18-K/A

Table of Contents

Table of Contents

Exhibit 99.1

FORWARD-LOOKING STATEMENTS

This exhibit includes forward-looking statements. The Province of Nova Scotia has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties, and assumptions about the Province of Nova Scotia, including, among other things:

	•		the Province of Nova Scotia’s economic and political trends; and

	•		the Province of Nova Scotia’s ability to control expenses and maintain revenues.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this exhibit might not occur.

2008-2009 Budget

The information set forth is an extract of budget documents released by the Minister of Finance on April 29, 2008 , and has not been updated since that date. All dollar amounts are expressed in Canadian dollars.

Budget Overview

The Province of Nova Scotia is tabling its seventh consecutive balanced budget in fiscal 2008—2009, estimating a surplus of $189.7 million.

Total revenues for 2008—2009, including government business enterprises’ net income of $358.2 million, are projected to be $8.5 billion, up from the $8.0 billion estimated in 2007—2008. This increase is attributed to a $276.1-million increase in provincial source revenues and a $170.4-million increase in federal source revenues.

Provincial source revenues have increased primarily as a result of increases to income taxes of $139.4 million, HST revenues of $55.2 million, and petroleum royalties of $93.3 million, offset by a decline in tobacco tax revenues of $12.8 million.

Despite equalization payments being flat, federal source revenues are up over 2007—2008 estimates due to increases in health and social transfers of $41.8 million, various federal trust revenues of $49.0 million, and tangible capital assets cost-shared revenue of $51.6 million.

The Offshore Agreement signed between the province and the Government of Canada on February 14, 2005, resulted in a lump sum payment of $830 million. Provincial legislation requires that the funding from the Offshore Agreement is applied to the province’s debt and accounted for according to GAAP over the eight-year life of the agreement. The amount accrued in 2008—2009 and recorded under federal revenue sources is $105.9 million, $37.6 million more than the 2007—2008 estimate.

Total expenses for fiscal 2008—2009 are budgeted at $8.3 billion, up $392.8 million from a $7.9-billion total in 2007—2008. Major increases in spending for departments include Health and Health Promotion and Protection, $189.0 million; Justice, $29.5 million; Community Services, $26.1 million; Service Nova Scotia and Municipal Relations, $27.3 million; Education, $24.1 million; and Transportation and Infrastructure Renewal, $21.8 million. In addition, the Department of Labour and Workforce Development has been created with an initial budget of $62.4 million.

Restructuring costs, a portion of which is for funding of wage negotiations, have increased to $177.7 million, $56.3 million higher than 2007—2008.

Partially offsetting these increases in program spending are gross debt-servicing costs, which are projected to be $904.5 million, down $49.8 million from 2007—2008 costs.

Authority for the annual cost to acquire provincially owned assets is reflected in tangible capital assets. Gross capital purchase requirements in 2008—2009 total $341.4 million, with net purchase requirements totalling $276.4 million (gross requirements less TCA cost-shared revenue). Gross capital funding includes an investment of $182.4 million in the highway system, $109.9 million for buildings, including schools, and $38.6 million for information technology.

In addition, capital funding has been provided to the following government units: $51.7 million for the district health authorities and IWK Health Centre, and $4.1 million in total for Trade Centre Ltd, Waterfront Development Corporation, and InNOVAcorp.

The province’s net direct debt to GDP ratio continues its downward trend in fiscal 2008—2009, falling to 34.9 per cent, compared to 36.6 per cent in 2007—2008.

BUDGET SUMMARY — STATEMENT OF OPERATIONS
($ thousands)


ESTIMATE
2006-2007			ACTUAL			ESTIMATE			FORECAST				ESTIMATE
(Restated)			2006-2007			2007-2008			2007-2008				2008-2009
												Consolidated Fund

												Revenues
	6,612,304			6,676,852			7,029,569			7,297,188		Ordinary Revenues		7,476,037
	58,903			64,682			60,883			57,821		Fees and Other Charges		60,834
	429,426			430,409			469,662			456,306		Ordinary Recoveries		456,375
	87,783			121,590			113,529			110,700		Sinking Fund Earnings		114,400

	7,188,416			7,293,533			7,673,643			7,922,015				8,107,646


												Expenses
	6,483,836			6,495,389			6,917,294			7,076,789		Departmental Expenses		7,360,889
	33,213			83,137			68,603			120,929		Pension Valuation Adjustment		67,590
	963,998			929,828			954,338			929,983		Debt Servicing Costs		904,522

	7,481,047			7,508,354			7,940,235			8,127,701				8,333,001

	(292,631	)		(214,821	)		(266,592	)		(205,686	)			(225,355	)


												Consolidation and Accounting Adjustments for Governmental Units
	46,402			2,711,633			40,592			28,585		Consolidated Fund Consolidation Adjustments		54,499
	4,100			(1,636,246	)		—			—		Health and Hospital Boards Operations		—
	—			(887,048	)		—			(6,439	)	School Board Operations		(2,000	)
	(1,533	)		6,115			76			1,383		Special Purpose Funds		385
	5,556			(137,828	)		309			(2,393	)	Other Organizations		3,916

	54,525			56,626			40,977			21,136				56,800


												Net Income from Government Business Enterprises
	144,200			141,717			139,600			134,500		Nova Scotia Gaming Corporation		136,200
	184,500			188,241			197,070			198,100		Nova Scotia Liquor Commission		210,021
	6,364			10,683			7,374			10,404		Other Enterprises		12,000

	335,064			340,641			344,044			343,004				358,221

	96,958			182,446			118,429			158,454		Provincial Surplus		189,666


Components of the Debt Reduction Plan¹
	4, 000			4,000			17,885			43,726		Debt Retirement — Contingency		6,365
	57,421			57,421			68,238			68,238		Offshore Offset Agreement		105,884
	23,466			22,546			16,882			37,329		Restricted Surplus — TCA		65,072
	12,071			98,479			15,424			9,161		Other		12,345

	96,958			182,446			118,429			158,454				189,666


¹		Note: the following table provides information as to the various components of the Debt Reduction Plan

REVENUES BY SOURCE
($ thousands)


