Liberal mid-term troubles bring back same old political landscape

As the federal Liberal government marks its second anniversary it appears at least some of the bloom is off the Trudeau rose. Several national polls actually have the Liberals neck-and-neck with the Conservatives. The CBC’s Poll Tracker aggregation, updated Oct. 17, had the Liberals slightly ahead, but down ten points from their standing a year ago.

The drop-off in support extends to the Atlantic Region, where Poll Tracker finds a similar ten-point drop from this time last year, albeit from a much higher starting point. Despite the decline in popularity, Poll Tracker still has the Liberals more than 20 points ahead of the second place Conservatives in the Atlantic Region. Halifax-based Corporate Research Associates (CRA) found an even wider margin of support for the Liberals over the Conservatives – 39 points – in its latest quarterly survey.

But the CRA polling was completed before the uproar over Energy East and tax reform hit critical mass. Those issues were particularly hot in New Brunswick, where opposition to the proposed changes to small business taxation led to the first public crack in the region’s solid Liberal wall.

Saint John MP Wayne Long got his knuckles rapped for supporting an opposition motion calling for more consultation on the reforms. The Liberals followed up that mild punishment up with some regional troubleshooting, dispatching the Finance minister to Saint John this week to announce a retreat on the passive income part of the tax reform package. Although there are plenty of other reasons – the health deal and the stagnant regional economy chief among them[1] – that foray into damage control suggests the Liberals see a connection between the dip in the polls and the tax reform brouhaha.

Trying to attribute a drop in popularity to any particular issue is a mug’s game. However, the mid-term polls indicate an interruption in what looked a year ago like an inevitable Liberal parade to re-election in 2019. The tightening polls also provide the cue for a resumption of talk about vote splitting and strategic voting.

Singh factor

So far, the Conservatives are the default beneficiaries of Liberal ineptness. But there is also the Jagmeet Singh factor. According to several reports his election three weeks ago to lead the NDP pleased Conservative strategists who expect his appeal to ethnic and suburban voters in Toronto and British Columbia will take center-left support from the Liberals and help elect Conservatives. A poll by Angus Reid, conducted two weeks after Singh’s victory, may bear this out. It shows the NDP creeping up to 18% and the Liberals and Conservatives in a tie.

Liberals were quick to buy into the Singh-as-spoiler scenario, telling the Hill Times that “the Jagmeet Singh-led New Democrats would ‘siphon off’ a significant chunk of votes from them in the 2019 election, creating three-way races across the country that would be a ‘double whammy’ for the ruling party trying to hold off the Conservatives, and, at the minimum, could reduce them to a minority government.”

Should that potential scenario continue to show up in the polls we will cursed by the same phenomenon that has often dogged federal politics ever since the Progressive Conservatives were replaced by the current noxious brand 20 years ago: strategic voting to keep the latter from getting in – or in the case of Stephen Harper’s government, getting back in – with 30-something per cent of the vote.

Harper’s replacement, the socially-conservative Andrew Scheer, seems like a more personable sort. But the leadership campaign he won narrowly over an avowed libertarian suggests that the federal party has moved further to the right.

The unfortunate part is that the Liberals had both the campaign commitment and the opportunity to fix the problem of polarization and vote splitting through electoral reform. They chose not to. Failing to convince anyone to support the type of reform they wanted, they abandoned the whole project. It would serve them right if voters remembered that betrayal and acted accordingly the next time the Liberals come looking for their strategic vote to keep out the scary Conservatives.

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[1] As I wrote in a First Anniversary piece a year ago:

“It is quite possible that Liberal support has nowhere to go but down. Trudeau’s threat to impose a carbon price and the negative reaction from Liberal governments in Nova Scotia and Newfoundland may cost support, especially in rural areas. If the Liberals fail to deliver something more on health transfers for the next fiscal year provincial Liberal governments in the region may finally be forced to take a strong stand. And if the economy continues in the doldrums, voters may stop blaming the price of oil and focus some of their concern on a federal government that has no plan for economic development in this region beyond Scott Brison photo ops and recruitment of a few hundred well-heeled immigrants some time in the future.”

It may be that those issues are having some impact on political preferences but given their scant coverage compared with the flood of reporting on tax reform (and to a lesser extent Energy East) it is a better guess to place the drop off in Liberal support there.

 

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Energy East: Political posturing over a business decision

One newspaper report described as “terse” TransCanada’s announcement cancelling construction of the Energy East Pipeline. And indeed it was.

“After careful review of changed circumstances,” declared TransCanada’s CEO, “we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications.”

He offered no elaboration for the decision, but didn’t need to. With that cue, others were ready to provide their own particular amplification. Pipeline opponents – including environmentalists, some First Nations, and the Mayor of Montreal, Denis Coderre – celebrated, with Coderre  calling the decision a “a great victory.”

In the polarized politics of pipelines, great victories must be matched with great defeats. Brad Wall, the outgoing Premier of Saskatchewan, foresaw a threat to the federation, predicting that some the decision “may well have some westerners wondering if this country really values western Canada.” He also played a familiar tune, questioning the right of politicians in an equalization-receiving province to oppose a pipeline carrying oil from a non-receiving one.

Wall, like the Conservative official opposition tried to blame the whole thing on Justin Trudeau. They chastised the PM both for what he did – his government’s feeble attempts to rein in greenhouse gas emissions – and for what he didn’t do – champion Energy East.

