03/27/2013 10:03 EDT | Updated 05/27/2013 05:12 EDT

Former Nova Scotia finance minister denies misleading legislature on deficit

HALIFAX - Nova Scotia's former finance minister dismissed opposition claims Wednesday that he misled the legislature when he tabled an erroneous deficit figure in the budget last spring.

Graham Steele said the opposition parties are trying to throw the government's handling of the province's finances into question before an election that's expected this year and a week before it tables a balanced budget.

"Frankly this is very much people trying to make a political mountain out of a very small molehill," Steele said outside the legislature, speaking on the matter for the first time. "This was routine business handled in a routine way."

Last month, auditor general Jacques Lapointe said the NDP government delivered a deficit forecast in its 2012-13 budget of $211 million when it was aware that the actual figure was $238 million.

Steele said he brought the budget estimates that were established before a March 1 cut-off point to the Treasury Board and they were approved.

"I assure you that nobody sat down and said, 'OK, we've got this great big decision to make on which way we should go,' " said Steele.

New revenue data that came to the department past the deadline was too small to affect the estimates, he said.

Steele said he didn't mislead the legislature when he said the government was on track to hit its deficit reduction targets and dismissed the $27 million gap between a deficit of $211 million and $237 million.

"I don't think there's very many people who think there's much of a difference," he added.

Steele spoke after Liberal Leader Stephen McNeil raised a point of privilege in the legislature asking that its internal affairs committee to determine whether the former finance minister misled the house.

Speaker Gordie Gosse said he needs time to consider McNeil's point of privilege.

Earlier Wednesday, opposition members of the public accounts committee pushed deputy finance minister Liz Cody for answers, arguing the legislature and the public should have been aware of the discrepancy.

Liberal Andrew Younger said the budget estimates were debated in the house when Steele knew the numbers weren't accurate.

"The minister of finance stood up in the house and said they had beat their back-to-balance targets by $5 million. In fact, they were short by $22 million," he said.

Cody said after an analysis of the new data that arrived after the March 1 cut-off date, Finance Department staff concluded around mid-March that the discrepancy wasn't large enough to affect the budget's overall estimates.

That recommendation was brought to the Treasury Board by Steele during a March 28 meeting, Cody said, where it was decided the budget estimates wouldn't be changed. The budget was tabled in the legislature on April 3.

Progressive Conservative Leader Jamie Baillie wanted to know if anyone from the premier's office attended the meeting, but Cody said she didn't know if that was the case at the time, although she added they sometimes do attend.

Premier Darrell Dexter does not attend the meetings and has denied knowing anything about the mistake.

"From a department's perspective, our mandate and our goal is to inform our political masters ... which we did," said Cody, who wasn't deputy finance minister at the time of the budget last year.

Baillie suggested while the error may not have met accounting thresholds for inclusion in the budget, it should have been made public.

He asked Cody who made the decision not to change the budget.

"Even if it's not wrong in the accounting materiality sense, it's still wrong and who made that decision?" he asked Cody.

"I can't answer that question," she said.

Outside the committee, Cody said the finance minister would have been operating on the analysis provided to him by the department.

"I think the minister was recognizing that this was in the grand scheme of things one-third of one per cent on a total budget of over $9 billion," she said.

However, Baillie said it was clear to him that beyond issues of whether the discrepancy was significant enough to include in the budget, a political decision was made by the government not to tell Nova Scotians.

"The only reason they would do that was so they could mislead Nova Scotians into believing they were on track when they weren't," said Baillie.

The auditor general has said the mistake was significant enough to be corrected and could have been fixed before the budget was presented.

The 2013-14 budget will be tabled in the legislature next Thursday.