Politics of carbon pricing becoming farcical

(Note to readers of Nova Scotia Observer: This is my final post at this site. Future posts will be on my new blog http://www.starrspoint.com. Please check it out.)

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Observing the controversy surrounding New Brunswick’s carbon-pricing plan announced late last week, something Karl Marx famously wrote came to mind. The context was slightly different, but Marx’s adage about history occurring “first as tragedy, then as farce” seems fitting to describe governments’ feckless efforts to get a national price on carbon.

The tragic part took place last December when the prime minister and the premiers met about something they called “The Pan-Canadian Framework for Clean Growth and Climate Change.” As I wrote at that time, the plan itself was a dismally inadequate response to the threat of climate change. Worse, the political posturing around it practically guarantees that even its modest goals for cutting greenhouse gas emissions will not be met. With the possible exception of the election of a Green-supported NDP government in British Columbia, nothing has happened since then to change that prognosis for the better.

So, cue the farce, New Brunswick’s venture into carbon pricing. In response to his government’s agreement at that meeting last December to put a price on carbon, Premier Gallant announced that from now on a couple of pennies from the existing and long standing motive fuel tax would be designated as a carbon tax and directed toward green projects. The Pan-Canadian Framework presumably contemplated an increased gas tax, not a re-shuffling of the proceeds of the one that’s already in place. The carbon tax was supposed to start next year at the rate of $10 a tonne of carbon, which works out to 2.3 cents on a litre of gasoline. It’s supposed to rise to $50 a tonne – almost 12 cents a litre – by 2022.

Calling the old gas tax by a new name and declaring it a response to climate change is a neat trick if you can pull it off – especially if like the New Brunswick Premier you are facing a Provincial election next year. But some people are not easily fooled. After questions about the scam, federal Environment minister Catherine McKenna went on Facebook and observed that New Brunswick’s plan “does not create a new incentive to cut carbon pollution.”

One year extension

That sounds about right, but unfortunately we are in the realm of farce, where facts and logic are devalued. A year ago, the Trudeau Liberals declared that if a province failed to put the $10 a tonne price on carbon by 2018, Ottawa would impose one. But as New Brunswick’s Liberal government was performing its obvious charade, Minister McKenna gave the provinces a one-year extension. As the Canadian Press reported:

OTTAWA — Environment Minister Catherine McKenna says a national price on carbon won’t be imposed on any province for at least another year.McKenna says carbon pricing legislation will be introduced sometime in 2018 and provinces will have until the end of that year to submit their own carbon pricing plans before a national price is imposed on those that don’t meet the federal standard. A year ago, McKenna said provinces would have to impose at least a $10-per-tonne carbon price in 2018 but it appears some provinces will make it all the way to the end of the year before they have to actually do it. The price has to rise at least $10 per tonne a year until it hits $50 per tonne by 2022. Alberta and B.C. already meet the threshold and Manitoba intends to introduce a carbon price of $25 next year. Ontario and Quebec’s cap and trade systems likely meet the threshold but the rest of the provinces either haven’t yet got a plan in place or what they do have doesn’t mesh with Ottawa’s standard.

To recap the above dispatch: B.C., Alberta, Manitoba, Ontario and Quebec are in on the project. Retiring Premier Brad Wall, on behalf of Saskatchewan (the highest per-capita GHG polluter in the country) thumbed his nose at the whole thing. The Liberal-led Atlantic Provinces are in – as long as they don’t have to actually put a price on carbon. And the federal Liberals want to keep the lip-service support of the Atlantic premiers without damaging them politically. Hence, we have a farce worthy of that other well-known Marx, Groucho.

New Brunswick’s performance last week at least had the virtue of transparency. Everybody knows it’s a sham. Nova Scotia’s version of Duck Soup was murkier. The legislature actually spent time during the fall session debating and approving a bill that was about putting a price on carbon. Conspicuously, the legislation lacked any details on what that price would be and who would pay it. That information may be in regulations to follow sometime next year- but don’t expect a price that will “create a new incentive to cut carbon pollution.”

National fiasco

As ludicrous as they are, the New Brunswick and Nova Scotia performances are definitely off-off-Broadway. The major travesty remains at the national level. As anyone paying attention already knows, New Brunswick and Nova Scotia have already met the GHG emission reduction goals – 30% below 2005 levels by 2030 – that the price on carbon is supposed to achieve. Their continued empty talk in support of a national price on carbon stems from some combination of Liberal solidarity and political greenwashing.