The latter criticism was probably closer to the mark. The Liberals were quick to go passive and push the notion that market conditions – principally the drop in the price of oil, U.S. approval of TransCanada’s Keystone XL line and the Liberals’ sanctioning of two other lines – were responsible for the cancellation. (University of Alberta’s Andrew Leach has a detailed discussion in the Globe and Mail of the impact of the Keystone approval on Energy East).

Markets dictated

Resources minister Jim Carr downplayed the significance of the NEB’s late summer announcement that its decision on TransCanada would take into account the effect of meeting GHG emission targets on the pipeline’s future viability. Friends of the pipeline fumed about that, but Carr claimed that getting the NEB involved was a matter of transparency.

According to the Minister, the Liberals had made clear on taking office they would assess pipelines and other major projects for their climate change impacts, and had done so before approving Trans-Mountain and the Enbridge Line 3. Said Carr: “The new wrinkle is that the NEB would conduct the review as part of its hearing process.”

That rationalization may sound too clever by half, but overall it’s hard to knock down the market conditions argument. Even Rachel Notley, faced with claims by Brian Jean, the once (and possibly future) leader of the opposition, that TransCanada’s decision amounted to a “declaration of war against Alberta by other provinces,” seemed to accept part of the market argument. Her statement of disappointment acknowledged that the decision was driven by a broad range of factors.

One factor that received scant coverage was outlined in the Globe and Mail by Benjamin Dachis of the business-friendly C.D. Howe Institute. He argued that because of a recent NEB pricing decision on natural gas shipments TransCanada no longer needs to pursue Energy East. The project was hatched largely to use pipeline capacity created by a drop in natural gas shipments to Ontario. With TransCanada’s recent approval for a new lower price, it can fill that capacity with natural gas and no longer needs to convert the pipeline to carry oil.

If Benjamin Dachis is right, it’s one more reason to lower the political heat and finger pointing. Unfortunately, that is not likely to happen anytime soon. Conservative provincial politicians in Alberta and Saskatchewan will ignore inconvenient facts and fan the flames, as will the federal Conservative Party. Despite environmentalists’ claims of victory, it doesn’t look like the demise of Energy East moves the country any closer to finding consensus on a realistic plan for sharply reducing GHG emissions.

Regional impacts

On early returns, the Energy East diehards and blame throwers will find some supporters in this region. It is a sad fact that when it comes to regional grievance, nothing fires up our media and politicos like oil and gas issues. Gouge us on equalization, fleece us on health transfers or abandon regional development and there’s barely a complaint. But don’t mess with our dreams of wealth from fossil fuels.

In the 1970s and 1980s Newfoundland and Nova Scotia were at war with Trudeau the First over offshore development and oil and gas royalties. In the 2000s the same two provinces clashed with both Liberal and Conservative federal governments over the effect of those royalties on equalization. Now it’s New Brunswick’s turn to cry.

That province has gone all in on Energy East since it was first proposed four years ago, craving both the short term economic boost that would come from its construction and ongoing increased activity at the port of Saint John. Premier Gallant, in deference to his federal Liberal patrons, was restrained in his response. But the editorial reaction of the Irving-owned newspapers was ballistic. The Telegraph Journal even raised the notion of secession, declaring: “It is time to stop playing nice and make clear to the federation that our continued membership depends on fairness, starting with support for projects that will aid in the free exchange of goods.”

Of course, Irving Oil was a partner in the Energy East project, expected to refine some of the pipeline-delivered oil, while exporting the bulk of it through a new terminal. Although the hyperbolic Telegraph-Journal envisioned Energy East “making us a wealthy, self-sustaining province again” the proposed terminal was in fact a relatively modest $300 million investment, employing no more than 50 people in hard-pressed Saint John.

Unlike New Brunswick, Nova Scotia had nothing – however modest – to gain from the pipeline and would have shared with New Brunswick the environmental risk of significantly increased tanker traffic in the Bay of Fundy and Gulf of Maine. Nevertheless, some past and present Nova Scotia politicians lamented the lost opportunity for a pipeline extension linking the Maritimes to the national grid.

And while refraining from separatist talk, the Chronicle-Herald’s editorialist exhibited the same regretful tone, complaining that in the eyes of the federal Liberals Atlantic Canada is “At the bottom. Where it’s OK to be the only region not connected to the national pipeline… left to get its oil from such bastions of political stability and climate enlightenment as Venezuela, Saudi Arabia and Nigeria.”

There is a two-word response to such concern. Offshore Newfoundland.

If it is so vital to the region’s interest to use Canadian oil, maybe we should encourage Irving and any other refiners selling into the Maritimes to purchase and refine the stuff from Newfoundland instead of those other awful places. Getting Irving to do that may not be as straightforward as it sounds. But it seems like a better plan than the expenditure of almost $16 billion so that we can hook up to the delivery system for a product we must drastically cut down on if we are going to survive.

Moving on

In the short term, some good may come from the Energy East flare up and the politics around it. The 32-strong Atlantic Liberal contingent elected in 2015 was not likely to survive intact after the next election two years from now. But the pipeline, the small business tax reforms and the lousy health deal alone point toward more  than just a return to political equilibrium going into 2019. It may become open season on the seats of Liberal MPs in the region.