	ACTUAL			ACTUAL
	2004-2005			2005-2006		ACTUAL		FORECAST		ESTIMATE
	(Restated)			(Restated)		2006-2007		2007-2008		2008-2009
Consolidate Fund Revenues
Provincial Sources
Corporate Income Tax		329,075			361,508		392,585		389,223		415,902
Harmonized Sales Tax		1,031,066			1,057,772		1,090,758		1,078,030		1,151,027
Individual Income Tax		1,462,250			1,568,449		1,678,995		1,780,967		1,828,653
Interest Revenues		70,513			81,139		81,889		75,854		81,823
Motive Fuel Tax		249,246			248,252		245,577		250,103		246,926
Offshore licenses forfeitures		61,000			43,208		4,227		108,808		—
Registry of Motor Vehicles		86,688			88,173		91,996		96,343		98,122
Royalties — Petroleum		28,202			123,850		269,100		399,747		513,775
Tobacco Tax		178,285			163,617		145,091		145,357		138,127
Other Provincial Sources		246,900			299,445		277,140		299,074		284,338
TCA Cost Shared Revenue		—			—		—		4,440		2,692
Prior Years’ Adjustments — Provincial Sources		(63,278	)		16,420		13,032		83,102		—
Fees and other Charges		60,553			60,928		64,682		57,821		60,834
Ordinary recoveries — Provincial Sources		191,389			203,886		247,328		263,289		254,560
Sinking Fund Earnings		143,235			124,395		121,590		110,700		114,400

Total — Provincial Sources		4,075,124			4,441,042		4,723,990		5,142,858		5,191,179

Federal Sources
Canada Health Transfer		484,528			581,015		610,477		638,954		664,185
Canada Social Transfer		244,867			254,964		264,304		280,412		296,869
C48 Infrastructure Trust Funds		—			—		2,468		44,168		38,767
C52 Trust Funds		—			—		—		4,208		24,547
Equalization Payments		1,321,774			1,343,527		1,385,539		1,464,528		1,464,935
Health Reform Fund		44,035			—		—		—		—
Offshore Offset		34,000			4,000		—		—		—
Offshore Oil and Gas Payments		—			57,100		57,421		68,238		105,884
Other Federal Sources		18,348			18,201		36,985		40,466		57,085
TCA Cost Shared Revenue		—			—		22,546		32,889		62,380
Prior Years’ Adjustments — Federal sources		25,093			5,027		6,722		12,277		—
Ordinary Revenues — Federal		154,592			161,954		183,081		193,017		201,815

Total Federal Revenues:		2,327,237			2,425,788		2,569,543		2,779,157		2,916,467

		6,402,361			6,866,830		7,293,533		7,922,015		8,107,646

Net Income from Government Business Enterprises
Nova Scotia Gaming Corporation		170,031			155,335		141,717		134,500		136,200
Nova Scotia Liquor Commission		170,034			181,217		188,241		198,100		210,021
Other Government Business Enterprises		9,442			8,867		10,683		10,404		12,000

		349,507			345,419		340,641		343,004		358,221

Total Revenues		6,751,868			7,212,249		7,634,174		8,265,019		8,465,867

REVENUES BY SOURCE
(as a percentage of Total Revenue)


	ACTUAL			ACTUAL
	2004-2005			2005-2006			ACTUAL			FORECAST			ESTIMATE
	(Restated)			(Restated)			2006-2007			2007-2008			2008-2009
Consolidate Fund Revenues
Provincial Sources
Corporate Income Tax		4.9	%		5.0	%		5.1	%		4.7	%		4.9	%
Harmonized Sales Tax		15.3	%		14.7	%		14.3	%		13.0	%		13.6	%
Individual Income Tax		21.7	%		21.7	%		22.0	%		21.5	%		21.6	%
Interest Revenues		1.0	%		1.1	%		1.1	%		0.9	%		1.0	%
Motive Fuel Tax		3.7	%		3.4	%		3.2	%		3.0	%		2.9	%
Offshore licenses forfeitures		0.9	%		0.6	%		0.1	%		1.3	%		—
Registry of Motor Vehicles		1.3	%		1.2	%		1.2	%		1.2	%		1.2	%


	ACTUAL			ACTUAL
	2004-2005			2005-2006			ACTUAL			FORECAST			ESTIMATE
	(Restated)			(Restated)			2006-2007			2007-2008			2008-2009
Royalties — Petroleum		0.4	%		1.7	%		3.5	%		4.8	%		6.1	%
Tobacco Tax		2.5	%		2.3	%		1.9	%		1.8	%		1.6	%
Other Provincial Sources		3.7	%		4.2	%		3.6	%		3.6	%		3.4	%
TCA Cost Shared Revenue		—			—			—			0.1	%		—
Prior Years’ Adjustments — Provincial Sources		-0.9	%		0.2	%		0.2	%		1.0	%		—
Fees and other Charges		0.9	%		0.8	%		0.8	%		0.7	%		0.7	%
Ordinary recoveries — Provincial Sources		2.8	%		2.8	%		3.2	%		3.2	%		3.0	%
Sinking Fund Earnings		2.1	%		1.7	%		1.6	%		1.3	%		1.4	%

Total — Provincial Sources		60.3	%		61.4	%		61.8	%		62.1	%		61.4	%

Federal Sources
Canada Health Transfer		7.2	%		8.1	%		8.0	%		7.7	%		7.8	%
Canada Social Transfer		3.6	%		3.5	%		3.5	%		3.4	%		3.5	%
C48 Infrastructure Trust Funds		—			—			—			0.5	%		0.5	%
C52 Trust Funds		—			—			—			0.1	%		0.3	%
Equalization Payments		19.6	%		18.6	%		18.1	%		17.7	%		17.3	%
Health Reform Fund		0.7	%		—			—			—			—
Offshore Oil and Gas Payments		—			0.8	%		0.8	%		0.8	%		1.3	%
Other Federal Sources		0.3	%		0.3	%		0.6	%		0.5	%		0.7	%
TCA Cost Shared Revenue		—			—			—			0.4	%		0.7	%
Prior Years’ Adjustments — Federal sources		0.4	%		0.1	%		0.1	%		0.1	%		—
Ordinary Revenues — Federal		2.3	%		2.2	%		2.4	%		2.3	%		2.3	%