The pathway to any progress under the Pan-Canadian Framework lies through the western oil-producing provinces. That means Saskatchewan coming onside and Albertans denying victory in the 2019 provincial election to Jason Kenney and his anti carbon-tax platform. And even if those unlikely events transpire, and if every province has the desired $50 per tonne carbon price by 2022, GHG emissions will hardly budge. And big business and some of the big polluters know it.

According to the industry-funded “The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions” a carbon price of $200 a tonne by 2025 will cut emissions by a mere 12.7% – about six-per-cent of the cuts needed to meet the modest 2030 national target. The report by the Conference Board and the Canadian Academy of Engineering suggests that the 2030 window is already closed and policy makers need to talk to Canadians about the trillions of dollars of investment required for the massive transformation of the energy system necessary to meet the mid-century GHG targets agreed to in Paris two years ago. But given the skittishness about adding a couple of cents to the gas tax, a gargantuan political transformation will have to take place first – which is where the farce turns back into tragedy.

 

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Federal government jobs in Atlantic Canada still dropping

It appears the Atlantic Region – particularly Nova Scotia – is still experiencing a drop in federal employment. The Trudeau government recently released data on the “Population of the Federal Public Service by Geographic Region” to March 31, 2017. It suggests that while public service employment (not counting Canadian Forces, RCMP, CSIS or the National Capital Commission) has gone up nationally over the last two years, public service employees (and by extension the services they provide) have continued to drop overall in the Atlantic Region.

After falling five years in a row in response to the Harper government’s austerity kick, public service employment across Canada increased by almost 5,700 between 2015 and 2017. But during that same two-year period, the recent data released by Minister Scott Brison’s Treasury Board show it has dropped by over 450 in Nova Scotia, more than offsetting small employment gains in the other three Atlantic Provinces.

The new data reveal that the latest reduction in federal public service jobs in the region (totaling 282 for the four provinces combined) follows a five-year period during which the civil service workforce in the Atlantic Provinces fell by 2,867, close to a 10% drop. Despite Conservative government claims to the contrary, the job loss here slightly exceeded the national rate. And when cuts to military are taken into account, the 2010-2015 regional picture becomes worse.

Statistics Canada produces counts for total federal employment, including the military (CANSIM Table 383-0033). The non-military numbers are not strictly comparable to the Treasury Board ones since they cover more jobs. And they are for the calendar year, whereas Treasury Board’s cover April 1 to March 31. With those caveats in mind, StatsCan data show that all in, between 2010 and 2015 federal public sector jobs fell by 4,480 in the Atlantic Region. That’s a drop of 8.6%, well above the national decrease of 5.6% for the whole of federal government employment. Of course, these are well-paying jobs, at almost twice the per-hour rate of the private sector – and they contribute a lot of provincial income tax as well.

So when military employment is counted, a little fib about federal job cuts in Atlantic Canada being at or below the national rate becomes a greater fabrication. But that was the record of the tight-fisted Conservatives. Shouldn’t a region with almost zero job growth in the last two years receive better from a free-spending Liberal government than a continuation of austerity-driven job cuts?

On that question, the jury is still out. Due to what appears to be the fault of the Phoenix pay system, Treasury Board reports having 6,537 employees whose 2017 “geographic data is not available due to changes in the central data system.” Who knows, perhaps a sizeable contingent of those whose “geographic data is not available” will turn out to be working in the Atlantic Region. Maybe the government will track them down and next year’s tally from Treasury Board will have more comprehensive data, allowing the Liberals to assert they’ve ended years of disproportionate job cuts to a region that can ill afford them. Based on available data, that’s a claim they unfortunately cannot yet make.

Federal Public Service Jobs (including armed forces)

2010         2015       Change

Canada     422,760        399,250     -5.6%

NS               24,100           21,760      -9.7%

NL                 7,405             6,555   -11.48%

PEI                3,790             3,555    -6.20%

NB                16,560         15,505     -6.37%

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Despite polls, Liberals whistle past economic graveyard

There were a couple of items of interest in the latest quarterly Corporate Research Associates (CRA) poll[1] on political preferences in Nova Scotia. First off was the piece making the headlines – the finding from polling carried out last month that support for the McNeil Liberals has reached the lowest level since they were elected in October 2013. Given all of the kerfuffle about the mismanaged health system, it’s no surprise that Liberal support has dropped.

A bit more interesting is the rise of the NDP from a distant third to a virtual tie with the Official opposition. And perhaps most significant is the drop in the government’s approval ratings and Stephen McNeil’s best premier ratings. Those numbers are getting dangerously (for the Liberals) close to where Darrell Dexter and the NDP were in CRA polls prior to their rude dismissal in the 2013 election.