That means we should see some attempts at fence mending in the months ahead. Let’s just hope those efforts consist of more than photo ops like this week’s pro-forma superclusters announcement, and do not include a full retreat on tax reform. Given their shifty record on the health file it may be wishful thinking, but a better place to go would be a fairer formula for health transfers, one that recognizes the special needs of provinces with older populations.

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Updated NS Budget 2017: Deja Vu, only worse

Driving back to Dartmouth from last Tuesday’s provincial budget lockup at Pier 21 we were required, like the rest of the traffic, to slow down because of the construction project that has turned Water Street into an obstacle course. The bottleneck caused by the Queen’s Marque construction simply added insult to injury.

We “stakeholders,” like members of the legislature and everyday Nova Scotians of less exalted status had just been briefed on the revised provincial budget for 2017-18. It was the updated version of the one that was introduced in April but not passed because the Liberals preferred going to the polls. As the media quickly detected, this new version of Budget ‘17 wasn’t much different from the one it superseded.

After an election campaign dominated by health care and its deficiencies, the Liberals decided in the update that it was prudent to sprinkle a bit more money in that direction:

  • $2.7 million to reduce wait lists for orthopedic surgery
  • $1.8 million for youth mental health
  • $800,000 each for cancer drugs and the opioid crisis

But the biggest single item of new spending in the revised post-election budget is $4.7 million to pay the inflated cost of cleaning up contamination on the site of the Queen’s Marque thing. This happens to be twice as much as the government plans to spend this year to scratch this particular stakeholder’s itch – supported community housing for people with developmental disabilities. The $2.1 million in new spending earmarked for this year may produce a dozen new homes – for a wait list exceeding 1,300. But housing for the wealthy, with a killer harbour view, must take priority.

The opposition in the legislature focused on the health issue. Jamie Baillie declared himself “pissed off” that there was no new money for primary care. Gary Burrill, noting several recent breakdowns in care, coincidentally equated the tiny increase in the $4.2 billion health budget with bringing a garden hose to a house fire.

Restraint overall

Others may look at the second coming of Budget ‘17 and wonder whatever happened to highway twinning. Given top billing in the April budget speech of Randy Delorey, it received nary a mention in Karen Casey’s address. Advocates for the disabled may also wonder why the April budget passage entitled “An Accessible and Inclusive Nova Scotia” hit the cutting room floor for the September edition. Of course, everything can’t be mentioned in a budget speech, especially when a good chunk of it was devoted to defending the pre-emptive introduction of the pre-primary program.

But it’s not the small details that are the most perplexing, it’s the overall thrust of the budget and the way that Stephen McNeil has framed it. The core of this budget and its predecessor is, to quote a conservative politician of another time and place, “acute, protracted restraint.” The only discernible overriding vision is of balanced budgets to produce a progressive reduction of the province’s debt-to-GDP ratio. But with no significant boost in GDP or revenue anywhere on the horizon, that will only be brought about by austerity, worse than what we have already experienced.

My piece about the April budget argued that the media and the opposition parties should expose the fact that the budget the Liberals were running on –in effect their election platform – was an austerity budget. To wit:

“Save for the election year spending blip, restraint is the Liberal plan right up until 2020, according to budget documents. After the 3.7% increase this year, balancing the budget would require limiting spending to a 0.7% increase in the 2018 budget and 1.3% in the 2019 budget. If Libs are actually running on the budget brought in this week they must be counting on no one bothering to read it, preferring instead that all people hear are the good news announcements and the magic words ‘balanced budget’.”

As it turned out, no one paid much attention to the fiscal plan during the campaign. The austerity promised in the budget’s four-year blueprint was glossed over as the opposition parties fashioned their campaign platforms on the April budget’s shaky fiscal structure. That budget had as its foundation the unsustainable suppression of public sector wages. The updated budget framework is based on that same cracked foundation, and it has become even more ramshackle.

As the NDP’s Dave Wilson put it, the Liberals have created a budget to fit their narrative, and that narrative is fiscal restraint. It would be possible for the Liberals to interpret their re-election with a significantly reduced majority as a backlash against their handling of health and their bullying tactics toward teachers and other public sector workers. Instead, they see their narrow victory as vindication of their tight-fisted ways, proof as the Premier put it on budget day that “Nova Scotians want us to live within our means.”

Rough future

So as a result the government continues with a fiscal plan with one constant – a balanced budget – and two variables – expenditures and revenues.

As for expenditures, the projected increases are even less in the update than they were in the April edition – 0.3% (down from 0.7%) next year and 1.1% (down from 1.3%) the following. No other government in the country is planning to inflict this level of austerity on its citizens, according to fiscal tables published last week by RBC.

Only New Brunswick and the depressed, oil-reliant provinces of Saskatchewan and Newfoundland even come close to matching Nova Scotia’s commitment to restraint. Indeed, the Liberals are trying to outdo themselves. When accounting adjustments are excluded from the calculation, the McNeil government increased spending an average of 2.7% a year between 2013-14 and 2016-17 – more than twice the average increase they are projecting for the next three years.

Budget papers provide no specific explanation for next years’ minuscule increase in spending – an increase that is in fact a spending cut, given 2% projected inflation. But the inference is that to keep the budget balanced, one variable – expenditure – has to match the other variable – revenue. The needs of the people for government services aren’t in the equation.

And unfortunately, revenues are expected to decline in 2018-19. There are three reasons for the drop, one of which is a one-time accounting adjustment for the Convention Centre. The second factor is tax cuts – $15 million to small business and $85 million for individuals.

