Wednesday, June 5, 2002
The Chronicle Herald
Moncton Times Transcript

What Stephen Harper got wrong – and right

By Brian Lee Crowley

The recent comments by Alliance Leader Stephen Harper about the culture of defeatism in Atlantic Canada, and the response to those comments by East Coast politicians and others, were entertaining theatre. But like most plays based on a true story, the facts often get bent to serve a good story line. So while Mr. Harper actually had a substantive point that he overplayed, his opponents were also wrong in their rush to absolve Atlantic Canadians of any responsibility for their state.

Let’s start with Mr. Harper’s lines in this little morality play. His view, later nuanced but not withdrawn, is that Atlantic Canadians made a pact with the devil in Ottawa. The region’s “defeatism” lies in believing that its citizens have ceased to have faith in their own abilities and talents, and have come to prefer reliance on Ottawa and its transfer programs.

There are two major objections to this. The first is that the Alliance leader appears to have set himself up in moral judgment of the region’s people. His diagnosis of our ills appeared to amount to saying that we had all been bought and the only way to solve the problem was a government in Ottawa that would refuse to honour the corrupt deal: Liberal votes in exchange for employment insurance, regional development and other transfer payments.

But in fact, history shows that, in the post-war era, Atlantic Canada was busy closing the disparity gap with the rest of the country right up until the advent of regional economic spending and UI liberalization in the early Trudeau years. We were turning things around quite nicely, and largely due to our own efforts, until cursed by Ottawa deciding that we were a “problem” that had to be “fixed.” Once the spending taps were opened, our own efforts were swamped by the perverse incentives of Ottawa’s good intentions.

Here are two examples of how those perverse incentives work today. Depending on the species you fish, with as little as a day’s fishing, people in coastal communities can get “stamped up” for their full EI entitlement. If you do, the federal government will give you thousands in benefits – but don’t try to go back to school, because students aren’t eligible for EI. Welcome to Ottawa’s vision of education and the economy of the future.

Under equalization, a province only gets to keep roughly 10 cents out of every new dollar in revenue it raises in taxation. Ottawa claws the rest back. On the other hand, every new dollar in transfers from Ottawa is a whole dollar available to be spent. Ditto for a dollar borrowed. Is it any surprise that the Atlantic provinces are horribly indebted and never met a transfer program they didn’t like?

The second problem with Mr. Harper’s view is that it treats the behaviour of a minority as if it were universal. In fact, the bulk of Atlantic Canadians work very hard, are self-supporting and are quite incensed that this goes unrecognized outside the region. Not only that, but there is a growing group of people in the business, university and other sectors who have been working actively for decades to reduce and eventually eliminate this region’s dependency. Every one of them feels that Mr. Harper has dismissed their efforts out of hand.

ut that doesn’t mean the Alliance leader’s critics are any more balanced. As the members of other parties self-righteously cried that there was no problem of regional dependence, the air was heavy with the smell of denial.

This region’s too-high unemployment sits awkwardly with the one-half of local employers consistently reporting significant unfilled job vacancies. Studies have repeatedly shown that this mismatch is largely due to a minority’s self-destructive dependence on EI. In a famous recent case, some New Brunswick fish plant workers, who were refusing available work in a nearby town and demanding tax-financed local “make work” to qualify for EI, had to be faced down by the premier.

Taxpayers in other parts of the country still pay 40 per cent of the cost of provincial government in Atlantic Canada. Business subsidies, federal and provincial, are still higher here than elsewhere, but are thankfully declining. The offshore oil and gas industry has become a battlefield between those who believe that the region should be given spinoff economic benefits, and those who think that we can earn those benefits through our own energy and efforts.

In other words, there is more than enough blame to go around for this region’s woes. But neither Mr. Harper nor his critics have moved from prejudice and defensiveness to an honest assessment of those woes and a plan for positive action to overcome them. That is the real tragedy being played out on this region’s stage.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, a public policy think tank in Halifax. E-mail: bcrowley@herald.ns.ca