If you are a government, there are two basic ways to determine if you have a balanced budget:
1) Your income (taxes, service fees, fines) meets or exceeds your expenses.
2) Your income plus the GDP (money brought in from outside) meets or exceeds your expenses.
I believe that the second one of these is a false measure and should not be used.
We, both federally and provincially, have enough debt to last a lifetime. As I point out in Spend Less Than You Earn each Canadian owes about 17,500 to the national debt, and each Nova Scotia owes about 17,033 to the provincial debt. The government has borrowed money on our behalf, with the promise of helping us, but also expecting us to pay it back.
The government also borrowed it based on the strength of the economy, and this is where the GDP comes in.
If we have a strong GDP — if we are exporting more than we are importing — we are selling more than we are buying — then the government sees more money coming in, it sees a stronger economy, and it wants to give more to the electorate. It will borrow more money because of this. And if we have a weak GDP — we are importing more than we are exporting — we are buying more than we are selling — then the government doesn’t have as much money to spend.
The problem is that we have no control over the economy of other provinces or countries. We can’t tell them to buy more of our goods and services. And because of that we shouldn’t count on their money when we are considering our debt.
The risk in doing that is it means that the strength of our economy, and therefore whether or not our budget is balanced, is dependent on things that we have no control over. If the economy of another country is doing well then they will spend money here, and so our economy will be doing well. And if their economy suddenly drops off then ours will drop off as well. (This certainly happens, but it should not be used to determine if we have a balanced budget or not.)
We need to have a provincial and federal balance sheet that is strictly based on domestic income on one side, and all expenses on the other. If our income is higher than our expenses then we have a surplus; and if our income is less than our expenses then we have a deficit.
At this point we owe too much money to look at things any differently.