The wisdom of cutting taxes while starving public services is certainly questionable, but could be justified if economic growth gave promise of increasing revenues. Sadly, there is a near absence of real economic growth next year –projected at 0.5%, down from 0.8% that was expected five months ago. The stagnant economy is  the third reason for next year’s revenue decline. And the budget projects little improvement in the economy in 2019 and 2020, resulting in revenue growth averaging only about 2% a year.

So that’s the bottom line of the 2017 budget. As long as a balanced budget remains the political holy grail and the economy produces little revenue growth there will be intense pressure on public spending. Unless the Liberals can pull more accounting tricks out of a hat – or there is an unexpected windfall from the federal government – we are in for a very rough ride over the next four years. But then, we will always have Queen’s Marque.

 

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Federal Liberals are bungling needed tax reform

The federal Liberals have certainly opened up the proverbial can of worms with their proposals for changing the taxation rules affecting small businesses. If there were such a thing as a Richter scale for backlash, this one would be closing in on 9.0.

Opposition has been growing since the mid-July release for public comment of the details underlying a Liberal campaign promise to stop highly paid individuals – including physicians – from using the small business tax regime to reduce their taxes. The Coalition for Small Business Tax Fairness has organized doctors, farmers, lawyers, shop owners and other small businesses across the country to fight the changes. In Nova Scotia, some Liberal MPs have held town halls for feedback, and received it in spades from overflow crowds. The previously slumberous provincial Conservative opposition has launched a petition demanding that the McNeil government call on the feds to stop planned changes “before they cause damage to our economy and make healthcare worse” by driving doctors out of the country.

Atypically for such a complex subject, the news media have been all over the story, tossing around terms like “income sprinkling” and “passive investments” as if they were topics of everyday discourse. And the pundits have been hammering the Liberals. A columnist for a national newspaper accused them of declaring class warfare, pitting the pampered wage earner with her employer-supported pension, paid vacation and parental leave against the rugged individualism of the small businessperson. Locally, the Chronicle-Herald’s Jim Vibert saw murderous intent. The feds, he fulminated “are killing small family businesses, discouraging initiative and risk-taking and aiming a bullet at the brain of weak economies, like Atlantic Canada’s.”

While some are forewarning the apocalypse, the Liberals are trying to frame the debate as an effort to level the playing field between the middle class and the one per cent. How it plays out won’t be known for a while, with consultations continuing officially until next month. But so far it is not looking good, either for Liberal competence or for real progress in making the rich and the large corporations pay their fair share of taxes.

Doctors pose a problem 

The hysteria that has been building all summer morphed into pathos last week when female physicians conducted a roundtable at the very same Kelowna hotel where the Liberal parliamentary caucus was holding its pre-session retreat. The doctors’ discussion was summed up by Dr. Gigi Osler, newly elected president of the Canadian Medical Association. As the CBC reported, Dr. Osler maintains that the proposed changes could cause women to leave the profession, or as she put it, force them “to chose between their dream job and being a mother.”

That’s likely not the kind of response our flamboyantly feminist Prime Minister wanted to hear when he set out, in the name of tax fairness, to change the rules affecting small business. But it was not surprising.

For years now private practice doctors, along with other professionals, have been setting themselves up as small businesses. Doctors Nova Scotia says that 75 per cent of this province’s physicians are incorporated.

Whether the Nova Scotia government encouraged them to do so as a backdoor way of increasing their incomes is not known, but that is what happened in Ontario. According to Michael Wolfson of the University of Ottawa, the Ontario government changed the law in 2005 to allow spouses to become shareholders in a small business set up to receive a doctor’s income. The number of private doctor companies in Ontario began to explode after that, from under 1,500 in 2004 to more than 20,000 now.

This has created a thorny problem, one that makes more relevant the Nova Scotia Conservatives’ petition calling on the McNeil government to speak out. In light of reduced federal health transfers it’s hard to imagine Nova Scotia or any province wanting to pay higher fees to compensate private practice doctors for bigger tax bills that result from the feds changing the small business rules.

Political games

With Nova Scotia and other jurisdictions worried about a shortage of family doctors it seems politically dumb to be messing with their incomes – fairly taxed or not. And in a time when politicians attack “red tape” and join the media in venerating the entrepreneur, the same can be said for the small business sector in general. The Liberals claim they are only going after the highly-paid professionals, not the corner store or restaurant owner. But tighter rules to nail the wealthy dentist, doctor, lawyer or accountant will also affect the mom-and-pop operation.

Moreover, the way in which the Liberals have handled the issue over the last couple of years is not likely to reassure small business. The commitment to crack down on wealthy Canadians setting up small businesses surfaced before the 2015 election campaign as a “gotcha” for the Liberals after some economists described the NDP’s promise to cut the small business tax rate to 9 per cent as primarily benefitting the rich. As the University of Calgary’s Jack Mintz put it in a Jan. 28, 2015 Huffington Post article, “[It’s] something to make the rich richer…We find that 60 per cent of the small business deduction goes to households with more than $150,000 in income.”

Mintz suggested that the NDP rethink its policy on the small business tax. The NDP didn’t take that advice, but the Liberals were listening.