Total Federal Revenues:		34.1	%		33.6	%		33.5	%		33.5	%		34.4	%

		94.4	%		95.0	%		95.3	%		95.6	%		95.8	%

Net Income from Government Business Enterprises
Nova Scotia Gaming Corporation		2.5	%		2.2	%		1.9	%		1.6	%		1.6	%
Nova Scotia Liquor Commission		2.5	%		2.5	%		2.5	%		2.4	%		2.5	%
Other Government Business Enterprises		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%

		5.1	%		4.8	%		4.5	%		4.1	%		4.2	%

Total Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

REVENUES BY SOURCE

2007-2008 FORECAST
Chart data


Net Income from GBE’s	4.1	%
Harmonized Sales Tax	13.0	%
Motive Fuel Taxes	3.0	%
Income Taxes	26.2	%
Canada Social Transfer	3.4	%
Canada Health Transfer	7.7	%
Equalization Payments	17.7	%
Other	24.9	%

2008-2009 ESTIMATE
Chart data


Net Income from GBE’s	4.2	%
Harmonized Sales Tax	13.6	%
Motive Fuel Taxes	2.9	%
Income Taxes	26.5	%
Canada Social Transfer	3.5	%
Canada Health Transfer	7.8	%
Equalization Payments	17.3	%
Other	24.2	%

EXPENSES BY DEPARTMENT
($ thousands)


	ACTUAL			ACTUAL
	2004-2005			2005-2006			ACTUAL			FORECAST			ESTIMATE
	(Restated)			(Restated)			2006-2007			2007-2008			2008-2009
Agriculture		63,220			62,370			54,652			67,305			59,563
Community Services		776,918			792,747			817,962			867,488			912,570
Economic Development		—			—			71,730			100,512			91,645
Education		1,054,605			1,110,881			1,186,958			1,238,703			1,261,744
Assistance to Universities		235,195			231,958			268,710			400,312			230,511
Energy		8,439			21,686			17,003			20,900			21,817
Environment		—			—			—			—			44,607
Environment and Labour		39,267			39,841			40,940			50,032			—
Finance		13,827			16,665			20,066			27,782			29,871
Fisheries and Aquaculture		—			—			6,168			7,091			7,463
Health		2,461,872			2,670,635			2,898,393			3,022,490			3,205,939
Health Promotion and Protection		—			—			50,290			68,252			87,526
Justice		192,986			206,672			215,487			234,727			262,244
Labour and Workforce Development		—			—			—			—			62,443
Natural Resources		62,271			66,678			69,107			86,957			84,638
Public Service		170,776			214,919			117,130			138,806			156,350
Seniors		—			—			—			—			2,127
Service NS & Municipal Relations		135,228			138,937			194,661			241,683			254,539
Tourism and Culture		59,231			51,728			54,717			57,584			56,727
Transportation Public Works		262,030			277,021			297,361			361,138			350,875
Restructuring Costs		64,910			90,656			116,017			87,905			177,690
Loss on Disposal of assets		(2,754	)		(357	)		(1,963	)		(2,878	)		—

Total Program Expenses		5,598,021			5,993,037			6,495,389			7,076,789			7,360,889


Pension Valuation Adjustment		6,221			30,327			83,137			120,929			67,590
Debt Servicing Costs		1,033,675			987,891			929,828			929,983			904,522

Total Expenses		6,637,917			7,011,255			7,508,354			8,127,701			8,333,001

EXPENSES BY DEPARTMENT
(as a percentage of Total Net Expenses)


	ACTUAL			ACTUAL
	2004-2005			2005-2006			ACTUAL			FORECAST			ESTIMATE
	(Restated)			(Restated)			2006-2007			2007-2008			2008-2009
Agriculture		1.0	%		0.9	%		0.7	%		0.8	%		0.7	%
Community Services		11.7	%		11.3	%		10.9	%		10.7	%		11.0	%
Economic Development		—			—			1.0	%		1.2	%		1.1	%
Education		15.9	%		15.8	%		15.8	%		15.2	%		15.1	%
Assistance to Universities		3.5	%		3.3	%		3.6	%		4.9	%		2.8	%
Energy		0.1	%		0.3	%		0.2	%		0.3	%		0.3	%
Environment		—			—			—			—			0.5	%
Environment and Labour		0.6	%		0.6	%		0.5	%		0.6	%		—
Finance		0.2	%		0.2	%		0.3	%		0.3	%		0.4	%
Fisheries and Aquaculture		—			—			0.1	%		0.1	%		0.1	%
Health		37.1	%		38.1	%		38.6	%		37.2	%		38.5	%
Health Promotion and Protection		—			—			0.7	%		0.8	%		1.1	%
Justice		2.9	%		2.9	%		2.9	%		2.9	%		3.1	%
Labour and Workforce Development		—			—			—			—			0.7	%
Natural Resources		0.9	%		1.0	%		0.9	%		1.1	%		1.0	%
Public Service		2.6	%		3.1	%		1.6	%		1.7	%		1.9	%
Seniors		—			—			—			—			—
Service NS & Municipal Relations		2.0	%		2.0	%		2.6	%		3.0	%		3.1	%
Tourism and Culture		0.9	%		0.7	%		0.7	%		0.7	%		0.7	%
Transportation Public Works		3.9	%		4.0	%		4.0	%		4.4	%		4.2	%
Restructuring Costs		1.0	%		1.3	%		1.5	%		1.1	%		2.1	%

Total Program Expenses		84.3	%		85.5	%		86.6	%		87.0	%		88.4	%


Pension Valuation Adjustment		0.1	%		0.4	%		1.1	%		1.5	%		0.8	%
Debt Servicing Costs		15.6	%		14.1	%		12.5	%		11.4	%		10.9	%

Total Expenses		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

TOTAL EXPENSES BY DEPARTMENT

2007-2008 FORECAST

Chart data


Community Services	10.7	%
Transportation and Infrastructure Renewal	4.4	%
Education & Universities	20.1	%
Resources and Economic Development	3.5	%
Health	38.0	%
Other	23.3	%

2008-2009 ESTIMATE

Chart data


Community Services	11.0	%
Transportation and Infrastructure Renewal	4.2	%
Education & Universities	17.9	%
Resources and Economic Development	3.2	%
Health	39.6	%
Other	24.1	%

Revenue Outlook

In 2008—2009, Nova Scotia’s total ordinary revenues are estimated to be $8,107.6 million, an increase of $434.0 million or 5.7 per cent compared to the 2007—2008 budget estimate.