CRA had the Dexter government with an approval rating of 42% in August of 2013. The Liberals were at 46% last month. There’s more of a gap on best premier – Dexter sat at an inglorious 19% in August 2013 while McNeil was at 28% in November. But McNeil’s was the lowest rating during his tenure as Premier, and down by 25% from a year ago.

It is a given that one should not put too much faith in a single poll, particularly one like this latest, with a high number of undecided. However, CRA has been conducting it’s quarterly surveys for decades and the results going back to 2005 can be viewed on its website. There’s a remarkable correlation between the survey results and political outcomes.

McNeil may already be preparing to take his leave anyway, but a couple more polls like the one released last week may put others in a McNeil-exit planning mode.

The state of the political horse race is item one of interest from the CRA poll. Item two is what Don Mills, CRA president and Nova Scotia’s long-time go-to pollster, had to say about the reason for the sagging support for the Liberals. To quote a political strategist from an earlier time – it’s the economy, stupid, not just in Nova Scotia but across Atlantic Canada.

No new jobs

“Generally speaking we trail the country in economic growth and have for a long time so the creation of jobs is limited,” Don Mills told the Chronicle-Herald. “If your cost of living goes up but your wages don’t go up, it doesn’t lead you to be that happy with life, so it’s hard on governments in those situations.”

There are several metrics for economic growth, although comparisons between the Maritimes and the country as a whole are skewed a bit by the impact of the drop in oil prices. Compared with the oil-price-depressed national picture, the relative numbers for GDP and wages are not too bad. But when it comes to job creation, the picture in this region is bleak, making Don Mills’ comment about trailing the country in economic growth something of an understatement.

As of  Statistics Canada’s November labour force report, 587,000 jobs had been added across the country in the previous two years. In the Atlantic Provinces, over that same period, there were 8,400 fewer jobs. The region was pushed into negative territory by Newfoundland and Labrador, where the oil price slide helped to reduce employment by nearly five per cent. But even with Newfoundland taken out of the calculation, job growth in the three Maritime Provinces over the period remained practically non-existent – less than 3,000 over two years. Trailing in growth is one way of putting it – not even in the same race may be a more accurate depiction.

If Mills is correct and people are beginning to blame government for their economic malaise, Liberals in the region and in Ottawa would be wise to start taking the issue more seriously.

So far, all they have come up with is a modest program to increase immigration and a tag – the Atlantic Growth Strategy – to hang on announcements of national programs. And there was nothing coming out of this week’s autumn meeting of Atlantic Premiers to indicate that the reality of two years of negative job growth has penetrated the Premiers’ bubble.

They marked the Halifax meeting with a three-page communiqué mentioning the new – regulation of cannabis – and the tried and true – partnerships, red tape reduction and the ocean economy. And the document started off with the bold claim that the Premiers are “working together to grow the economy (and) create jobs.”

Somebody needs to tell them to work harder.

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[1] The polling numbers are part of the CRA Atlantic Quarterly®, an independent, quarterly telephone survey of Atlantic Canadians, and are based on a sample of 800 adult Nova Scotians, conducted from November 1 to 30, 2017 with overall results accurate to within ± 3.5 percentage points, 95 out of 100 times.

 

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On the Auditor General, McNeil is half right

The ironic thing about the fuss over the Premier’s snarky attack on the provincial auditor general is that he has the right target but the wrong issue.

Asked by reporters last Thursday to comment on the auditor’s deconstructing of the government’s efforts to deal with the family doctor shortage, McNeil aimed a couple of jabs in AG Michael Pickup’s direction. The gist was first, that he (McNeil) didn’t need to be told Nova Scotia has a shortage of family doctors, and second that the voters, not Pickup, would judge the quality of the government’s communication on the shortage.

Prodded for his opinion on whether the auditor had overstepped his authority, McNeil made a general observation on the respective roles of elected representatives and the auditor. He argued that public policy is the “right” of elected members, whose decisions in that regard are judged by the public at election time. Then he delivered what he may have expected to be the knockout blow.

“If he (Pickup) chooses and wants to do public policy there are 51 ridings for him to run in…He has a job to do to ensure that the finances are being spent appropriately, but public policy is actually for the people who are elected.”

To continue the boxing metaphor, the media judged that the Premier’s roundhouse punch badly missed the mark. It was McNeil, not the AG, who ended up on the canvas.

