Atlantic Provinces Should Join the New West Partnership
By Marco Navarro-Génie
President & CEO
Governments in Atlantic Canada have a vital political task: to break down all barriers, overcome all obstacles, and invalidate all irritants to interprovincial exchange. To this end, a regional free trade agreement is one possible idea. But it isn’t the best one.
Though implementing free movement of labour, common dispute-settlement mechanisms, harmonized investment standards, transferable professional accreditations, and mutually-recognized business permits is theoretically easy, it is likely that the provinces could end up negotiating for years over minute details. These are years we don’t have, according to the Ivany Report of 2014, which says that our economy will careen toward a cliff unless we foster a stronger culture of entrepreneurship.
A better option is for each of the Atlantic Provinces to seek individual entry to the New West Partnership Trade Agreement. Signed in 2010 and functioning as a free exchange zone between British Columbia, Alberta, and Saskatchewan (soon to include Manitoba), it opens trade relations, labour mobility, and investment between member provinces. By joining this trade agreement, the Atlantic Provinces would join a fully-functioning, ready-made set of standards where there is free flow of goods, services and capital; certified workers can practice without extra tests or obstacles; residence requirements for business registration are waived; unnecessary differences in business standards are removed; and where an open procurement process exists alongside a dispute settlement mechanism.
Joining would produce a virtual agreement between Atlantic Provinces, add new markets and a common trade policy with three dynamic co-members of the federation.
Nationally, an economic union of east and west would have a salutary effect on the centre. Most of our trade in this region is with Ontario and Quebec, who would be most vulnerable to a trade crunch with the United States. As an added bonus, the capacity of the west and the east to speak with a common voice on national infrastructure projects such as the Energy East Pipeline could help to advance such interests in Ottawa.
The Atlantic Provinces have shown a desire for greater openness and more efficient standards of regulation. But there is no need to reinvent the wheel. Joining the New West Partnership Trade Agreement is the best opportunity available.
Are New Brunswick’s challenges so overwhelming, so severe, that our provincial government has given up trying to solve them? Or does the province instead believe decisions to reverse our grim economic position and troubling social indicators should be kicked down the road? After a recent announcement to permanently ban shale gas development and another to appeal a provincial court ruling on liberalizing interprovincial trade, it is a question worth considering.
Our province is in a very difficult economic position. The jobless rate hovers at 10 per cent, our taxes – already among the highest in Canada – will rise again because of an unwillingness to control budget expenditures. The two-point HST tax grab on July 1 will cost New Brunswick consumers an additional $300-million a year.
Our jobs and budget outlook would be less dire were it not for New Brunswick’s precarious demographic shift. Not only is our population ageing, it is also shrinking as the death rate exceeds the number of births and overall immigration levels are low. This position would challenge any government since social programs are funded by tax-paying workers. But our problem is further aggravated because young families are leaving home to find employment opportunities elsewhere.
The most striking illustration of our population time bomb isn’t that New Brunswick is tied with Nova Scotia as the greyest province in Canada. Or that the numbers of seniors will continue to grow. It is the steady decline in the number of children in N.B. schools and what this trend means for population growth.
P.E.I.’s Harmonized Sales Tax will rise from 14 to 15 percent on October 1. This policy will inflate the cost of almost everything Islanders buy, without adequately lowering other taxes.
New Brunswick and Newfoundland & Labrador both increase their HST rate to 15 percent on July 1, matching the 2010 hike in Nova Scotia. By joining them, we will strip our businesses of an advantage over their Atlantic competition. Compared to other Canadian jurisdictions and New England, we already live in a high-tax zone. Incremental increases move us in the wrong direction, away from an environment conducive to private-sector growth and toward continued economic stagnation.
Raising the HST will increase prices at hotels and restaurants. Motorists are hit especially hard, since they pay HST on the price of gasoline as well as other federal and provincial gas levies. Some tourists may see our high sales tax as a reason to vacation elsewhere. Punitive tax rates weaken prospects for growth and employment. Has the government considered these consequences?
As an important voice in advocating fiscal prudence and market solutions, AIMS is a vital institution for Atlantic Canada. The political and economic issues facing the region cannot be resolved by a further regime of dependence on the rest of Canada, or by levying a harsher tax burden upon Atlantic citizens and businesses. Going forward, bringing public expenditure within the bounds of our means is the only way to ensure that the pillars of government in our region – healthcare, education, and public services – remain viable.
Your charitable contribution now will help us build a stronger legacy and make a difference in the lives of Atlantic Canadians. To contribute, please click here.