Provincial own-source revenues are expected to increase by $276.1 million or 6.2 per cent over the 2007—2008 budget estimate to $4,761.4 million in 2008—2009.

Federal source revenues will increase by $170.4 million or 6.7 per cent from the 2007—2008 budget estimate to $2,714.7 million in 2008—2009.

Provincial Own-Source Revenues

Personal Income Tax (PIT)

Nova Scotia’s 2008—2009 estimate for personal income tax is $1,828.7 million, an increase of $110.4 million or 6.4 per cent over the 2007—2008 budget estimate.

National personal taxable income is projected to increase by 3 per cent in 2008, a significantly slower rate of growth than in 2007 but in line with historical trends. Taxable income in Nova Scotia is forecasted to expand by 3.3 per cent, but revenue growth will be offset by increases to the basic personal amount and non-refundable credit blocks announced in the 2006 budget, together with increases to the Graduate Tax Credit and Volunteer Firefighter Tax Credit and the introduction of a Volunteer Ground Search and Rescue Tax Credit.

Nova Scotia’s share of national personal taxable income has been steadily declining since 2000 and is projected to be 2.46 percent in 2008—2009, down from 2.52 per cent for the 2007—2008 budget estimate. The province’s yield of national personal taxable income is rising and is forecast to be 7.92 per cent in 2008—2009, up from 7.77 per cent in the 2007—2008 budget estimate. The 2008—2009 estimate is based

upon Finance Canada’s January 2008 forecast for national personal taxable income and the 2006 tax year Final Payment Books received from the federal government in March 2008.

Corporate Income Tax (CIT)

Nova Scotia’s 2008—2009 estimate for corporate income tax is $415.9 million, an increase of $29.0 million or 7.5 per cent over the 2007—2008 budget estimate.

CIT is based primarily on federally forecasted national corporate taxable income, as well as forecasted corporate profits in the province. It is affected by other variables, such as business take-up of provincial tax credit programs and the provincial allocation of taxable income based on corporations’ revenues and salaries paid in each province.

CIT also includes offshore corporate income tax, which is estimated to be higher in 2008—2009 than the 2007—2008 budget estimate. Growth in national corporate taxable income is expected to be 3.0 per cent in 2008, which is much slower growth than observed in the past few years.

Provincial corporate profits are projected to grow moderately in 2008 and outpace the growth rate in corporate profits on a national basis. The province’s share of national corporate profit has been trending down each year since 2003 and is projected to be 1.45 per cent in 2008, compared to 2.0 per cent in the 2007—2008 budget estimate.

Harmonized Sales Tax (HST)

Gross HST is estimated to total $1,295.7 million in 2008—2009, up $28.9 million or 2.3 per cent from the 2007—2008 budget estimate.

HST rebates for public-sector bodies, new housing, printed books, volunteer fire departments, persons with disabilities, and Your Energy Rebate are projected to total $144.7 million, a decrease of $26.3 million or 15.4 per cent from the 2007—2008 budget estimate. This is due primarily to revisions in the Your Energy Rebate Program offset by increases in the other rebates.

Net HST is projected to total $1,151.0 million in 2008—2009, an increase of $55.2 million or 5.0 per cent over the 2007—2008 budget estimate. Growth in the consumer expenditure component remains the most influential factor of the increased revenues, with increases in the public sector, housing, and financial institutions bases also contributing to revenue growth.

Tobacco Tax

Tobacco tax revenues are projected to total $138.1 million in 2008—2009, down $12.8 million or 8.5 per cent from the 2007—2008 budget estimate.

Consumption of tobacco products continues to decline as a result of several factors: promotion of a healthy lifestyle by all levels of government, increased application of no-smoking laws in public spaces, and increases in prices. In addition, the increased distribution of illegal tobacco products has had a significant effect on revenues and the market penetration of illegal products has not yet stabilized.

Motive Fuel Taxes

Motive fuel taxes are projected to total $246.9 million in 2008—2009, down $5.3 million or 2.1 per cent from the 2007—2008 budget estimate.

High petroleum prices are expected to continue to prevail during the next fiscal year, having a slight negative impact on gasoline consumption (0.8 per cent), which accounts for approximately 73 per cent of revenue from motive fuel taxes. This impact will be offset by a projected rise in labour income of 5.6 per

cent. In addition, diesel oil consumption is estimated to increase by 1.5 per cent, as it is more closely tied to economic activity than price movements.

Offshore Petroleum Royalties

Offshore petroleum royalties are estimated to be $513.8 million in 2008—2009, an increase of $93.3 million or 22.2 per cent from the 2007—2008 budget estimate.

The increase is primarily a result of higher prices for natural gas, increased production volumes for the Sable Offshore Energy Project, and the project’s interest holders achieving predetermined return thresholds that result in increasing royalty rates.

Other Provincial Sources

Other provincial sources are estimated to be $467.0 million, an increase of $6.4 million or 1.4 per cent from the 2007—2008 budget estimate.

This revenue source includes such items as corporate capital taxes, tax on insurance premiums, Seniors’ Pharmacare premiums, and the Casino Win Tax.

The increase is the result of higher revenues from the Registry of Motor Vehicles and increased interest revenue. These increases are somewhat offset by lower corporate registration fees and a reduction in the Casino Win Tax.

Federal Transfers

Equalization

Equalization revenues are estimated to increase by $0.4 million over the 2007—2008 budget estimate to $1,464.9 million.

