When Nova Scotia unveiled its 2025-26 budget on March 3, 2025, it didn’t just present numbers—it laid out a gamble. With a projected $697.5 million deficit, the province is betting that slashing taxes and pouring $2.35 billion into infrastructure will reverse a decade of sluggish growth in Halifax. The centerpiece? A 1% drop in the Harmonized Sales Tax, from 15% to 14%, effective April 1, 2025. It’s not just about saving shoppers a few dollars. It’s about trying to convince people and businesses that Nova Scotia is still worth investing in.
Why Halifax’s Economy Is Stalling
Here’s the thing: Halifax isn’t collapsing. It’s just not moving fast enough. Real GDP growth slowed from 1.4% in 2023 to just 0.8% in 2024, placing it fifth among peer cities. Meanwhile, real GDP per capita dropped 2.6% last year—even as the population kept growing. That’s not a housing boom. That’s a demographic treadmill. People are arriving, but the economy isn’t creating enough high-value jobs to keep up. The Conference Board of Canada put it bluntly: Nova Scotia ranks near the bottom of all provinces in productivity. Factories run slower. Offices output less. Wages stagnate. And that’s the core problem behind the budget’s urgency.
Even with $4.2 billion in major projects slated for Halifax in 2024—a 20% jump from 2023—growth is uneven. Retail sales rose 2.8% from 2022 to 2023. Manufacturing sales grew 4.5%. Good, but not transformative. The real pain? TD Economics warns that without intervention, the province’s net debt-to-GDP ratio will hit its highest level in 25 years by 2028-29. Borrowing is rising. Revenues are shaky. And the Fraser Institute says the deficit ballooned because spending jumped $503 million beyond projections while revenues fell by $44.9 million. This isn’t bold fiscal policy. It’s damage control.
The $2.35 Billion Infrastructure Gamble
So what’s Nova Scotia doing about it? It’s building. Hard. The 2025-26 budget includes the largest capital plan in provincial history. Over $750 million is going to healthcare—$300 million alone for the Halifax Infirmary expansion, and another $450 million for Cape Breton Regional Municipality hospitals. That’s not just about beds. It’s about attracting and keeping skilled workers who need reliable care.
Then there’s housing. $136.4 million to build 242 new public units. Not enough to solve the crisis, but a signal. And schools? $210 million to renovate and build across the province, with a focus on underserved communities. But the biggest chunk—$518 million—is going to roads. New passing lanes on Highway 107, a redesigned Port Hastings intersection in Inverness County, and upgrades to key freight corridors. Why? Because if you can’t move goods efficiently, you can’t compete.
“We’ve got the money. Now we need the capacity,” said Duncan Williams, President & CEO of the Construction Association of Nova Scotia, in a November 5, 2025 interview with CBC’s Portia Clark. “Tradespeople are stretched thin. We’re not short on projects—we’re short on welders, electricians, and project managers.”
Federal Money Is Coming—But Too Late?
Meanwhile, Ottawa is throwing fuel on the fire. The Build Communities Strong Fund, announced in the federal 2025 budget, will inject $51 billion over ten years into local infrastructure. But the catch? The bulk doesn’t start flowing until 2026-27. That’s a year after Nova Scotia’s budget takes effect. And then there’s the Trade Diversification Corridor Fund—$5 billion over seven years to build ports, railways, and highways to reduce reliance on U.S. markets. Prime Minister Carney announced it on March 28, 2025.
But Halifax Mayor Andy Fillmore isn’t celebrating yet. “We’re ready to build,” he told Clark. “But federal programs come with layers of bureaucracy. We need flexibility, not red tape.”
Still, the timing is critical. With U.S. tariffs looming and global trade shifting, Nova Scotia’s ports and highways could become strategic assets—if they’re upgraded fast enough. The Atlantic Economic Council forecasts another 18% jump in major Halifax projects for 2025. That’s $5 billion in potential investment. But can the province handle it?
What’s Next? The November 21 Test
The real pressure point arrives on November 21, 2025, when Minister Mary Ng arrives in Halifax to launch a major Atlantic Canada economic push. This isn’t just a photo op. It’s a signal to investors: Ottawa is watching. And if Nova Scotia can’t show results—on housing, on transit, on skilled labor—then federal dollars may flow elsewhere.
TD Economics still sees hope. Real GDP growth is projected to average 1.9% over the next two years, buoyed by capital spending and tax cuts. Nominal GDP growth could hit 4.5%. But that’s only if the province avoids the trap of spending its way to prosperity without fixing productivity. The tax cut? A nice boost. The infrastructure? Essential. But without better education, training, and innovation, this budget might just delay the inevitable.
Why This Matters to Every Nova Scotian
You might think this is all about politicians and budgets. It’s not. If Halifax’s economy stalls, wages stay flat. Housing stays unaffordable. Young professionals leave. Schools lose funding. Hospitals get overcrowded. The $2.35 billion isn’t just concrete and steel—it’s a bet on whether this province can still compete. And right now, the odds aren’t great.
Frequently Asked Questions
How will the HST cut affect everyday Nova Scotians?
The 1% HST reduction—from 15% to 14%—saves the average household about $150 annually on purchases like groceries, gas, and clothing. While modest, it’s the first provincial tax cut in over a decade and signals a shift toward affordability. But experts warn that without wage growth, the savings may be absorbed by rising rents and utility costs.
Why is productivity so low in Nova Scotia?
Nova Scotia lags due to outdated infrastructure, a shortage of skilled trades, and underinvestment in tech and innovation. The province has the lowest R&D spending per capita in Atlantic Canada. Many businesses still rely on manual processes, and digital adoption in small enterprises remains below national averages, stifling output per worker.
Is the $2.35 billion infrastructure plan enough to fix Halifax’s economic issues?
It’s necessary, but not sufficient. Infrastructure creates jobs and improves efficiency, but without matching investments in education, immigration support, and tech training, the province risks building roads without enough drivers—or factories without enough skilled workers. The real test is whether new housing and transit attract and retain talent.
What role is the federal government playing in Nova Scotia’s recovery?
The federal Build Communities Strong Fund and Trade Diversification Corridor Fund will provide $56 billion over the next decade, but funding doesn’t start flowing until 2026-27. This creates a gap. Nova Scotia must use its own budget to lay groundwork—otherwise, federal dollars may bypass the province due to unpreparedness.
Who stands to lose if this budget fails?
Young workers, low-income families, and rural communities. If Halifax doesn’t become more productive, wages won’t rise, and outmigration will accelerate. Rural areas, already losing population, could see further decline as services shrink. The next generation may look elsewhere—not because they don’t love Nova Scotia, but because it no longer offers them a future.
What’s the biggest risk to this budget’s success?
The biggest risk is a mismatch between ambition and capacity. Nova Scotia has the plan and the money—but not enough skilled labor, streamlined permitting, or digital systems to deliver projects on time. Delays could trigger cost overruns, erode public trust, and make future funding harder to secure. Speed and efficiency matter as much as spending.