The Liberal platform committed to the same rate reduction as the NDP but – outflanking the NDP on the left – added a commitment to ensure that small business status “is not used to reduce personal income tax obligations for high-income earners rather than supporting small businesses.” During the election campaign, Justin Trudeau reiterated the gist of that plank in his one-on-one leaders interview with Peter Mansbridge. But he ad-libbed a serious misstatement, claiming that “a large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes.”

That was wrong. None of the expert studies that preceded the Liberal policy on the small business tax suggested that a large – or even significant – percentage of small businesses were set up as tax shelters. What they claimed was quite different – that the largest percentage of the benefits from the business tax regime went to high income earners, who represented only a small percentage of small business owners.

Trudeau’s misspeak was immediately pounced on by the other parties. The NDP demanded that Trudeau apologize “for smearing small-business owners as tax cheats.” Conservative Jason Kenney called small business “the heroes of our economy, but J Trudeau says ‘a large percentage’ are just tax dodges for the rich.”

If there ever was an apology or clarification of Trudeau’s remarks during the campaign or in the months since it has become lost in the rush of events. However, the Liberals’ attitude toward small business was reiterated in their first budget, which kept the rate at 10.5 per cent, postponing the platform commitment to reduce it by two points. So it’s little wonder that small business was riled up and in no mood to play nice by the time details of the proposed changes were released two months ago.

Better options

In addition to being politically risky, the exercise seems like small potatoes  in the big picture of government finance and corporate taxation. The government has estimated increased revenue of $250 million from cracking down on income sprinkling – the practice of diverting income from a business to lower-income family members. No revenue estimates have been produced for the other practices being targeted. But $250 million is barely a drop in the bucket of federal revenue that exceeds $300 billion a year.

And while pursuing – at least for now – small businesses set up by highly-paid professionals, the Liberals are giving a pass to highly-paid corporate executives. Citing concerns about stifling innovation they hit the pause button on a campaign promise to close down a much more costly $840 million perk exempting those executives from paying tax on 50 per cent of their income from cashing stock options. That same discount, applied to all forms of capital gains, is worth about $10 billion a year, according to Canadians for Tax Fairness.

Then there is the general tax rate on large corporations, cut nearly in half over the last 15 years. Although raising the rate by a single percentage point would yield close to $2 billion a year the Liberals have shown no interest in going that route – this despite recent polling showing that most Canadians agree that large corporations are paying too little tax, while only one in ten believe that’s the case for small business. If it’s more revenue they want, the Liberals should go hunting where the ducks – and potential votes – are.

So why are the Liberals spending political capital for what seems like such a small return? Why get in a brawl with two of the more admired groups in society – doctors and entrepreneurs – when there are many alternative ways to raise revenue? They may see it as a necessary first step in bringing about thorough tax reform. But aside from raising taxes on high income earners in their first budget, there’s little in their program or performance suggesting that to be the case. Another plausible explanation is that just as with electoral reform, the Liberals took a position to neutralize or embarrass their NDP competition during the election campaign, but in government are prepared to back off in the face of opposition.

Most people agree that First-Past-the-Post needs to be reformed, but getting it done isn’t easy. It takes leadership, commitment and compromise. Probably even more people would agree that the tax rules for small business should not be used to help the rich avoid paying their fair share. But again, working out the details requires leadership, commitment and compromise. The Liberals botched the electoral reform process, then killed it. They are in the process of mishandling small business tax reform, with a similar outcome a clear possibility.

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New Health Minister doesn’t mean better health deal

Although last week’s federal cabinet shuffle generated little excitement here, it was a different story in New Brunswick. There, the surprise appointment as Health minister of Ginette Petitpas Taylor, a rookie backbencher from the Moncton area, created considerable buzz.

Aside from the fun fact that the appointment gave the province with 2% of the population 6% of cabinet posts (Trudeau friend and Fisheries minister Dominic LeBlanc is the other New Brunswick cabinet minister) there was the added possibility that the new Health minister would be sympathetic to the health funding concerns of New Brunswick, Nova Scotia and the other smaller provinces.

Ever since the Harper government re-jigged the formula to the benefit of the wealthier provinces the other provinces have been trying to recoup some of their losses by arguing that the formula needs to be further adjusted to recognize greater needs in provinces, like the Maritimes and Newfoundland, with older populations.

This is a position that has been endorsed by the Canadian Medical Association, the Conference Board of Canada and most recently, by a committee of the Canadian Senate. The proposition has found no favour, however, with several other provincial governments, especially Ontario, nor with the outgoing Health minister, Toronto-area MP Jane Philpott.

Perhaps with Philpott’s replacement, coming as she does from a fiscally-challenged province with an aging population, the proposal would get a better hearing? Based on media reports, we shouldn’t count on it.

Province changed tune

Chantal Hebert, writing in the Toronto Star suggests the Moncton-Riverview-Dieppe MP’s promotion has mostly to do with her bilingualism and the impending legalization of marijuana. Petitpas Taylor, along with MP and former Toronto police chief Bill Blair and Justice minister Jody Wilson-Raybould will be on the front lines on that file. The new Health minister is the only one of the three who speaks French, important because the federal government’s legalization plans are encountering flak in Quebec.

And then there’s the gender balance thing. Symmetry was thrown off by the replacement of the retiring Judy Foote, previously the Newfoundland representative in the cabinet, with Trudeau friend Seamus O’Regan. Cabinet gender balance was restored with Petitpas Taylor’s appointment.