Reporters looked to the law and concluded that the auditor’s report on certain aspects of health care delivery (physician, mental health and home care services) was well within his legal mandate. That’s an interpretation with which the AG heartily agreed. “I’m 150 per cent comfortable that the work we’re doing lies within the mandate of the office of the auditor general,” said Pickup.

Far be it from me to challenge 150 per cent certainty. And the audit at issue of the work of the Department of Health and Wellness and the Nova Scotia Health Authority certainly seems to fall within the terms of Section 18 (1) of the Auditor General Act. That section says the AG may conduct “any audit or investigation that the auditor general considers appropriate” with respect to “any auditable entity.” An auditable entity would include any government department or agency such as the health authority.

Fiscal policy

Who knows what McNeil was thinking when he went after Pickup? Perhaps he was just annoyed with the headlines generated by the health audit – for example, “AG slams Nova Scotia health care” (Chronicle-Herald) and “Report calls out gaps in N.S. health care” (Globe and Mail). Those headlines help to validate what the opposition parties and vocal members of the public have been saying for months.

Maybe the Premier was thinking that the timing of the audit report and the way it was delivered and covered was close to crossing the line set out in Section 18 (7) of the legislation, to wit “Nothing in this Act is to be interpreted as entitling the Auditor General to question the merits of policy objectives of the Government.”

I’m no lawyer, but as tough as the audit report was, it did not question “the merits of the policy objectives of the government” – just its failure to achieve them. Whether the same can be said about the eagerness of both Pickup and his AG predecessor to implicitly question the fiscal policy objectives of successive governments is another matter. If there has been any crossing of the line into public policy it has taken place there.

Pickup and the AG before him, Jacques LaPointe, have used their office to purvey doom and gloom about Nova Scotia’s fiscal state, using selective statistics and dubious analysis to make their case. It started with LaPointe, when the NDP was in power, questioning the inter-generational ethics of public debt. It has continued with Pickup.

I wrote about Pickup’s tendency to leave out facts that would spoil his story in posts in February 2015 and again in November of 2015. As a backbench MLA in 2012 Howard Epstein challenged LaPointe’s initial foray into this territory at a meeting of the legislature’s public accounts committee in January 2012. Further details of that encounter can be found in Epstein’s book, “Rise Again: Nova Scotia’s NDP on the Rocks.”

One thing to note is that there is nothing in the Auditor General Act that mandates an overview of the province’s fiscal position. LaPointe and Pickup have taken it upon themselves to venture into territory normally occupied by the Canadian Taxpayers Federation. The other thing is that other than Howard Epstein, no politician has complained about AG’s continuously raising the small “p” political issue of public debt. Indeed, when Epstein brought it up in 2012 the top Liberal at public accounts apologized to the AG for his “diatribe” and the Conservatives called for Epstein to be kicked off the committee.

It was obviously to the political advantage of the Liberals and Conservatives to do so. When the dustup involving Epstein and LaPointe occurred, the debt of the province stood at $13.4 billion. Liberal and Conservative governments ran up over 97 per cent of that debt over the years, $9 billion of it accumulating since 1990. Being able to cast the NDP as defenders of public debt worked like a charm in letting the Liberals and Tories off the hook for past performance. Similarly, Pickup’s dire warnings of 2015 fitted well with the McNeil government’s restraint agenda.

Doom and gloom forever

But now that the budget has been balanced and some modest new spending is planned, the McNeil government may want to pat itself on the back and austerity weary Nova Scotians can point to a recent report from the Parliamentary Budget Office in Ottawa. It revealed that Nova Scotia is one of only two fiscally sustainable provinces in the country. (PBO defines fiscal sustainability as maintaining current debt-to-GDP levels without the need to raise taxes or cut spending. The calculations are done annually, and may be different next year).

Despite that positive news from the PBO, the AG is still peddling doom. Pickup’s latest fiscal overview report presented in October downplayed the Liberals’ modest surplus and played up the bad news over the last 10 years – expenses up 37%, taxes up 49% and net debt increased by $3 billion. His report is accompanied by videos (available on Utube) posing 30 questions Nova Scotia “may want to ask” (of whom is not clear).

The ten questions on fiscal matters are either politically loaded or unanswerable. There are no non-political answers to questions such as:

  • Nova Scotia paid $7.5 billion in interest in the last 10 years. What happens if interest rates rise by 2-3% and how will this be paid?

Or

  • Total health care costs increased 46% in the past 10 years. If the number of Nova Scotians over 65 years doubles in the next 15 years, what is going to happen to health care costs?

Or

  • What are the biggest risks to Nova Scotia’s financial conditions and how prepared is Nova Scotia to react to the next recession or unexpected events?

