Friday,  February 8, 2002
Ottawa Citizen

Government Handouts in Newfoundland – The truth behind the Rhetoric

By Peter Fenwick

Little did The Ottawa Citizen’s Bruce Ward know how his throw away line on a recently aired Newfoundland miniseries would inflame sentiments among Newfoundlanders both on the rock and “away”.

He described the final episode of the Random Passage series as “The struggle of Irish immigrants in Newfoundland before the invention of government handouts.”

The item drew fire from two Newfoundland columnists, from hundreds of e-mail writers and from callers to a Newfoundland open line program. In his defence Ward argued that the line was meant to be humourous, and he was dismayed to find that most Newfoundlanders who read the comment missed the humour.

What made the crack worse was the program it was attached to. Random Passage spoke to the soul of all Newfoundlanders, about how we came to be here, and why we hate to leave. Ward’s comment appeared to trivialize our existence.

And while Ward’s attackers berated him for failing to understand the dangerous nature of the fishery and for failing to appreciate that Bombardier received more assistance in one greedy gulp than all of Atlantic Canada, they conveniently glossed over the demands in Newfoundland that perpetuate that stereotype. Despite some progress, many politicians and many Newfoundlanders are into government handouts in a big way.

Both Ward and his attackers failed to give Atlantic Canada credit for its efforts to grow an economy that is much less dependent on government handouts than it was in the bad old days. The austerity of the nineties forced the federal government to curtail its handouts, and in the vacuum, private money has helped create a mini-boom in many parts of Atlantic Canada.

Unfortunately the Newfoundland government still diverts tax dollars into private enterprise at an alarming rate. Call centres receive wage subsidies, ski hills receive mountains of support, while entrepreneurs are turned into grant-epreneurs by government funding programs. The same kinds of programs exist in all provinces, but they stand out more in the small Newfoundland economy.

And the old demands of the people for make work programs any time the economy hits a bump are still there. Many politicians still look on government as the employer of last resort.

The most recent example of this tendency is the $3.5 million make-work program that the Newfoundland government announced last Christmas eve. The money was sent to 35 provincial districts, expressly to provide enough work to qualify people for Employment Insurance.

Another is a recent federal government grant of $370,000 to a small community in ACOA minister Gerry Byrne’s riding to construct trails and bridges to tourism attractions. While the project has some merit, starting it in the depths of winter is problematic given the heavy cover of snow that blankets the region this time of year. Prior to becoming the minister in charge of government funding, the minister had asked for ACOA to get into make-work projects. As minister, he appears to have done just that.

But these make-work projects are now more the exception than the rule. Chris Decker, a former provincial cabinet minister under premiers Clyde Wells and Brian Tobin, scolded the provincial government for going back to the make-work practices that the administrations he was part of had abandoned. That kind of dissent, especially from the ruling Liberals, was unprecedented in the past. It shows how the political culture in Newfoundland is changing.

Many parts of Atlantic Canada, especially the urban areas, have healthy economies that only need the government to get out of the way to prosper. St. John’s, Halifax, southwestern Nova Scotia, and the more urban parts of New Brunswick enjoy unemployment rates that would not look amiss in Ontario.

But the stereotype still persists.

Which is why Bruce Ward’s throwaway line stings. A growing number of Atlantic Canadians look on government hand outs as destructive, driving out, if you will, the better planned investments of the private sector. When ACOA and other easy government money overbuilds hotels in Cape Breton and rural Newfoundland, as it did, the industry suffers from low occupancy rates and bottom line loses for a decade or more. It also scares away investors who refused to put money into a hotel that may have to compete with operations supported by their tax dollars.

Much of the newer research into how laggard economies develop points to places like Ireland where government grants play little role in economic development. Much more important are good education systems, competitive tax and wage rates, and good infrastructure. If governments had put the billions they invested in failed coal mines, steel mills and hotels into roads, education and lower taxes, Atlantic Canada would have been even farther along the road to economic recovery. (Those interested in a fuller explanation of how laggard economies grow should read Fred McMahon’s Road To Growth published by the Atlantic Institute for Market Studies.)

And since these are legitimate time-honoured roles for governments, Atlantic Canada, and especially Newfoundland, would not have to carry an undeserved reputation as the leeches of Canada.

Bruce Ward hit a raw nerve when he tried to be funny, but our own Newfoundland politicians have done just as much as Ward to perpetuate the government dependency stereotype.