As for the minister herself, in an interview with the Saint John Telegraph-Journal she cited her social work background and experience in addictions and mental health counselling as assets she brings to the job. She acknowledged the challenge provincial governments face in serving a rapidly aging population. However, rather than address the funding formula Petitpas Taylor said only that she would look into a proposal from New Brunswick for a joint home care pilot project aimed at having more seniors cared for at home.

When the Conservatives were in power, the New Brunswick Liberal government was outspoken in condemning the feds for slashing the rate of increase in health transfers. The Gallant government changed its tune when the Trudeau Liberals embraced the Conservative cuts, adding some modest additional targeted funding for home care and mental health to cushion the blow. Indeed, New Brunswick was the first province to abandon the provincial common front and accept the federal offer.

Costly to provinces

As calculated in my post last March the capitulation that started with New Brunswick will cost the provinces dearly over the next ten years – for example a shortfall of at least $1.2 billion for Nova Scotia between what the provinces were seeking and what they accepted after the common front fell apart. Nonetheless, New Brunswick now appears content just to talk about a “partnership” with the federal government on a home care pilot project.

“Obviously, having Ginette Petitpas Taylor now as minister hopefully will advance those discussions,” Health minister Victor Boudreau told the CBC, adding that it can only be beneficial to the province to have a second New Brunswick minister at the federal table. “Not to say we don’t have a great relationship already with the Trudeau government.”

That’s the solid front of partisan politics talking there, but there are other voices. Unlike the media in Nova Scotia, which seem uninterested in the problem, the Irving-owned press in New Brunswick is ready to pursue it. In an editorial the Telegraph-Journal allowed that while the new minister faces challenges like cannabis legalization and drug overdoses the biggest issue is “what is the federal government going to do about the effect of an aging population on health care?” The answer, according to the newspaper is for the feds “to adjust the health funding model to account for population composition.”

And then there’s the Senate, another unlikely ally. In June, the Senate Finance Committee, headed by a Conservative Senator from New Brunswick and a Liberal from Ontario, put out a report calling on the government to consider demographics when calculating federal transfers “to ensure that all regions of the country have the resources to fulfill their responsibilities with respect to the aging population.”

Those are good arguments, but the new minister would have better luck selling them to her boss and cabinet colleagues if the Liberal governments and a few of the Liberal MPs in the Atlantic provinces had the political fortitude to speak up on behalf of the citizens of the region.

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Proclamation shines light on anti-worker Liberal agenda

For those of us wondering whatever happened to the government Nova Scotians elected three months ago it was a rude reminder. After a sleepy political summer disturbed by few signs of consciousness, the slumbering McNeil government woke up in a grumpy mood last week and, with proclamation of Bill 148, again turned its ire on public sector workers.

Signing the proclamation came as no particular surprise after negotiations with the Nova Scotia Government and General Employees Union (NSGEU) broke down a few weeks ago and the union asked for arbitration. In Trumpian terms, the Liberals have been “locked and loaded” in anticipation of such an impasse ever since Bill 148 was passed by the legislature almost two years ago. The bill, part of a string of assaults on collective bargaining rights of civil servants, imposed a three per cent increase over a four-year agreement and messed with long service awards. All it took was for a union to challenge the imposed framework by asking for arbitration, and the trigger would be pulled through proclamation.

It may be recalled that back in late December, 2015, passage of Bill 148 occurred at 7:45 in the morning after another of those all-night sittings of the House of Assembly that have become as much a part of the McNeil government’s repertoire as union bashing. Apparently the Liberals now believe that both tactics have been endorsed by Nova Scotians, claiming that achieving a majority in the recent election is sufficient mandate to bring the bill into force.

Any qualms about the significant reduction in that majority seem to have been overcome. Also of no apparent concern is the fact that eight of those Liberals who voted for Bill 148 back before Christmas 2015– including two cabinet ministers – were turfed by the voters on May 30th. But that doesn’t seem to matter to the survivors. Although the electorate may have spoken, only those four out of ten who voted Liberal were heard.

Leading the country

With proclamation of Bill 148 and the recent defeat of the Liberals in British Columbia the McNeil government can lay claim to top honors in the neoliberal “stripping public sector workers of their collective bargaining rights” sweepstakes. Indeed, they are becoming a pacesetter with Bill 148, officially dubbed the Public Service Sustainability Act. A new contender in the union-bashing race, the recently-elected Conservative government of Manitoba, brought in a similarly titled Public Service Sustainability Act bill two months ago, featuring an equally draconian wage pattern.

A fuller sense of how Nova Scotia stands can be had by visiting the website of the labour-sponsored Canadian Foundation for Labour Rights. The site lists 223 restrictive labour laws passed by Canadian governments going back over 35 years. Since coming to office with a phoney commitment to respect collective bargaining rights, the McNeil Liberals have carved out a prominent niche on that list. There have been 16 new entries since the beginning of 2014 – Nova Scotia has been responsible for six of them.

  • First up were 500 home care workers legislated back to work in March 2014 by Bill 30, the Nova Scotia Essential Home Support Services Act, which required the workers’ unions and their employers to negotiate an essential services agreement prior to a strike or lockout.
  • Bill 30 was followed a few days later by Bill 37, curtailing a nurses’ strike by extending the requirement for essential services agreements to another 35,000 public employees including nurses and hospital support staff.