The equalization estimate reflects the province’s adoption of the Expert Panel formula for equalization. Growth in equalization revenues to the province are flat in 2008—2009 despite an enrichment of the national program from $13.0 billion to $13.8 billion. This is as a result of the clawback of payment to the province under a fiscal capacity cap provision.

As part of a clarification reached with the Government of Canada on October 10, 2007, Nova Scotia will receive an additional payment from the federal government if the cumulative value of the equalization formula in effect at the time the Offshore Accord was signed (the Interim approach) exceeds the cumulative value of the Expert Panel approach.

In 2008—2009 the value of the Expert Panel approach exceeds the value of the Interim approach, so no additional payment will be forthcoming. The arrangement is in effect until 2019—2020 to coincide with the term of the Offshore Accord.

Offshore Offset payments are estimated to be $105.9 million in 2008—2009, an increase of $37.6 million or 55.2 per cent over the 2007—2008 budget estimate. The increase reflects the inclusion of higher offshore royalties from recent years in the equalization formula. Under provincial legislation, the Offshore Offset payments are directed to debt repayment until the notional payments reach the $830-million advance payment made to the province in 2005.

The Canada Health Transfer (CHT)

In 2008—2009 the total provincial entitlement for CHT consists of the provincial allocation of a fixed national entitlement. The 2008—2009 national CHT amount that is available in cash and tax points is estimated to be $36.5 billion. The fixed national pool of cash to be distributed to provinces is $22.6 billion.

Under an agreement reached in September 2004 the cash portion of CHT is legislated to grow by 6 per cent each year.

The CHT cash entitlement for Nova Scotia is estimated to be $664.2 million, which is $25.2 million or 3.9 per cent higher than the 2007—2008 budget estimate. The estimate of the province’s cash entitlement reflects the federal government’s calculation on the levels of population and personal and corporate income tax provided in January 2008.

The Canada Social Transfer (CST)

Nova Scotia’s 2008—2009 cash entitlement for CST is estimated to be $296.9 million, $16.5 million or 5.9 per cent higher than the 2007—2008 budget estimate.

The provincial entitlement is based on a per capita cash provincial allocation of a fixed national entitlement, which stands at $10.5 billion. Effective with the 2007 federal budget, the CST no longer contains a tax point transfer component.

Other Federal Sources

Other federal sources are estimated to be $182.8 million in 2008-09, an increase of $90.6 million
or 98.2 per cent over the 2007—2008 budget estimate:

• $24.5 million of the increase is the result of draw downs from federal trusts established in the 2007 federal budget for Patient Wait Times Guarantee, Human Papillomavirus (HPV) Immunization, and an ecoTrust for Clean Air and Climate Change; and

• $22.5 million of the increase is due to additional federal trusts funded from the 2008 federal budget, specifically, community development, police officer recruitment, and public transit capital

In 2008—2009 Nova Scotia will also start to receive base funding of $25.0 million per year for infrastructure. This was announced as part of the 2007 federal budget, but the program parameters were not finalized until the spring of 2008. Much of this funding will be used for tangible capital assets across government.

Other federal sources also include the federal Wait Times Reduction Fund. This funding is drawn down according to the notional allocation included in the Wait Times Agreement and provincial spending commitments. Nova Scotia has drawn down $34.4 million in 2007—2008, but the funding available in 2008—2009 is only $17.1 million.

Other

Recoveries

Recoveries are projected to total $456.4 million in 2008—2009, down $13.3 million or 2.8 per cent from the 2007—2008 budget estimate.

The decrease relates primarily to medical equipment funding being moved from recoveries to ordinary revenues.

Fees and Other Charges

Fees and other charges are projected to total $60.8 million in 2008—2009, unchanged from the 2007—2008 budget estimate.

Sinking Fund Earnings

Sinking fund earnings are projected to total $114.4 million in 2008—2009, an increase of $0.9 million or 0.8 per cent from the 2007—2008 budget estimate.

Key Tax Measures—Personal Income Taxes

Basic Personal Amount and Other Non-refundable Credits

As announced in the 2006—2007 budget, the province is increasing the basic personal amount exempted from personal income taxes by $250 per year over a four-year period. This represents an increase of $1,000 or 13.83 per cent. The province’s other non-refundable credits will also grow by 13.83 per cent over this period. The basic personal amount will increase from $7,481 to $7,731 effective January 1, 2008, and to $7,981 in January 2009. The province’s other non-refundable tax credits will also grow by 3.46 per cent.

Volunteer Firefighters Tax Credit

For the 2008 tax year, the Volunteer Firefighters Tax Credit will increase from $250 to $375 as announced in the 2007—2008 budget. This tax credit will increase to $500 in 2009.

Volunteer Ground Search and Rescue Tax Credit

Budget 2008—2009 provides a new tax credit for eligible ground search and rescue volunteers commencing January 1, 2008. The tax credit will be equivalent to the Volunteer Firefighters Tax Credit for the 2008 tax year ($375) and will increase to $500 in 2009. Eligibility criteria will be developed this fiscal year.

Healthy Living Tax Credit

Budget 2008—2009 provides for the extension of the Healthy Living Tax Credit to all Nova Scotians effective January 1, 2009. The tax credit for children’s sport and recreational activity registration costs was introduced in 2005, and the maximum eligible expenditure was increased to $500 in 2006. The tax credit is being expanded to cover both adult and children’s eligible expenditures to a maximum of $500 for each individual or child.

Transit Tax Credit

Budget 2008—2009 provides for a new Transit Tax Credit. Starting in 2009, Nova Scotians will be able to claim credits for their transit pass expenses. Eligible transit pass expenses in Nova Scotia will match the Federal definitions and be multiplied at the lowest personal income tax rate (8.79 per cent) to calculate a non-refundable provincial personal income tax credit.

Graduate Tax Credit

For those individuals who graduate from eligible postsecondary programs after January 1, 2008, the province will increase its graduate tax credit from $1,000 to $2,000.

