New Nova Scotia premier must seize opportunity for economic change

Nova Scotia is envied for its commitment to the environment. But it must also more aggressively encourage resources and startups

Joseph QuesnelThe Nova Scotia Liberal Party has chosen a new leader so it’s important to think about the policy priorities of the province’s new premier, Iain Rankin.

Although an election doesn’t need to be held until spring 2022, Elections Nova Scotia is already preparing for one as early as April 1 of this year.

The premier has some big shoes to fill. His predecessor Stephen McNeil was incredibly popular and shepherded the province through the first wave of the COVID-19 pandemic. Nova Scotia has become known for its quick actions in response to the pandemic and low rates of infection.

Rankin and his cabinet were sworn in on Tuesday. Here are some policy recommendations for the group that transcend party labels:

Rankin should continue on the same path regarding the pandemic as McNeil. The province has worked closely with top scientists and has been strict on isolation requirements (as part of the Atlantic Bubble, which has burst somewhat recently, but not in Nova Scotia). The next challenge will be the vaccine rollout, working closely with the federal government.

The pandemic forced the province to eat through its slim surplus; Rankin will be dealing with a $500-million deficit by the end of the fiscal year. The tourism and hospitality industries have suffered greatly throughout the pandemic. The government faces the perennial choice between tax increases or budget cuts.

The province needs to work with the federal government on ensuring a balanced economic recovery.

However, as Rankin plans the recovery, he should thumb through some insightful commentary. David MacKinnon, a senior fellow with the Frontier Centre for Public Policy and a native of Prince Edward Island, looked at the system of regional subsidies in Canada. He points out how the federal equalization scheme – while aiming at regional fairness – often distorts the policy choices Atlantic provinces make. The system damages the provinces’ market economy, reduces their competitiveness compared to other jurisdictions, and encourages provinces like Nova Scotia to engage in risky policy because it’s shielded from the consequences.

For example, Nova Scotia, like some other subsidy-dependent regions, has an excessive public sector per capita. It also tends to generate large budgetary deficits, thanks to federal bailouts.

Moreover, the way natural resource wealth is calculated in the federal subsidy formula has allowed the province to shun fracking and uranium mining, which other provinces that contribute to the equalization fund permit. Nova Scotia and New Brunswick have important energy resources that aren’t being developed because the revenue isn’t needed.

While Nova Scotia is envied for its laudable commitment to the environment, it must also embrace its entrepreneurial, risk-taking side and more aggressively encourage resource developments and business startups.

Rankin should also dust off the report of the Nova Scotia Commission on Building Our New Economy, called Now or Never: An Urgent Call to Action for Nova Scotians. This honest, insightful and hopeful 2014 report identified many of the systemic challenges facing the province.

The report was compiled well before the pandemic but many of the challenges it identified still ring true. Most hopeful was its declaration that Nova Scotia wouldn’t necessarily remain a have-not province. An aging and shrinking population and lower traditional rates of economic growth affects the province’s standard of living and critical public services. However, the province’s educated human capital could change things. The government must think beyond the pandemic to the province’s future prosperity.

Nova Scotia must also work with the federal government and the other provinces to bring about systemic change to the way equalization payments are calculated.

The province must also find ways to restructure its costly public sector. This doesn’t have to mean mass layoffs but it must deal with large hospital and university infrastructures.

Rankin and his government must have an honest conversation now with all Nova Scotians about the systemic reforms needed to improve the province’s prosperity.

Joseph Quesnel is a senior research associate with the Frontier Centre for Public Policy.

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environment, economy, nova

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