These two pieces of essential services legislation at least had a plausible story line – they were enacted to head off strikes by home care workers and nurses, and were further justified by the government because all other provinces had such laws. But the next big blowup was over something that likely baffled many Nova Scotians while exposing the government’s anti-union bias.

The ostensible purpose of the Health Authorities Act was to streamline collective bargaining by slotting health care workers into four bargaining units, each unit represented by one of the existing unions. That seemed reasonable enough, but the hidden agenda was to reduce the membership and clout of one of those four unions, that is, the NSGEU. After much ado over a six-month period the government compromised, allowing health care unions to keep their membership while establishing four Councils of Unions as bargaining agents.

Finished with the health care unions, the Liberals turned to the universities with Bill 100, introduced in the spring of 2015. The legislation allows universities in financial trouble to suspend collective agreements and ban strikes. Next came the just-proclaimed Bill 148, followed last winter by the Teachers’ Professional Agreement and Classroom Improvement Act that imposed on teachers the wage and service award terms contained in Bill 148.

Six tough labour relations bills in three years is quite a feat for any government. How much of this blitzkrieg will survive legal challenge is now the multi-million dollar question.

Troubles ahead

Ransacking of the long service awards is reportedly saving the government about $40 million a year, but the move involved taking away benefits employees achieved through collective bargaining. Last November the Supreme Court of Canada, in a case involving British Columbia and its teachers, ruled that governments can’t take back through legislation something they agreed to at the bargaining table. So perhaps there should be an asterisk on a big chunk of the surplus the Liberals are so proud of.

The essential services legislation is also fraught with difficulty. Under Bills 30 and 37 unions are prevented from striking unless there is an essential services agreement in place. Agreeing on a definition of essential services could prove difficult. The Wall government in Saskatchewan brought in legislation with such a broad definition that the Supreme Court of Canada found it effectively removed the right to strike. The Saskatchewan government subsequently rewrote the legislation to meet the Supreme Court’s objections. It’s an open question whether Nova Scotia’s law, passed before the Supreme Court decision, would pass muster.

The McNeil Liberals’ heavy-handed approach to labour relations is not only standing out nationally, it is securing for them a dubious but distinctive place in Nova Scotia’s political history.

There have been some high profile battles between government and organized labour in this province’s recent past:

  • The John Savage government of the mid-1990s imposed unpaid leave, a wage rollback and a three-year suspension of bargaining rights on public sector workers;
  • The Hamm government imposed back-to-work legislation on paramedics (1999) and nurses (2001);
  • In a move opposed by the McNeil-led Liberals, the minority Conservative government of Rodney MacDonald tried unsuccessfully in 2007 to remove the right to strike from health and community care workers;
  • Even the Dexter government was forced to swallow hard and end a walkout by paramedics a few months before their defeat in the 2013 election.

But those episodes, spread over two decades and four administrations, pale by comparison with the current hardball Liberal approach to labour relations. With key elements still in play because of potential court rulings the issue will likely continue to fester into the future. Making the potential for strife even more certain is the sense of betrayal caused by the fact that, over six years in opposition under Stephen McNeil, the Liberals presented themselves as supporters of collective bargaining rights for health care workers and others. [i]

The president of the NSGEU raised eyebrows last week when he referred to McNeil as “a snake.” Going by the Oxford English Reference Dictionary (1996), “snake in the grass” (a treacherous person or secret enemy) may have been more precise, but the sentiment is understandable.

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[i] For example, from Hansard, November 2007, here is McNeil, the former idealist,  speaking against a Conservative government bill stripping health and community service workers of the right to strike. “There isn’t a single person who wants a strike, including those very health care workers you’re taking away the right from. What they want, though, is to have the right to sit down with the government and bargain in good faith and make sure that they have that tool to be able to not go to work… the easiest thing for me and this caucus to do would have been to support this government. I think it’s fair to say to the members who are here, who are the leaders in the union movement in the Province of Nova Scotia, they don’t vote, quite frankly, for me, and I think most of them would tell you that, nor do they vote, I would suggest, for the government. But this to me, quite frankly, is not about politics. When I asked to be the Leader of the Nova Scotia Liberal Party, I didn’t be ask to be Leader so we could divide Nova Scotians and take away their rights. I asked to be the Leader of the Nova Scotia Liberal Party so we could put forth good, constructive solutions to the issues facing Nova Scotians.”

 

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Domesday File #2: Missing the news in the stats

Domesday File: An occasional series inspired by the Domesday Book, the medieval survey of wealth and human resources 

It is interesting to track media coverage when large amounts of data like this week’s Census report on families are released. For many people, what reporters and editors chose to highlight will be the extent of their exposure to the vast amount of information collected during last summer’s intelligence gathering exercise. Taking their cues from Statistics Canada on-line release, most of the national media went with what the agency suggested was news – the fact that as the Globe and Mail headline writer put it “Canadians are increasingly going it alone.” The CBC took a similar tack, also reporting that for the first time one-person households were the most common living arrangement, edging out the former number one, couples with children.

While it was newish, this development was hardly dramatic. The previous 2011 census had reported a virtual tie, with couples with children ahead of one-person households by just 75 households, the continuation of a trend going back at least to 2001. And the ascent of the one-person household was old news in Nova Scotia. In this province and in New Brunswick that category overtook the couple with kids grouping sometime between 2006 and 2011. And in Newfoundland, it hasn’t happened yet – there one-person households are out-numbered both by childless couples and couples with children.

