Toward a new Atlantic strategy

CHRIS WOOD October 27 1986

Toward a new Atlantic strategy

CHRIS WOOD October 27 1986

Toward a new Atlantic strategy


The Prime Minister was late. Leaving his limousine behind, Brian Mulroney had chosen to walk the four blocks from his hotel to Charlottetown’s historic Province House. There, over lunch, he was scheduled to meet the premiers of the four Atlantic provinces to discuss a new federal strategy for addressing the region’s economic woes. Mulroney stopped frequently to shake hands en route, at one point dropping into a restaurant to greet diners, and finally arrived 20 minutes behind schedule to consume a lunch of shrimp sandwiches and chowder. The mainstreeting, like the new economic development strategy, was clearly aimed at shoring up Conservative votes in a region where support for the party has eroded badly since the 1984 federal election.

But as Mulroney returned to Ottawa on Friday night, critics questioned whether the keystone of the Tory plan— the proposed Atlantic Canada Opportunities Agency (ACOA)—will prove any

more effective than earlier federal efforts to boost the region’s economy. In his meeting with the premiers, Mulroney provided few details about the new agency, which his government promised to establish in the Oct. 1 throne speech. And even as the Prime Minister sought the premiers’ advice about the as yet unstructured economic body, a rising uproar over proposals to make radical cuts in unemployment insurance benefits threatened to undo much of the political credit he hoped to gain from the initiative.

The meeting in Charlottetown Friday fell at the halfway mark of Mulroney’s two-day trip to New Brunswick and Prince Edward Island. The previous day, he had opened a $450-million pulp mill at Newcastle in New Brunswick’s depressed Miramichi region. The same evening 500 people, most of them loyal Tories, filled a Charlottetown ballroom to gulp canapés and pastries paid for by the local Conservative organization and to hear Mulroney deliver a partisan recital of

his government’s achievements. After his meeting with the premiers, the Prime Minister flew on to Moncton for an evening speech.

But the shape of the government’s new economic strategy for the Atlantic provinces was as unclear at the end of the trip as when it began. Neither the Prime Minister nor the premiers could say after their luncheon precisely how the proposed new development agency would function, how much money it would spend or what its powers would be. Answers to those questions may be some time coming.

Mulroney said he would consult the region’s interest groups before settling on a final design for the proposed agency by next spring.

Still, the general thrust was clearly to give Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland a far more di-

rect role than in the past in determining federal development policies. Said Mulroney: “We’re going to put together an agency that’s closer to the ground, more responsive to Atlantic Canada’s needs and thinking, where the decision-making process is intimately associated with those who suggest solutions.” He contrasted the approach to earlier programs designed by Ottawa, adding, “We do not have guaranteed success this way, but the other way is guaranteed failure.” That message appeared to please P.E.I. Premier Joseph Ghiz, who said: “It will be a federal agency with significant provincial input. The agency will operate in Atlantic Canada, by Atlantic Canadians and for Atlantic Canadians.”

The new Tory proposals had been hinted at as early as August, when Mulroney met with his inner cabinet in Newfoundland amid slumping regional polls and a chorus of bad reviews for the government’s economic performance. Existing efforts to attack regional disparities, Mulroney acknowledged in St. John’s, “haven’t worked out. We’ve got to go back to fundamentals.”

Indeed, despite three new programs in less than 18 months, all aimed at reviving the Atlantic economy, by most indicators the region still lags far behind the rest of the country.

Family incomes in the four provinces trail the national average of $38,075 by as much as $8,400. Unemployment ranges from 12.9 per cent in Nova Scotia to 20.6 per cent in Newfoundland, more than twice the national rate. And the four provinces continue to rely on government spending for more than three-quarters of their economic activity.

Earlier Tory initiatives have had little success in changing that gloomy picture. Special tax incentives promoted by former industry minister Sinclair Stevens to increase investment in Cape Breton Island have so far attracted barely $7 million and created only 35 new jobs, according to officials at Enterprise Cape Breton, the agency established earlier this year to administer the incentives. The Atlantic Enterprise Program, announced in the February federal budget, was to guarantee up to $1 billion in private lending for new ventures in the region. But at week’s end, it had not announced a single project.

Tory MPs, who returned from their summer recess smarting from criticism of the government’s poor economic showing, blamed the development issue for a sharp drop in Conservative support among Atlantic voters. By September, according to a poll commissioned by Maclean's and released last month, Tory support in the region had fallen to 32 per cent—compared to 37 per cent for the Liberals. Said Halifax West MP Howard Crosby: “We’ve fallen into rhetoric. What people want is action.” Groundwork for the new Tory plan for Atlantic Canada was laid in Monc-

ton early in September, when the region’s six representatives in the federal cabinet spent two days listening to interest groups attack the government’s record and suggest new directions. The event was overshadowed by Transport Minister John Crosbie, who angered even loyal Tory supporters with an illtimed comparison of conditions in Atlantic Canada to those in the Third World. But in a private 45-minute briefing, New

Brunswick’s Richard Hatfield—carrying ideas agreed on earlier by the other Atlantic premiers—apparently convinced the federal ministers that ceding more authority to the provinces offered the best hope of reversing the dismal record of regional development.

Cape Breton MP David Dingwall, a Liberal, was quick to criticize the ACOA as “another layer of bureaucracy” complicating an already complex procedure for approving development assistance. University of Moncton economist Donald Savoie, author of a 1986 book on regional development policy, predicted that the new agency could fail because of underfunding. Said Savoie: “With less than $200 million a year, it’s wasting its time.”

Even as Mulroney trumpeted the new Conservative strategy for Atlantic Canada, a fresh controversy threatened to damage further the party’s standing in the region. A summary of an inquiry commission report on unemployment insurance, leaked to the press, recommended drastic changes in the $12-billion system. Chaired by Claude Forget, the commission proposes abandoning current rules that favor claimants in high-unemployment areas. And it recommends that benefits be based on annual income, not 10to 14-week periods of work. Those measures could slash incomes in the four Atlantic provinces by $1 billion. Two of the six commissioners, Jack Munro and Frances Soboda, both vice-presidents of the Canadian Labour Congress, issued a dissenting report criticizing the proposals. And both federal opposition parties immediately demanded that the government reject the Forget recommendations.

Still, Ottawa can cite some evidence that its policies are slowly taking hold, among them a construction site in Sydney, N.S., where work continued last week on a $2-million brewery that will employ 19 people when it is completed next year. Indeed, unemployment in the region, while still high, is down from September, 1984, when the Tories took power. And the business audience that listened as Mulroney wrapped up his Atlantic swing in Moncton last week was apparently undismayed to find that the new Tory strategy is incomplete. While two dozen fishermen demonstrated in a chill drizzle outside against cuts to unemployment benefits, Mulroney drew a standing ovation indoors with his promise that the new Tory development strategy—whatever its shape— would not be “made-in-Ottawa.”