity, but rather a transfer of debt from one generation to another. Simply put, governments in the region are making costly spending decisions that have ramifications both today (e.g. higher government debt interest costs that consume more taxpayer dollars) and tomorrow (likely higher taxes on our children and grandchildren to pay for today’s debt). 

Governments in Atlantic Canada have created a fiscal mess. Extensive research shows that spending reductions are the most effective way to eliminate deficits (rather than tax cuts), yet the region’s governments are pursuing the exact opposite strategy. They should reduce spending, move towards budget balance, and reduce the debt burden on taxpayers today and in the future. And stop misusing terms to mislead the public about government fiscal policy. 

Alex Whalen is Director, Atlantic Canada at the Fraser Institute. 

The views expressed are those of the author(s). National Newswatch Inc. publishes a range of perspectives and does not necessarily endorse the opinions presented.