And then there are the ones that seem designed to stir up the political pot, such as:

  • Education costs have increased by $109 million from 10 years ago. With fewer students than a decade ago, how did education costs increase by 7%?

Or

  • Total net debt increased by $1.6 billion in the past five years…What does this extra debt get us?”

Then there is

  • Why does the amount of debt we all owe keep increasing?

Question number eight (Is there a plan to repay the debt, and how many years will it take) is in my view the most eccentric. There has been a public debt as long as there has been a political entity called Nova Scotia. Does the AG of this province seriously believe we can have a plan not just to reduce it – but to repay it?

So run, already

Perhaps he is just being provocative with this question and one he posed in his chapter on pensions. That one’s a doozy, politically. It asks why the province contributes different amounts to different pension plans – one dollar for each dollar contributed by teachers and civil servants and five bucks for every dollar contributed by MLAs. That’s a good one to be chewed over at the local coffee shop by the “all politicians are in it for the money” crowd.

No doubt about it. Michael Pickup has raised a lot of interesting questions, most of them political. Maybe it’s time he gave up his $187,000 per annum 10-year gig as AG to run for office. The Conservatives are currently looking for a Leader so he may even be able to get in close to the top.

 

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The Mayor’s speech and the missing facts

I couldn’t help but notice the headline across the top of page 6 in last Thursday’s Chronicle-Herald : “Halifax on the rise, says Savage.” Accompanied by a photo of the mayor himself, the story reported on Savage’s speech to a luncheon put on by the chamber of commerce and the Halifax partnership.

Boosterism was the order of the day, and the mayor provided it, both with his rhetoric (“This is Halifax’s time, time for big ideas and decisive moves”), ambitious growth targets (population of 550,000 by 2031) and some statistics.

For the latter, Savage highlighted population growth (to 426,000 from 414,000 over the past two years) particularly in 25 to 39 age group – up 2,560 in 2015 and 3,800 in 2016. “These are the people that every city covets,” said the mayor – and who would not agree that growth in this key demographic is a good thing? According to the Herald report, the mayor also looked at the bright side of the current plague of traffic snarls and closed sidewalks, implying they are the result of it being “Halifax’s time.”

In the mayor’s defence, his speech was par for the course at luncheons sponsored by business groups. A big part of the contemporary political leader’s job seems to consist of cheerleading for business and promoting city or province to business leaders. Facts and stats are selected to further that objective, while nuance and balance are not part of the deal.

With regard to the ubiquitous construction, it’s hard to measure how much of that has to do with economic growth and how much is just to take advantage of federal dollars to replace infrastructure that’s simply worn out and in need of replacement.

The population stuff is easier to calibrate since it comes from Statistics Canada. The mayor referred to the increase in 25-39 year-olds as his favourite statistic and it’s no wonder. There are not many other stats at hand to support an excessively cheery outlook. Indeed, some facts and stats could lead in the opposite direction, especially for rural Nova Scotians and young Haligonians.

Demographics mixed

Take for example the mayor’s favourite, demographics. While a surge of immigration played a big part, another chunk of the city’s growth came from people moving in from other parts of the province. Thus, while Halifax was growing by almost 12,000 between 2014 and 2016, the rest of the Province’s population dropped by nearly 5,400. The same pattern existed for the 25-39 year-olds. While Halifax gained nearly 6,400, the rest of the province lost over 2,000 members of this sought-after demographic. A small percentage moved to Halifax, the rest left the province.

Other examples: while Halifax’s 25-39 age group was growing, the feeder bracket for this demographic was not. The number of 15-24 year-olds in Halifax dropped by 2,300 between 2014 and 2016. Throw in the fact that Halifax’s over-65 population increased by almost 9% and you will understand why – the mayor’s selective statistics notwithstanding – our aging population trend continues.

Then there is the confounding state of employment in Halifax. Despite appearances to the contrary, as reported in July and in August statistics show that the number of jobs in Halifax is not keeping up with the increase in population. This leads to a jump in the unemployment rate and questions whether the city will retain many of those working age individuals who are contributing to the current increased population.

Employment still dropping

The latest monthly employment numbers from StatsCanada – coming out two days after the mayor’s speech – provided more troubling news on that score. They showed a continuation of the negative trend that began in the summer of 2016 when employment was 231,500 and the unemployment rate was only 5.2%. Comparing October 2017 to a year earlier shows the following.