Key Tax Measures—Business Taxes

Digital Media Tax Credit

The Digital Media Tax Credit announced in budget 2007—2008 will be increased starting on January 1, 2008. This measure will increase the refundable tax credit on eligible expenditures from 35 per cent to 50 per cent, as well as increase the tax credit cap on total production costs from 17.5 per cent to 25 per cent. In addition, the tax credit for production work completed outside the Halifax Regional Municipality will increase from 5 per cent to 10 per cent, with the corresponding total production cost cap increasing from 2.5 per cent to 5 per cent.

Film Industry Tax Credit

As announced in September 2007, the Film Industry Tax Credit will be increased for productions starting after September 30, 2007. This measure will increase the refundable tax credit on eligible expenditures from 35 per cent to 50 per cent, as well as increase the tax credit cap on total production costs from 17.5 per cent to 25 per cent. In addition, the tax credit for production work completed outside the Halifax Regional Municipality will increase from 5 per cent to 10 per cent, with the corresponding total production cost cap increasing from 2.5 per cent to 5 per cent.

Large Corporations Tax

As previously announced, the province’s Large Corporations Tax (LCT) on capital of non-financial institutions will decline from 0.225 per cent to 0.2 per cent on July 1, 2008. That tax rate will continue to decline on an annual basis until its elimination in 2012.

Tax Relief in Nova Scotia
($ millions)


	Estimated Tax		Estimated Tax		Fiscal Impact
	Relief in 2008		Relief in 2009		2008-09
New Tax Measures

Volunteer Firefighters and Ground Search and Rescue Tax Credit	$	3.9	$	5.3	$	4.1
Healthy Living Tax Credit	$	3.3	$	8.6	$	4.3
Transit Tax Credit		—	$	1.5	$	0.3
Film & Digital Media Tax Credit	$	15.5	$	17.3	$	15.7

Previously Announced Tax Measures

Basic Personal Amount and other credits	$	32.3	$	48.4	$	35.3
Graduate Tax Credit	$	14.3	$	14.3	$	14.3
Large Corporations Tax Reduction	$	28.0	$	42.8	$	31.7

Sensitivity

Revenue estimates that are in the form of a forecast are based on a number of economic, financial, tax assessment, and statistical values and assumptions. All of these reflect the province’s planned course of action for the forecast period and judgment as to the most probable set of economic conditions.

As these variables change throughout the year and as more information becomes available, they may have an impact, either negative or positive, on the revenue forecasts, and these impacts could be material. The province intends to update the forecast periodically throughout the forecast period. It is also important to note that the above-referenced variables can move quite independently of each other and may have offsetting effects.

The following table lists the specific key economic assumptions and key variables that directly affect the calculation of provincial revenue estimate and forecast figures as included in this Revenue Outlook section and reflects assumptions developed by the province as at April 29, 2008.


Revenue Source		Key Variables
Personal Income Tax		• national level of personal taxable income as provided by Finance Canada
		• Nova Scotia share of national levels of taxable income
		• provincial taxable income yield
		• tax credits uptake


Corporate Income Tax		• national level of corporate taxable income level as provided by Finance Canada
		• Nova Scotia share of national taxable income
		• tax credit uptake
		• national and provincial corporate profit levels
HST		• personal consumer expenditure levels
		• provincial gross domestic product
		• spending by exempt industries
		• rebate levels
		• housing investment
Tobacco, Gasoline and Diesel Taxes		• personal consumer expenditure levels
		• tobacco and fuel consumption patterns
		• tobacco and fuel prices
		• labour income
Petroleum Royalties		• foreign exchange rates
		• production levels
		• world price of natural gas, subject to current market conditions
Equalization		• one-estimate, one-payment approach
CHT / CST		• annual increases in the national base amount
		• changes in personal and corporate income taxes
		• changes in population
		• changes in tax point values

Additional Information

In addition to the key economic and fiscal assumptions contained in the 2008—2009 revenue estimates, the following information should also be taken into account when interpreting the revenue estimates.

The revenue estimates for 2008—2009 are considered to have been prepared on a basis consistent with accounting policies currently used by the province to record and/or recognize revenue for purposes of its Consolidated Fund. As a result, revenues for certain government service organizations that are consolidated for financial statement purposes are not included in the province’s revenue estimates.

The Department of Finance and other departments or agencies of the province have prepared their specific revenue estimates for 2008—2009 using a combination of current internal and external models and other information available. Every effort has been made to ensure the integrity of the results of the models and other information. As actual or more current information becomes available, adjustments may be necessary to the projection of revenues.

The revenue forecasted to be received through federal transfer payment programs pursuant to the Federal-Provincial Fiscal Arrangements Act incorporates official information released by the federal government as of February 26, 2008. In addition, CHT and CST revenue estimates are, in part, based on Canadian national and provincial population estimates supplied by Statistics Canada.

As with past population estimates, there is a forecast risk that the data will be revised by Statistics Canada. Prior years’ adjustments (PYAs) are normally made to federal transfers and to income tax revenues. All PYAs known to date have been included in the forecast for 2007—2008.

Statistics Canada will be releasing results of Census 2006 in the fall of 2008. The province does not have any data at this time that could be reflected in the revenue estimates. Due to federal legislative provisions, transfers in respect of Equalization, CST, and CHT for 2007—2008 will not be affected by new census data, nor will the 2008—2009 estimates for Equalization and Offshore Offset payments.

Offshore Forfeiture Revenue

The risk of a deposit forfeiture is inherent in the offshore exploration industry. While a forfeiture is not unusual given the unpredictable nature of this industry, any revenue projection based on past trends would be inappropriate. The province’s accounting recognition policy is to record forfeiture revenue when a notice of forfeiture is given. As of today’s date, no notice has been provided for 2008—2009.

To be consistent with our revenue recognition policy and to reflect the uncertainty of this revenue, no offshore forfeiture revenue is included in the 2008—2009 estimates. If, subsequent to the budget, forfeiture notice is provided, the amount will be reflected in future quarterly forecast updates and the Public Accounts for 2008—2009.

Tangible Capital Assets

The 2008—2009 Estimates have been prepared using the revisions to Section 3150, Tangible Capital Assets, of the Public Sector Accounting Handbook. This standard, amongst other things, defines the cost of an asset as the gross amount to acquire, construct, develop, or better the asset. Previously, the province netted recoveries or cost-sharing contributions from others to determine the cost of an asset. All recoveries are recorded as revenue in the year when the related asset is acquired. Amortization expense is calculated based on the gross cost amount.

