Deliver us from Liberal MPs’ secret rescue plans


The Globe and Mail
Page A11

ON ATLANTIC CANADA — Liberal MPs from Atlantic Canada have a plan to rescue the region from its economic distress. And they’re so confident that it will be embraced by Canadians everywhere that they are refusing to reveal its contents outside the cozy confines of the national Liberal caucus that met in Halifax earlier this week.

Wiped out in Nova Scotia in the last federal election and reduced to a largely rural rump of 12 seats elsewhere in Atlantic Canada, the regional party could have profited from its humiliation, rethinking its traditional reliance on patronage and the cultivation of dependency as the twin pillars of its electoral strategy. No such luck — at least not if the rumours about the content of the MPs’ gassy meanderings contain even a modicum of truth. And until the MPs lift their self-imposed cone of silence and share their vision with us mere mortals, the rumours seem all too credible.

Atlantic Liberals, it appears, believe three things. First, they think the region’s economy is still centred on traditional, largely seasonal natural-resource industries such as the fishery, mining and forestry. Second, they believe that the region’s already weak economy has been devastated by cuts to unemployment insurance and other transfers. Finally, they see the solution to these problems as being — surprise, surprise — a big influx of Ottawa dollars under their control.

Federal MPs are not the first to have this nostalgic vision of the reality of Atlantic Canada’s economy, but surely our elected representatives have a greater responsibility than most to see whether it has any grounding in reality.

Take this notion that natural resources are still the bedrock of the economy. Why is it, then, that in Nova Scotia natural resources, including the highly profitable fishery, represent considerably less than 10 per cent of economic activity, while such sectors as manufacturing, information technology, the port of Halifax and knowledge-based industries are more important?

Nor is the notion that federal spending cuts have devastated the region convincing. Economic growth across the region is strong. Newfoundland is a star performer these days because of offshore petroleum activity, although admittedly its growth is from a very small base. Halifax, the second most government-dependent city in the country after Ottawa, has absorbed thousands of public-service job cuts from all levels of government, not only replacing all of them with private-sector jobs but creating thousands more. Halifax’s unemployment rate is well below the national average, and the city has one of the hottest housing markets in the country.

Most touching of all, however, is the notion that the region’s problems would be solved by even more “helpful” intervention by Ottawa. Governments typically spend the equivalent of 60 to 70 percent of the region’s GDP in Atlantic Canada, far more than anywhere else in the country. If more government spending were the answer to economic disparities, Atlantic Canada would long ago have become the wealthiest part of the country, and would now be subsidizing Ontario and Alberta.

Instead, Atlantic Canada’s economy is ravaged by politically directed spending that does little to build the economy, but gives ministers and local MPs lots of goodies to dangle in front of their constituents. In a study ranking Atlantic Canada’s competitiveness against that of 48 countries, only Russia had a higher level of government involvement in investment decisions, and only 10 countries had more government control of enterprises, distorting fair competition.

And let’s not lose sight of the fact that this huge government apparatus in the region has to be paid for somehow. That “somehow” includes provincial income-tax rates that will soon be about 50 percent higher than those borne by provincial taxpayers in Ontario and Alberta. In the case of Newfoundland, it’s more like 75 per cent.

Yet the region’s Liberal MPs, if the rumours emerging from this week’s meeting are true, oppose the idea of tax cuts in favour of enriching unemployment insurance and giving yet more money to Ottawa’s Atlantic Canada Opportunities Agency. This is the same ACOA that drove out at least one former president who had the temerity to suggest that local MPs shouldn’t be determining where regional development dollars should be spent.

Yet liberalizing UI again will encourage more people to stay in the fishery, putting more pressure on the stocks while giving those seasonal workers every incentive to neglect the other economic opportunities available to them. And the most charitable thing that can be said about ACOA’s “economic development” spending is that sometimes it does no harm. But it does let MPs maintain the illusion that they are doing something for their constituents.

If this is the vision that the Atlantic Liberal MPs have of Atlantic Canada’s future, all that can be said is that we have seen this particular future before, and it doesn’t work. And if that isn’t what they lobbied their fellow Liberal MPs for in Halifax, let them make their proposals public so that we can judge them on their merits, if any.

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