Date                                     October 2016           October 2017     Change

Employment                       226,200                   222,900           -3,300

Full-time employment      189,100                    185,500           -3,600

Unemployment                     13,500                      16,800             3,300

Unemployment rate                5.6%                         6.9%             23.2%

 

In a nutshell, with the size of the workforce unchanged employment dropped by 3,300 and unemployment rose by the same amount between October 2016 and 2017, leading to a big increase in the unemployment rate. The 25-44 age group – including the hankered-for 25-39 group – fared slightly better than the labour force as a whole, with an unemployment rate of 5.7% in October. That rate was in the middle of the pack among the 34 census metropolitan areas (CMAs) reported by Statistics Canada.

That middling result was in sharp contrast to the youth labour force. Unemployment among 15 to 24 year-olds was 17.1% in October, second highest in Canada and up a rather startling 45% from October 2016. That 45% increase represents the rate. The number of unemployed youth has gone from 4,500 to 6,100 – an increase of 36%. And think how much worse those numbers could have been if so many of these young people hadn’t left town (see above).

Youth unemployment, like poverty, has been talked about for so long- and has been in double digits seemingly forever – that no one pays much attention. (Except when it goes down a bit and gives the government a chance to pat itself on the back). Maybe that should change. October marked the sixth month in a row that the rate of unemployment among young Halifax workers exceeded 16%. The last time the Halifax rate hovered around such a high level for half the year was in 2002. (CANSIM 282-0128).

It may be a bit of an overstatement to throw out a headline such as “Halifax faces a youth unemployment crisis.” But there’s at least as much evidence to support such a headline as there is the “On the rise…” that trumpeted the mayor’s speech to the business crowd.

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Feeling sorry for Alberta (and the rest of Canada)

Globe and Mail columnist Gary Mason has a timely piece in Wednesday’s edition. Headlined “No one should feel sorry for Alberta” his commentary serves as a preemptive sortie again the emergence of Jason Kenney as the new leader of the United (in rage) Conservative Party of Alberta.

As Mason sees it, Kenney rose to power with a narrative formed by the notion that “the province is a shell of its former self: the NDP has ruined everything: the rest of the country is against us but we won’t be on our knees much longer. Mr. Kenney will Make Alberta Great Again.”

Mason argues that many provinces – just many? – wouldn’t mind having Alberta’s “so-called problems” such as “the highest GDP per capita in the land” and growth exemplified by Calgary’s rate of 4.6%. He could have cited even more examples to strengthen his case – provincial growth which is expected to be the highest in the country this year and next.

But his key point is about taxes. Mason frets unnecessarily about Alberta’s growing deficit and debt but points out that if Alberta raised its taxes to the same level as neighbouring British Columbia – with the second lowest taxes in the country – it could bring in almost enough revenue to eliminate this year’s expected deficit.

The concern about Alberta’s deficit – or as Mason would have it “the mess the province is in” – is based more on ideology than fiscal reality. The province’s debt-to-GDP ratio is estimated at 6.8% this year. RBC’s most recent Canadian Federal and Provincial Fiscal Tables project that even after two more years of sizeable deficits Alberta will have a ratio of only 11.4%, still easily the lowest in the country and about one-third of the 34.1% projected for Nova Scotia in 2019.

NDP raised taxes

Mason paints with an overly broad brush when he suggests that rather than raise taxes or rein in spending “politicians and others here moan and whine about how horrible things are, how awful the province is being treated by Ottawa and other jurisdictions.” So far, the moaning and whining is coming mostly from Jason Kenney and his crowd, not from the NDP government.

In its first budget, the Rachel Notley government increased the corporate tax from 10% to 12% and replaced the 10% flat tax on personal income with a bracketed system that raised the rate to 15% for those making $300,000 or more. (Nova Scotia’s top rate is 21% and kicks in at $150,000). The NDP also bravely introduced a carbon tax of $20 a tonne, rising to $30 next year.

Despite these increases, the NDP government’s most recent budget was still able to boast about Alberta’s overall tax advantage compared to other provinces, with no sales tax, no health premium and no payroll tax. “Even when the carbon price rises to $30 a tonne in 2018, Albertans and Alberta businesses will still pay at least $8.7 billion less in total taxes and carbon charges than if Alberta had the same tax system and carbon charges as any other province,” according to the 2017 budget.

But does this positive, revisionist view of the province’s economic situation mean “No one should feel sorry for Alberta”? Not necessarily.

Reminding about the province’s good fortune relative to others has had no noticeable impact on the complainers and bellyachers. The carbon tax in particular has people seeing red even though the impact of the levy on most Albertans is benign. At worst the tax may cost an affluent fuel-inefficient family of four about $40 a month, but will be fully rebated to the majority of households.

