Clock ticking as Nova Scotia banks on economic turnaround in election year

HALIFAX – With an election in Nova Scotia expected within a year, Premier Darrell Dexter is taking every opportunity to tell voters that economic prosperity is “just around the corner.”

In a recent state-of-the province speech, Dexter reminded the audience about the $25-billion federal contract for the Halifax Shipyard, the $3.5-billion in spinoffs expected from a plan to link the province with the Muskrat Falls hydroelectric project in Labrador and construction of a new convention centre in Halifax.

“Nova Scotians today have extraordinary opportunities, the likes of which our province has never seen before,” he said, adding that Nova Scotia is poised to leave behind 20 years of the worst economic growth of any province.

But there is growing evidence the province’s economy has again stalled and could begin rolling backwards in the months ahead.

The most disturbing sign came earlier this month when Finance Minister Maureen MacDonald confirmed the province’s expectations for revenue from personal income tax for 2012-13 were too optimistic. The NDP government is now predicting it will bring in $61 million less than projected in its April budget.

As a result, the province’s projected deficit is expected to climb to $277 million — a $66-million increase.

“The big factor is personal income tax,” says Elizabeth Beale, an economist and president of the Atlantic Provinces Economic Council, an independent economic policy think-tank.

“What it reflects is that Nova Scotia’s economy has been pretty soft. In particular, we’ve seen a number of job losses in terms of full-time employment in forestry.”

Though Dexter has said he is “obsessed” with creating jobs, the latest employment figures show dubious results.

In November 2009 — six months after the NDP was elected — there were 455,500 adults in Nova Scotia employed full- and part-time, according to Statistics Canada.

As of last month, the federal agency said there were 454,800 employed full- and part-time — a loss of 700 jobs.

“Employment growth is pretty flat in the province,” says Beale, adding that the entire Atlantic region is still suffering from a lingering recession, a weak U.S. housing market and a strong Canadian dollar. “We’ve been hit by it hard this year in some key sectors.”

Liberal Leader Stephen McNeil says the premier’s poor track record on job creation means he should be concerned about keeping his own job.

“The job-creation plan of the government is not working,” he said in an interview. “Every other province is dealing with the same issue, but we are coming in last. We have the worst-performing economy in the country.”

Conservative critic Eddie Orrell says the job market isn’t flat, it’s actually falling.

He cites Statistics Canada figures that show the number of full-time jobs in the province has fallen by 6,000 during the same period, which means a growing number of part-time jobs is masking a larger problem.

“We’re losing jobs at a phenomenal rate,” he says. “To me, that corner is not being turned. … You’d have to create four times as many part-time jobs to make up for the full-time jobs that were lost.”

As for the promise of thousands of full-time shipbuilding and construction jobs Dexter keeps talking about, Orrell says they need to materialize.

“Until those jobs are actually in place, it’s still only potential,” he says.

Indeed, the province’s largest megaproject — Irving Shipbuilding’s plan to build 21 combat ships for the navy over 30 years — is stalled within the federal bureaucracy. Company officials are now saying the first time steel is cut for the project won’t be until 2015.

“It’s clear that it’s taking longer than initially thought,” says Beale. “It’s a longer wall until we get to the corner. … But I also think that we do have a good platform for future growth with these large projects on the horizon.”

The finance minister admits the province’s recovery “continues to be slow and sluggish,” but MacDonald insists the prospects for 2013 look good, even though some projects will take a little longer to get off the ground.

“It’s a longer-term outlook that this government is taking in terms of providing economic growth to the province,” she said in an interview, adding there are signs the U.S. housing market is on the rebound and Nova Scotia’s Deep Panuke offshore energy project will finally begin producing natural gas next year.

“I’m not at all pessimistic about how far away the change in the economic fortunes are. They’re imminent.”

Still, there are other red flags on the horizon. Buried at the bottom of the province’s recent fiscal update is a warning about further slippage of revenue from personal income tax.

However, Nova Scotia isn’t alone, MacDonald says. British Columbia, Alberta, New Brunswick, P.E.I. and Newfoundland and Labrador have all released fiscal updates this year showing lower-than-expected revenue, as has the federal government.

Nova Scotia’s fiscal update goes on to say the province remains exposed to the Ottawa’s bid to cut spending by reducing the size of the public service. The province is particularly vulnerable because it has a large number of federal employees, including a big military presence in Halifax.

Last month, a study from the Canadian Centre for Policy Alternatives said Nova Scotia can expect to lose 1,600 federal jobs by 2015 — a figure that the federal government says is too high.

“If good, federal jobs are being lost in the Atlantic region, then that will show up in Nova Scotia and it will contribute to the hill we have to climb,” said MacDonald.