Since being elected last June, Premier MacDonald has sought to engage Nova Scotians in his vision of a New Nova Scotia. Aside from the clear expectation that Ottawa will give Nova Scotia more money for equalization, more money for health care, more money for education and some real money for an Atlantic Gateway, the New Nova Scotia has lacked substance. Frankly, looking to Ottawa for our “fair share” is not anything new in these parts, or in any other part of Canada for that matter. So, if more cash from Ottawa doesn’t equal a New Nova Scotia, what would? Here are a few suggestions.
The province of Alberta long ago decided that the money should follow the child in public education. Edmonton Public took that literally and opened their public school boundaries so that any child in their system could attend any school in their system. This had amazing results. Forget about test scores and completion rates leaping upwards by 2-5% a year, forget about satisfaction rates for teachers, students and parents in the mid 90s, forget about the multiplicity of choice and the innovation that has resulted. Consider that, in Edmonton, the richest families send their kids to public school. And, before you write off choice as a viable option for rural Nova Scotia, consider that students in Eastern Shore are taking calculus from a teacher located kilometres away at Halifax West.
Speaking of expanding existing programs, the combination of our taxation and our social welfare systems actually harms the people most in need of assistance. The highest marginal tax rates are paid by those transitioning from welfare to work: for every dollar they earn they lose a dollar in benefits, 100% taxation. To help, the federal government has just introduced a tax deduction for the working poor. Nova Scotia has also recognized this problem and launched a pilot project called Harvest Connections where the first $3,000 of earned income does not result in a claw back of benefits for those in certain agricultural sectors. We should expand this pilot to all Nova Scotians, no matter what industry.
Removing disincentives applies as much to companies as it does to individuals. Corporate taxes amount to about 6% of our provincial revenues (about 10% if you count just our own source revenues and not the flow of cash from Ottawa). The Institute for Competitiveness and Prosperity has recently argued that within 20 years business taxes will be non-existent in most of the world. Nova Scotia should lead the way. Within two years we should have no business taxes. Between accelerated growth and targeted spending cuts we can find 6% of our overall budget to make up that loss. The point here is this, corporate taxes are a drag on investment and job creation, yet we make relatively little money from those taxes in compensation.
As for attracting investment, a great deal of time has been spent in the last few years talking about immigration as one of the critical tools to respond to our growing labour shortage. Yet we spend very little money, relatively speaking, on actually attracting immigrants. We need to have more offices overseas not only to attract trade but to attract immigrants. Immigrants after all, bring family, community and corporate connections with them that then result in more immigration and expanded trade. Additionally, while we must encourage immigrants to learn the principal language of our daily and corporate life, we should also recognize that being able to speak to them in their native language, both in person and over the web, sends a message of welcome that would not be lost on potential new arrivals.
Finally, the New Nova Scotia needs to hang on to some of the hard earned lessons of the past. Chief among these is the fact that windfalls cannot be frittered away on expanded programs and more public servants because a windfall today is a shortfall (and a tax increase) tomorrow. Better for the New Nova Scotia to take a page from Dr. Hamm’s book and invest windfalls to reduce the debt (which right now sits at over $12,000 per person). The interest savings are then available to make targeted, sustainable improvements in critical services.
A New Nova Scotia, innovative, accountable, accessible, prosperous and sustainable.
Charles Cirtwill is Acting President of the Atlantic Institute for Market Studies an independent social and economic policy think tank based in Halifax.