The perceived negative effect on Alberta of the federal equalization program is also hard to fathom. Alberta does not receive equalization – as the richest province in the country it doesn’t need it. In general, Alberta does pay more in federal taxation than it gets back in federal programs – again, a consequence of its wealth. And of course, that has changed to Alberta’s advantage in recent years with the on-going per-capita health transfers and short-term disaster relief. And Jason Kenny’s big idea – removing resource revenues from the equalization formula – would provide negligible benefit to Alberta, while surely helping out Newfoundland and Labrador.

Fear for Future

The fact that equalization and the carbon tax remain such sources of anger suggests they are proxies for underlying anxiety about Alberta’s ability to keep the good times rolling in a world in which fossil fuel consumption must decline. Railing against the carbon tax, equalization and pipeline opponents in other provinces are interconnected responses to that fear of falling now that a major source of the province’s wealth is in jeopardy.

Never mind that several generations of political leadership – federal and provincial – should have seen this coming and planned for it. Any prospect of such forward thinking evaporated a long time ago. Put simply, the Mulroney government handed over the formulation of national energy policy to the oil industry, and Alberta decided to dip into its heritage fund to avoid a sales tax.

Now that Donald Trump has demonstrated again the potency of know nothing populism we will likely see a continuation of the sort of provocative stuff Kenney spouted during his leadership campaign. Trump has his Mexican wall and his Muslim ban; Kenney has his referendum on equalization and his campaign against national polices on carbon emissions.

The difference is that Trump’s cruel but nonsensical proposals may have sprung from ignorance. Kenney, a member of the federal cabinet for eight years, has no such excuse. He will know that a provincial referendum on a federal program is fraudulent. But he could well keep on about that, as well as challenging national polices on carbon emissions.

Stoking people’s anger at scapegoats and paper tigers is easier than talking about the real problems and their solutions. If Kenney and his United Conservative Party continue that approach and are successful we may indeed end up feeling sorry for Alberta – and for the rest of the country as well.

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McNeil tries to re-write history of bad health care deal

The fall session of the Nova Scotia legislature wrapped up Thursday – not with a whimper but a crack – as the government ignored opposition and expert advice and whipped through its flawed cyber bullying and adult capacity legislation. Those bills, along with a gormless cap-and-trade bill that will leave everything to cabinet regulation, were the dubious legislative highlights of the session. Question period and a lot of the budget debate were dominated by health care and its mismanagement.

Given that health care also monopolized the recent Nova Scotia election, one might have expected more attention directed to the diminished federal health transfers that are contributing to the problems. Some insist that money (or lack of it) isn’t the issue. That may be true, but we are having trouble finding family doctors and the ones we have are, on average, the lowest paid in the country. So there is at least a correlation between the issues everyone’s talking about (finding a family doc) and the one rarely mentioned (the tight-fisted approach of the Harper-Trudeau government to health transfers).

Thanks to the Nova Scotia Health Coalition, the subject of health transfers finally arose during question period a week ago Friday. The Coalition had put out a release pointing out that the health deal accepted by the McNeil government around Christmas time last year would cost Nova Scotia something like $1 billion over the next ten years.

The $1 billion figure was a little lower than the $1.2 billion I calculated in a piece last March using a slightly lower annual escalator. However, give or take a couple of hundred million, unless the national economy booms it is very likely that there will be a costly (to Nova Scotia) gap between what the provinces settled for and what we could justly demand. When NDP Leader Gary Burrill, citing the Health Coalition’s report, asked the Premier to admit he signed a bad deal, the ensuing exchange elicited from McNeil a response typical for the session just past. Every time the NDP asked a question, McNeil responded by distorting the NDP’s record in office and throwing it back at them.

What follows is an edited version of the exchange from Hansard for Oct. 20, starting with Gary Burrill questioning the Premier.

Burrill: A new report from the Nova Scotia Health Coalition finds that the Health Accord negotiated with the federal government last December will end up costing Nova Scotia close to $1 billion over the next 10 years because the Premier agreed to an escalator clause that falls so far short of the 5.2 per cent required to ensure the federal government pays its proper share. Mr. Speaker, the Premier was adamant at the time that this was a fine and fair deal for our province. Will he now admit that there is mounting evidence that he was wrong?

McNeil: Mr. Speaker, the honourable member…would know that when he was in government last, that escalator clause was negotiated with his Premier and the federal government, the former Conservative federal government….We went to negotiate it to ensure that there were hundreds of millions of dollars added, to ensure that we dealt with the escalating costs of home care…there’s also additional funding in that Health Accord to adolescent mental health. (Interruption)

The Speaker : Order, please.

