Will the NDP deliver in Nova Scotia?

Nova Scotia’s New Democratic Party made history on June 9 when it became the first ever social democratic party to form provincial government east of Ontario. Political economist Eric Newstadt examines the party platform and asks if it can meet voters’ expectations for a progressive alternative to the Liberals and Conservatives.

Eric Newstadt

As the Australian scholar of labour politics, Boris Frankel, said about the demise of socialist and progressive politics in that country, “The only dispute is whether death was due to murder, suicide, social neglect or old age.”

A similar such debate is about to emerge in Nova Scotia, where the newly minted New Democratic Party (NDP) government—the first ever in Atlantic Canada—gets set to roll out a right-of-centre fiscal program that will likely read like the gravestone of progressive politics in Canada’s East. Not coincidentally, that program—if it is at all similar to the platform on which the NDP campaigned and was elected—will be cousin to the efforts of successive Labor governments in Australia between 1983 and 1996. This was, as the quote above suggests, the era when the Australian Left met with an untimely end, and sister to that of successive and so-called “New” Labour governments in Britain, whose policies, between 1997 and the present day have done much to carry forward the legacy of Margaret Thatcher.

Led by Darrell Dexter, the Nova Scotia NDP advanced a platform comprised of seven commitments, two of which stand out: 1) a promised cut to the province’s tax on home energy consumption (which will carry a projected price-tag of $28 million); and 2) a promise to balance the budget within the first 24 months of the NDP’s election. The other commitments—which involve job growth, emergency room openings, the retention of university graduates, geriatric health care and road construction—are either relatively inexpensive and uninspiring band-aids or based around temporary tax rebates similar to federal programs implemented by the Harper Tories.

As such, only the proposed cut to the HST on home energy use and the plan to balance the Province’s Budget really demonstrate the logic driving the new NDP government. Even on the face of it, an eight per cent tax cut on home energy use is a harbinger of bad environmental economics. Though the NDP platform does call for the development of cleaner energy programs, Nova Scotia is presently the largest consumer of coal energy in the country (on a per capita basis) and new energy sources will not likely be operational anytime soon, particularly given the immense up-front cost of harnessing tidal energy.
What’s more, in permanently giving up an important revenue stream, the province is surrendering not only what some believe is a disincentive to over-use energy, but also an ability to pay for future program expenditures. Any new taxes will be all but impossible to introduce, particularly when the logic of progressive taxation is something that the government has already abandoned.

The promise to balance the Budget is equally concerning. First, the projected deficit is so large that projected growth in the province is unlikely to generate the kind of cash necessary to balance its books. Second, even though there are $73 million (or one per cent) of inefficiencies and patronage to be eliminated from the budget, this extra cash is too little to allow for new Government expenditures. In effect, the Nova Scotia New Democrats, like every other provincial government in the country, are about to lock themselves into a fiscal program in which visionary ideas become all but impossible to articulate—if they haven’t done so already.

In an environment where both the Left and the Right speak the same language of fiscal conservatism and restraint, even the idea of increasingly progressive taxes becomes untenable. And without increasing the Government’s revenue base, little can be done to meet raised expectations among voters for a progressive alternative to the Liberals and Conservatives.
As Augustus Haynes, the intrepid reporter put in during the fifth season of The Wire, “You don’t do more with less, you do less with less.”

It would appear that the Nova Scotia NDP has embraced the idea that the rate at which private corporations invest in (and thereby grow) the economy will increase in an environment of low taxes and fiscal conservatism. But what is amazing about the NDP’s continued faith in right-wing economics is its timing: at the very moment when such ideas are proving to be wholly bankrupt. Indeed, to presume the relative efficiency of private investment at a time when the global financial system has been largely nationalized—precisely because of the inefficiency of private investment—is nothing short of fantastic.

As Sam Gindin, the former Canadian Auto Workers (CAW) economist has noted time and again, Canada has lost literally tens of thousands of good, unionized jobs since accepting the logic of tax cuts and fiscal restraint—even in the midst of high rates of economic growth. The trade-off has been that Canada has “gained” tens of thousands of more precarious forms of employment: contract work, part-time service sector jobs and lots of call-centre-type jobs, particularly in the Atlantic Provinces.

It is also important to keep in mind that Nova Scotia spends less as a per cent of provincial GDP than six of the other 10 provinces; that tuition-fees, which the government has said it is not going to reduce, are the highest in Canada; and that the NDP has vowed to do nothing to make it easier for unions to organize in Nova Scotia. Put another way: the Nova Scotia NDP has tied itself to a conservative fiscal agenda, even though there is room to increase expenditures without raising the eyebrows of the wealthy investors they are so anxious to attract; even though low tuition-fees are a well documented incentive to obtain a higher education; and even though good jobs have been lost en masse as the rate of unionization in Canada has fallen.

The Nova Scotia NDP has moved further to the Right than is necessary, even if we stick to the bankrupt fundamentals of supply-side economics.

Though we won’t know for some time yet (the new government is set to offer its first budget sometime in the fall), we should expect an early retreat from the 24-month balanced budget horizon. Instead, we can expect that the NDP government will announce that the deficit inherited from the Conservatives was larger than originally anticipated and that, as a result, the province will have to wait a little longer before Nova Scotia can “live within its means,” as the party describes it on its website.

Of course, this should not be interpreted as the government will suddenly become more accepting of deficit financing, which is key to an equitable and sustainable pattern of economic development. On the contrary, the longer that the NDP stretches out the timeline for resolving its fiscal deficit, the less likely we are to see the kind of initiatives that are so needed in Nova Scotia.
Things are likely to get worse before they get better.

Advocates of more traditionally left-wing politics have been apt to proclaim the importance of avoiding the mistakes that the Left made under the Bob Rae New Democrats in Ontario in the early 1990s. Accordingly, the Left is telling itself that it needs to place constant pressure on the Dexter New Democrats to live up to the promise of social democratic politics. It would appear, however, that forcing the New Democrats to change course would be a momentous, if not impossible, feat—particularly once the HST has been scrapped, which is likely before the winter.

Not that pressure is a bad idea—it is a fundamental necessity. Also necessary, however, is an acceptance of the cold reality that the Nova Scotia NDP is no longer a social democratic party, and that the political spectrum, if it is to be pushed back to the Left, will likely require some other form of party organization.