Crown Share Revenue

The governments of Canada and Nova Scotia have agreed to allow an Expert Panel resolve the outstanding issue of Crown Share revenue owing to the Province. To date, the Expert Panel has not submitted its report. To be consistent with our revenue recognition policy and to reflect the uncertainty of this revenue, no Crown Share revenue is included in the 2008—2009 estimates.

Government Business Enterprises — Net Income

Nova Scotia Liquor Corporation Net Income

The Nova Scotia Liquor Corporation (NSLC) returns all of its net income to the Government of Nova Scotia as shareholder. The NSLC is budgeting net income of $210 million in 2008—2009. This is an increase of 6.6 per cent compared to the 2007—2008 estimated net income. The net income is projected on net sales of $554 million for 2008—2009 as compared to $524 million estimated for 2007—2008. The increase in net income is primarily attributable to the following factors:

1. net sales increase of 5.7 per cent, attributable to a combination of price, premiumization, and volume increases

2. continuing expenditure investment in enhancing the retail customer shopping experience and IT infrastructure

3. a new focus on serving the wholesale community

4. more aggressive and effective product promotion and marketing programs; and

5. increased employee capacity focused on customer assistance selling and product knowledge skills

Nova Scotia Gaming Corporation Net Income

Nova Scotia Gaming Corporation’s (NSGC) net income is budgeted to be $136.2 million in 2008—2009, $3.4 million lower than the 2007—2008 budget estimate and $1.7 million higher than the 2007—2008

forecast. Budgeted revenue growth in 2008—2009 will be offset by increased expenses, largely as a result of increased prize payout to ticket lottery players.

Net Income from Other Enterprises

Net income from other enterprises is estimated at $12.0 million for 2008—2009. This includes $8.9 million from the Halifax-Dartmouth Bridge Commission and $3.1 million from the Highway 104 Western Alignment Corporation.

The 2007—2008 estimated net income from other enterprises was $7.4 million. The increase is primarily due to an accounting change at the bridge commission, changing from a calendar year reporting period to a fiscal year accounting period, ending March 31. The change brings the bridge commission in line with the provincial government’s fiscal year reporting period.

Data for Treasury Management Debt Maturity Schedule Chart (millions $)


	GBP		USD		CAD
2008-09						269.3
2009-10						657.5
2010-11						646.6
2011-12		56.3		795.0		728.4
2012-13						55.8
2013-14				299.9		164.0
2014-15						285.0
2015-16				205.7		135.0
2016-17				586.5		420.0
2017-18						160.0
2018-19				198.0		47.1
2019-20		114.4		855.4		73.9
2020-21						78.3
2021-22				312.0		496.3
2022-23				708.8		—
2023-24						90.6
2024-25						85.8
2025-26						—
2026-27						—
2027-28						550.0
2028-29						—
2029-30						—
2030-31						—
2031-32						300.0
2032-33						—
2033-34						600.0
2034-35						—
2035-36						441.8
2036-37						109.6
2037-38						581.5

Key national economic assumptions, displayed in the schedule below, are based on data and information available as of March 3, 2008.

National Forecast Assumptions


	2007			2008f			2009f
Real GDP (Chained 2002 dollars), % change		2.7	%*		1.9	%		2.2	%
Employment, % change		2.3	%*		1.3	%		1.4	%
Unemployment rate, %		6.0	%*		6.0	%		6.0	%
Personal income, % change		6.1	%*		5.4	%		4.4	%
Consumer price inflation, % change		2.2	%*		2.1	%		1.3	%
Retail sales, % change		5.8	%*		5.7	%		4.7	%
Corporate profits before taxes, % change		5.8	%*		4.2	%		3.5	%
Exports of Goods and Services, % change		1.9	%*		1.3	%		3.1	%


Source: Statistics Canada, actual (*), Nova Scotia Department of Finance, projections

The economic assumptions displayed in the schedule below are based on data and information available as of March 13, 2008.

Provincial Forecast Assumptions


	2007			2008f			2009f
Real GDP (Chained 2002 dollars), % change		1.7	%		1.7	%		2.5	%
Nominal GDP, % change		5.4	%		4.9	%		4.2	%
Employment, % change		1.3	%*		0.9	%		1.3	%
Unemployment rate, %		8.0	%		8.1	%		7.5	%
Personal income, % change		3.5	%		4.2	%		4.2	%
Consumer price inflation, % change		1.9	%*		2.0	%		2.0	%
Retail sales, % change		4.0	%*		4.4	%		4.9	%
Corporate profits before taxes, % change		4.6	%		4.0	%		4.1	%
Exports of Goods and Services, % change		5.4	%		3.9	%		8.5	%


Source: Statistics Canada, actual (*), Nova Scotia Department of Finance, projections

Nominal Gross Domestic Product at Market Prices
($ millions)


			Growth					Growth
Year	Nova Scotia (1)		Rate %			Canada (2)		Rate %
1998		21,401		5.1			914,973		3.7
1999		23,059		7.7			982,441		7.4
2000		24,658		6.9			1,076,577		9.6
2001		25,909		5.1			1,108,048		2.9
2002		27,082		4.5			1,152,905		4.0
2003		28,851		6.5			1,213,175		5.2
2004		30,014		4.0			1,290,828		6.4
2005		31,575		5.2			1,375,080		6.5
2006		31,997		1.3			1,446,307		5.2
2007		33,727		5.4	p		1,531,427		5.9
2008		35,383		4.9	p		1,590,836		3.9	p
2009		36,866		4.2	p		1,654,878		4.0	p


1		Source: Statistics Canada, Provincial Economic Accounts, Cat. No. 13-213-PPB

2		Source: Statistics Canada, National Income and Expenditure Accounts, Cat. No. 13-001-PPB

p		Preliminary Projections; Source: Nova Scotia Department of Finance

Nominal Gross Domestic Product at Market Prices
(chained 2002 $ millions)


