Livio Di Matteo is Professor of Economics at Lakehead University in Thunder Bay, Ontario. Visit his new Economics Blog “Northern Economist” at http://ldimatte.shawwebspace.ca/
The time has comes to take stock of the implications for the North of the potential outcomes of the October 6th provincial election. According to the polls, it is a close race and the possibility of a minority government is high. At the same time, polls do not always fully predict the outcome and much depends on the concentration of party support across the various ridings, as well as the actual voter turnout. What can we expect the morning after?
Whatever party forms the government, expect to see the donning of sackcloth and ashes as it suddenly becomes apparent that the economy is on the verge of recession, the stock markets have dropped 20 percent and the province’s coffers are bare as a result of a massive deficit. All those rosy revenue forecasts that were going to see the budget balanced by 2017 will now go out the window. Expect to see announcements of government expenditure cuts, freezes and restructuring as well as the discussion of temporary “revenue enhancements.” A Liberal or NDP backed government will likely favor revenue enhancements over expenditure cuts while a Conservative government is more likely to favor cuts or restructuring.
Should the Liberals win another majority, it will be interpreted as a vindication for their program of policies, especially their job creation strategy focused on Green Energy. As for the North, it means the Far North Act will stay in place. For the North, a Liberal majority win will put it in an odd situation. If the North returns Liberal members and there is a Liberal majority, it means that any future complaints about the government’s economic policies towards the North especially with respect to energy, the forest sector and natural resource development will be taken with a grain of salt and Northerners dismissed as simply habitual complainers.
On the other hand, not returning Liberal members to a Liberal majority after the substantial investments that the Liberals have made in the North’s knowledge economy, research and health sectors and road construction will be seen as adolescent ingratitude. With a Liberal majority, the North could be in a political no-win situation.
If there is a Conservative or Liberal minority, the situation becomes much more fluid for the North. Either will likely be short-lived as given the differences between the parties, a formal alliance or coalition that might provide stable government is unlikely. For the North, a minority government will provide it with more opportunities to get its points across as every party will now be much more sensitive to opinions even from smaller and more remote regions. A minority government, because of its inherent fragility, is much more open to debate and compromise.
The parties need to work together and that forces a degree of consultation and accommodation that takes multiple points of view into account. On the other hand, a minority government may be less able to take concrete action especially given the fiscal situation. Moreover, a minority government could place a halt to the public investment in research and knowledge economy jobs that has been driving the northern economic transition. The Ontario minority government of the 1980s saw the creation of Northern Health Travel grants and the Heritage Fund. On the other hand, there was not a looming 250 billion dollar provincial debt in the 1980s and an international sovereign debt crisis.
Are there any wild cards in all of this? Is there a possible Conservative majority? Not really likely based on the polls but then nobody saw Bob Rae’s NDP victory coming in 1990 either. A Conservative majority would help create an environment that would boost private sector job creation in the North but it would also be accompanied by public sector austerity that would hurt the North disproportionately given its dependence on government spending for job creation. The North’s dependence on public sector funds for job creation has grown in the wake of the forest sector crisis.
Of course, nobody is forecasting an NDP government this time, but who knows? An NDP majority government may have campaigned on “Respect for the North” but once in power would also face the same constraints as any other government. There will be respect for the North when necessary but the most respect would flow towards the greatest mass of voters – and they are in the South, not in the North. As for the NDP economic strategy, what short term benefits it creates will come at the expense of the long-term competitiveness of the Ontario economy.
As a sign of where the priorities really lie, consider the fact that in all of the main party platforms, there was no real mention of new institutions for the North or any real policy of decentralization or devolution of decision-making when it comes to northern resource development. On the other hand, there seems to be no real demand in the North for new institutions either.
Northerners seem to be quite happy in their role as an economic dependency punctuated by bouts of adolescent outrage. They will be dealt with accordingly no matter who forms the government. As for new decentralized decision making institutions for the North? Their day will come when the growing aboriginal population in the region reaches a critical mass and articulates a compelling case for a new deal. When that day comes, it will be a call that no provincial government will be able to ignore.