McNeil: Thank you, Mr. Speaker. Again, I think it’s sensitive to them, the fact that the deal that they are referring to is one that was negotiated by their former Leader with the former Conservative Party…We’re going to continue to stand up and work with Nova Scotians to ensure they have access to primary health care.

Burrill: We have communities holding Chase the Ace events so they can buy lifts for their hospitals; we have nursing homes making cuts in diet and programming. Just this weekend, we have six emergency rooms across the province that are closed. The Health Coalition reports that the money Nova Scotia failed to negotiate in the Health Accord would have paid for 396 physicians. I want to ask the Premier, why did he negotiate a deal that put us so far behind the eight ball for dealing with the health care crisis?

McNeil: Mr. Speaker, the deal he is referring to, the base of that deal was committed to by that government. Thank God Nova Scotians booted them out…We negotiated on behalf of the people of Nova Scotia to have hundreds of millions of dollars added to that deal for home care, which is a priority for our government, which continues to reduce the home care wait-list, to provide supports at home for seniors where they want it…

Burrill: Mr. Speaker, I do hope that the Premier will not be looking to us to provide him with a reference as a history teacher. Now few, if any, government decisions will have negative consequences as long-lasting in our communities as the Premier’s negotiation of a health deal that does not account in its fundamentals for the realities of our older and our rural population…

Let’s look at the actual history, instead of McNeil’s version.

  • The health deal in place when the Liberals took office was not “negotiated” by the previous government. The Harper Conservatives imposed the deal on the previous government (and all provincial governments), decreeing in December 2011 that a 6% annual increase would end in 2017, to be replaced by smaller increases tied to the rise in the GDP.
  • As the 2012 Chair of the Council of the Federation, McNeil’s predecessor, Darrell Dexter, responded to the edict by working with the other provincial and territorial governments to seek negotiations with Ottawa for  a better health deal. When Stephen Harper refused to negotiate, the Dexter government joined the other Atlantic provinces as well as British Columbia and Quebec to press for a funding formula that would give a top-up to provinces like Nova Scotia with older populations.
  • During the 2015 federal election campaign, the federal NDP committed to retaining the 6% escalator. The Trudeau Liberals accepted the Harper government’s escalator and promised only to spend an extra $3 billion over four years for home care – worth about $7 billion less to the provinces than keeping the 6% escalator over the same period. The Liberals  made no commitment for a needs-based top-up.
  • McNeil and other Liberal Premiers in the region said little or nothing about health funding during the federal campaign helping to keep the issue – and the stark difference in party platforms – off the campaign radar.
  • Post election, there is no evidence that the McNeil Liberals vigorously pressed the Trudeau government for a demographic top-up, an idea that had support from both the Canadian Medical Association and the Conference Board of Canada.
  • Nova Scotia was one of the first provinces to abandon the provincial common front demand for a 5.2% annual increase to settle for a GDP-determined escalator, some targeted per-capita funding for mental health and home care, with no demographic top-up.
  • According to budget documents, as of next March 31, two and a half years into the Trudeau government mandate, Nova Scotia will have received a mere $8.8 million of new money for home care and mental health, the first modest instalment of the heavily back loaded “hundreds of millions of dollars” McNeil claims to have “negotiated.”

Instead of looking in the rearview mirror for someone else to blame for the federal and provincial Liberals’ health funding duplicity McNeil should spend more time thinking about the future of health care. A good place to start would be the latest annual sustainability report from the Parliamentary Budget Office. The PBO finds that the federal-provincial fiscal imbalance that began under the Harper government is continuing. Despite current deficits, the Office’s long term growth and demographic projections show the feds completely eliminating  their debt over the next 40 years. Meanwhile, provincial debt will increase more than three-fold without some combination of spending cuts or tax increases.

The principal cause of this potential debt down loading is increased health costs from an aging population, and federal contributions that do not keep pace with those cost increases. As a result, the PBO projects the federal share of health spending will drop by from 20-30% in the Atlantic Provinces over the next 25 years. In Nova Scotia, the federal share of health spending is projected to drop from 23% in 2016 to 18.1% by 2041. In the worst case, Newfoundland and Labrador, the federal share based on current trends is 13%, down from 18.6%. To preserve any semblance of a national system where the quality of health care is not determined by postal code, those percentages need to be going up, not down. The McNeil Liberals need to drop the partisanship, admit the flaws of the current health deal and work to fix them.

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