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Nova Scotia’s dual economy emerges as top election issue

Nova Scotia Premier Darrell Dexter is being attacked by opposition parties over business subsidies.

Andrew Vaughan/The Canadian Press

If polls are to be believed, even without an identifiable flashpoint issue, Nova Scotians are poised to throw out their governing party after just one term – in a province known for giving its governments a second chance to get it right.

The province's dual economy is a challenge for its politicians in the campaign for Tuesday's election – it is hot in the urban areas, and struggling to stay afloat in rural regions.

The opposition parties have homed in on subsidies to businesses as a major issue, hoping that the NDP will pay the price for doing what it said it would not when it was elected in 2009: throw money at failing industries or big companies it wanted to attract.

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The leader of Nova Scotia's Progressive Conservative Party, Jamie Baillie, is fond of pointing out that, for the past four years, Premier Darrell Dexter gave about $90-million a year in handouts to paper mills and manufacturing plants that were in trouble, and even helped successful companies such as Irving Shipbuilding.

It was an attempt to retain jobs as Nova Scotia's population ages and its young people make a steady march west in search of employment.

But as an economic development strategy, it was timeworn and only temporarily successful, if that.

The tipping point, many believe, was a generous loan – $304-million – to already profitable Irving Shipbuilding. The company had just won a $25-billion contract to build vessels for the federal government, a pot sweetened by the provincial loan for upgrades needed to prepare for the work, of which only $44-million has to be repaid.

The handout particularly rankled small business owners.

It was a "direct slap in the face," said Jennifer English of the Canadian Federation of Independent Business, which represents 5,200 small businesses in the province.

She said that, a year later, her members are still complaining that the Irving company got the loan at the same time the province is saying money is tight.

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Her entrepreneurs tell her Nova Scotia would be a more attractive place to do business if "government got out of our way. … The Nova Scotia economy will sort out naturally which businesses are going to be successful."

That, said William Watson, an economist at McGill University, is unlikely.

"[Politicians] can't resist going around and pretending that they can create jobs," he said. "… The population seems to force them to promise to create jobs, and force them to try to take credit for jobs that get created."

The Liberals are promising to stop bailouts for failed industries and grants to individual corporations.

They would review the tax system and create an incentive program to keep graduates in the province.

That policy grew in part from in-camera roundtable meetings Liberal Leader Stephen McNeil conducted with small businesses.

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The Liberals said they discovered attitudes toward grants and loans to businesses were shifting away from the old approach, such as the Dexter government's 2010 investment of nearly $20-million (for a 49-per-cent stake) in a manufacturing plant in Trenton, N.S.

Mr. McNeil, the front-runner, calls Mr. Dexter's economic policy a "chequebook" approach.

In his platform, he said "old habits die hard in government, and because of this failed approach, government now assumes that they are the first-stop show when it comes to subsidies to individual corporations and bailouts to failed industries in decline."

The PCs pledge to cut the small business tax rate to zero and eliminate a fund controlled by the cabinet – the Industrial Expansion Fund – that doles out the largesse.

Mr. Dexter is not backing down.

He argues his approach is about "paycheques" and is crucial to saving and attracting jobs. So proud are the NDP of their record that Mr. Dexter launched his campaign in Cape Breton, near the mill his government spent millions to keep open so 1,400 jobs could be saved.

On Friday, the NDP were saying privately they see the undecided vote breaking disproportionately their way in ridings they need. They believe a solid minority win is possible, but a majority would be a surprise.

They acknowledge that months of unchallenged opposition attacks over corporate handouts have hurt.

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About the Author
Ontario politics reporter

Jane Taber is a reporter at Queen’s Park. After spending three years reporting from the Atlantic, she has returned to Ontario and back to writing about her passion, politics. She spent 25 years covering Parliament Hill for the Ottawa Citizen, the National Post and the Globe and Mail. More

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