Another focus in some of the national reporting was on the increase of adult children living with their parents – a particular concern in Toronto, and a valid story at the centre of the Canadian media universe: 20-34-year-olds camping out with Mom and/or Dad jumped from 44.6% in the 2011 Census to 47.3% in 2016. But in Nova Scotia, the percentage actually dropped from 30.3 in 2011 to 29.7 in 2016 and has not increased since the 2001 Census. It also dropped in Newfoundland, but went up about one percentage point in New Brunswick and PEI.

In times gone by when local newspapers had more resources and a greater commitment to their readers there would have been some good localized coverage of the latest Census release. That may still come, but in the meantime, local media either ignored the Census story or took the same approach as the national media. One of the few places to try a Nova Scotia spin on this is the Nova Scotia Finance department website here.

The Finance department number crunchers give some context to the living alone phenomenon, pointing out that the trend has been most noticeable in the Atlantic provinces, “reflecting the faster aging of the population in the region.” The department’s post goes on to report that “the rise of one-person households, multigenerational households and couples without children can be interpreted as a result of the aging population. As the large baby boom cohort ages into later stages of life, a growing number of widows and widowers live alone and households headed by baby boomers are increasingly ‘childless’ as their children reach adulthood and move out.”

Lone-parent families 

Our aging population is a familiar story, but the Finance report on the Census identified another category in which Nova Scotia – and in fact all of the Atlantic provinces – stood apart. The percentage of lone parents and children living in lone-parent families increased from Census 2011 to Census 2016. Finance reported the fact that 26.0% of children aged 0-14 lived in a lone-parent family, up from 25.1% in 2011.

As one might expect, Finance did not delve into the numbers, the media are supposed to do that. But further examination of the Census data reveals that with more than one-quarter of its children living in lone-parent families, Nova Scotia is far above the national average. Nationally less than one in five children (19.2%) live in lone-parent families. Six provinces are above the national average, led by Nova Scotia, which at 26.0% is followed closely by New Brunswick (24.3%) and Newfoundland (23.2%). All six above the average, except the newly affluent Saskatchewan, are among the traditional “have-not” provinces. Wealthy Alberta, at 16.1%, is the lowest.

Nova Scotia also had the highest percentage of kids living with a single parent in 2011. Only New Brunswick had a bigger increase between 2011 and 2016 while the four western provinces all saw decreases. This correlation between lone-parent families and economic geography applies within Nova Scotia as well, with Cape Breton showing the highest percentage of lone parent families and Halifax the lowest.

The connection between one-parent households and poverty is well established. Nova Scotia not only has a higher percentage of lone parent households than any other province, the income gap between lone parent households and couple families is greater here. Moreover, in Nova Scotia, 40% of lone-parent families (representing 50,000 parents and children) are low-income. The Canadian figure is 36%. The only statistical factor preventing Nova Scotia from having the highest rate of child poverty appears to be that lone parents here have fewer children than the three provinces with higher child poverty rates than Nova Scotia – New Brunswick, Manitoba and Saskatchewan.

Poverty stats under-reported

Fourth from the bottom on child poverty is little solace, given that the most recent low income statistics reveal that in 2015 Nova Scotia had the country’s highest overall poverty rate. At 17.5%, the overall rate was the worst since 1976 and represented only the second time since 1976 that Nova Scotia has claimed the dubious honour of the worst rate of poverty in the country.

Surely that’s news worth ferreting out and reporting. But like the facts about lone-parent families, the poverty stats have pretty much flown under the radar since their release by Stats Canada in May. The indifference is even harder to accept, given that the release came towards the end of a provincial election campaign during which one of the major parties made the poverty issue the central focus of its platform. And it wasn’t just the poverty rates that were troubling. Other highlights of the release (CANSIM 206-0041) included:

  • Nova Scotia families had the lowest median income in Canada;
  • Nova Scotia families had the lowest median market income;
  • And also the lowest after tax median income in the country.

Perhaps the media and our opinion leaders have decided that the poor economy is no longer news. Maybe the facts about sagging employment, the aging population, economic stagnation and poverty have become routine. Or perhaps the media and our policy makers and opinion leaders have decided that there’s more profit in embracing a sunnier alternative reality.

A final note

Last month Stats Canada reported a big increase in unemployment in June, the result of an increase in working age population and the labour force, with very little increase in jobs. As suggested at the time, this increase in unemployment could have been a blip, and province-wide it appears it was. Unemployment in Nova Scotia in July dropped sharply from the previous month and from July 2016. This was the result of a modest increase in employment (a good thing) and a larger drop in the labour force (not such a good thing but positive for the unemployment rate).

In Halifax, where the June increase in unemployment was most marked, the glass continued to be half full (or empty). Employment, full-time employment and labour force were all up from June and unemployment was down a bit. However, compared with July of 2016, the news is still not great. As the table shows, employment is still down and unemployment way up from a year ago.

 

                                          July 2016         July 2017     Change

Working age population   353,600           358,900       + 5,300

Labour Force                       242,200           243,300       +1,100

Employment                         229,600           227,200       -2,400

Full-time employment       192,400           186,400       -6,000

Unemployment                       12,600              16,000       +3,400

Unemployment rate                   5.2%                 6.6%           27%

Is it a two-month blip or trend? As they often say on the news, time will tell.

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