			Growth					Growth
Year	Nova Scotia (1)		Rate %			Canada (2)		Rate %
1998		23,210		3.7			990,968		4.1
1999		24,482		5.5			1,045,786		5.5
2000		25,234		3.1			1,100,515		5.2
2001		26,036		3.2			1,120,146		1.8
2002		27,082		4.0			1,152,905		2.9
2003		27,464		1.4			1,174,592		1.9
2004		27,836		1.4			1,210,656		3.1
2005		28,336		1.8			1,247,780		3.1
2006		28,597		0.9			1,282,204		2.8
2007		29,093		1.7	p		1,316,219		2.7
2008		29,581		1.7	p		1,340,577		1.9	p
2009		30,306		2.5	p		1,369,887		2.2	p


1		Source: Statistics Canada, Provincial Economic Accounts, Cat. No. 13-213-PPB

2		Source: Statistics Canada, National Income and Expenditure Accounts, Cat. No. 13-001-PPB

p		Preliminary Projections; Source: Nova Scotia Department of Finance


Note:		The Chained 2002$ millions is the Fisher Volume Index formula (2002 = 100) used to project Gross Domestic Product in constant dollars.

Personal Income Per Capita
(dollars)


			%					%
Year	Nova Scotia (1)		Change			Canada (1)		Change
1998		21,786		5.1			24,814		3.7
1999		22,922		5.2			25,755		3.8
2000		23,933		4.4			27,384		6.3
2001		24,793		3.6			28,254		3.2
2002		25,426		2.6			28,650		1.4
2003		26,094		2.6			29,416		2.7
2004		27,041		3.6			30,703		4.4
2005		28,311		4.7			31,959		4.1
2006		29,459		4.1			33,530		4.9
2007		30,505		3.6	p		35,221		5.0	p
2008		31,825		4.3	p		36,996		5.0	p
2009		33,174		4.2	p		38,301		3.5	p


1		Source: Statistics Canada, Cat. Nos. 13-001-PPB, 13-213-PPB, 91-215-XIE (Statistics Canada Annual Demographic Statistics) and Nova Scotia Department of Finance

p		Preliminary Projections; Source: Nova Scotia Department of Finance (Projections calculated using NS Budget 08 Forecast for Personal Income and Cat no. 91-520 for Population Estimates)

Nova Scotia Labour Market
(thousands of persons)


			%					%
Year	Labour Force (1)		Change			Employment (1)		Change
1998		441.8		1.5			395.3		3.5
1999		446.8		1.1			404.0		2.2
2000		452.8		1.3			411.4		1.8
2001		460.0		1.6			415.2		0.9
2002		467.7		1.7			422.9		1.9
2003		474.6		1.5			431.2		2.0
2004		485.0		2.2			442.2		2.6
2005		483.9		(0.2	)		443.1		0.2
2006		480.0		(0.8	)		441.8		-0.3
2007		486.7		1.4			447.6		1.3
2008		491.6		1.0	p		451.6		0.9	p
2009		494.5		0.6	p		457.3		1.3	p


1		Source: Statistics Canada 2007, Labour Force Historical Review, 71F0004XCB, February 2008

p		Preliminary Projections; Source: Nova Scotia Department of Finance

Unemployment
(thousands of persons)


			Nova Scotia (1)					Canada (1)
			Unemployment					Unemployment
Year	Unemployed		Rate (%)			Unemployed		Rate (%)
1998		46.6		10.5			1,270.1		8.3
1999		42.9		9.6			1,181.6		7.6
2000		41.4		9.1			1,082.8		6.8
2001		44.8		9.7			1,163.6		7.2
2002		44.8		9.6			1,268.9		7.7
2003		43.4		9.1			1,286.2		7.6
2004		42.8		8.8			1,235.3		7.2
2005		40.8		8.4			1,172.8		6.8
2006		38.1		7.9			1,108.4		6.3
2007		39.1		8.0			1,079.4		6.0
2008		40.0		8.1	p		1,093.4		6.0	p
2009		37.2		7.5	p		1,108.7		6.0	p


1		Source: Statistics Canada 2007, Labour Force Historical Review, 71F0004XCB, February 2008

p		Preliminary Projections; Source: Nova Scotia Department of Finance


Note:		The unemployment statistics shown in this table are annual averages of the monthly indices.



	Amounts as to	Names of
	which registration	exchanges on
Title of issue	is effective	which registered
N/A	N/A	N/A


DAVID H. LANDAU		VICKI L. HARNISH
Katten Muchin Rosenman LLP		Deputy Minister of Finance
575 Madison Avenue		Province of Nova Scotia
New York, New York 10022-2585		P.O. Box 187
		Halifax, Nova Scotia B3J 2N3


SIGNATURE
EXHIBIT INDEX
EX-99.1: EXCERPTS FROM THE 2008-2009 NOVA SCOTIA BUDGET
EX-99.2: RECENT DEVELOPMENTS



Exhibit 99.1		Excerpts from the 2008-2009 Nova Scotia Budget, tabled on April 29, 2008, and approved by the Legislature on May 15, 2008.

Exhibit 99.2		Recent Developments


	Province of Nova Scotia
	By:	/s/ Vicki L. Harnish
		Deputy Minister of Finance

Exhibit

Number

Description

Excerpts from the 2008-2009 Nova Scotia Budget, tabled on April 29, 2008, and approved by the Legislature on May 15, 2008.

Recent Developments


*		The Registrant filed this annual report on a voluntary basis.


			Percentage Change
	Period		Nova Scotia			Canada
Retail Trade ⁽¹⁾	Jan. — Mar. 2008/ Jan. — Mar. 2007			6.6	%		6.0	%
Housing Starts (all areas) ⁽²⁾		2007 / 2006		-3.0	%		0.4	%
Unemployment Rate ⁽³⁾	April 2008			7.8	%		6.1	%
Consumer Price Index	Jan. — Apr. 2008/ Jan. — Apr. 2007			2.7	%		1.8	%


(1)		Seasonally adjusted.

(2)		These figures represent residential housing starts in both urban and rural areas.

(3)		These figures reflect the seasonally adjusted rate of unemployment.