Constitutional conundrum
 
Vulnerable provinces in Atlantic region fear isolation if Confederation crumbles Published: The Globe and Mail, June 4, 1990, Report on Business By Deborah Jones, Halifax Fear of economic isolation is growing in Atlantic Canada's business community as the deadline for approval of the Meech Lake accord nears. Peering at the rest of Canada from behind Quebec, the region is worried the four eastern provinces could be left high and dry if Meech fails and Quebec separates. Atlantic Canada is already considered remote and would face unique problems if Confederation crumbled, according to regional development expert James McNiven, a former Nova Scotia deputy minister for development who is now dean of management studies at Dalhousie University. "We're continually faced with people saying 'you're nice people, but you're really far away from everything, and pyschologically now you're even farther than you used to be.' " Economics professor Alasdair Sinclair of Dalhousie University in Halifax said: "We're most vulnerable because of the high percentage of our income that comes in transfer payments from the federal government . . . If Meech doesn't go through, people will start to rethink the entire basis of Confederation." Newfoundland and New Brunswick - both of which changed governments after the accord was signed - have opposed the deal, while Nova Scotia and Prince Edward Island have been supporters. The region's business community began taking the constitutional threat seriously early last month, when high interest rates were linked to constitutional uncertainty. It's impossible to finger constitutional discord as the sole reason for economic uncertainty, business and economics experts agree. The reason for a recent spate of bankruptcies in Atlantic Canada, for example, is muddied by factors including high interest rates and the fisheries downturn. Still, most agree that constitutional problems have created new tensions in the Atlantic economy that are more extreme than elsewhere in Canada. "It's had a dampening effect on business," said Jim Kinley, president of Lunenburg Foundry and Engineering Ltd., which manufactures goods for the fishery in Lunenburg, N.S. "People are hauling in. They're battened down for a blow. The fishing business has gone down, and Meech Lake on top of that has knocked people into a very cautious mood." Harry Steele, president of Newfoundland Capital Corp. of Dartmouth, which has transportation and communications interests across Canada, said: "I'm not worried about my business in Quebec as much as I am about my business in Atlantic Canada." The Atlantic Provinces Economic Council hopes to complete a study on the potential impact of Quebec separation on the East Coast economy by June 23. But aside from that, no cohesive business voice has emerged on the constitutional issue, a sharp contrast to Quebec lobby groups that have sprung up to advance their views. Indeed, many businessmen are irritated with talk about Meech Lake, suggesting it's a distraction from more important issues. Lee Shinkle of the St. John's-based Newfoundland Offshore Industries Association said provincial business groups have not taken sides. "Most of the people in the business community are bewildered. This is taking up so much, everybody's focused so heavily on this, that other things that might be necessary for our economy are being ignored." Some analysts suggest the lack of a strong business sector in Atlantic Canada is to blame for little business comment on Meech Lake. "There's a vitality in Quebec business now," according to Dalhousie University's Mr. Sinclair. "You don't have that sense of strength in the business community here." One businessman who did not want to be identified said few people want to speak out because many companies depend on political goodwill for contracts. "You have to have strong beliefs as a businessman to stand up and be quoted on political issues." Mr. McNiven warned: "If things go badly and the region is thrown more on its own resources, this is going to create some profound pyschological shocks in the region." He said Nova Scotia Premier John Buchanan was right last month to raise the spectre of what would happen to Atlantic Canada if the Meech Lake accord failed. "If it's an unpleasant separation with Quebec, Ontario and the west would lose interest in Atlantic Canada, it would be like East Pakistan . . . to us it would be a real economic blow." If Canada is redefined, Mr. Sinclair said, any changes in transfer payments "will only be part of the adverse effect for Atlantic Canada. The long-term adverse effects would come if resource mobility, the flow of goods, were restricted. I think interest costs would rise in a post-Meech situation as whatever remains would be less of a good credit risk." Mr. Sinclair is preparing one of the four reports that will make up the Atlantic Provinces Economic Council study. In it, he compares federal revenues and spending in the Atlantic region. In Nova Scotia, the gap is so widely in favor of the province that "20 per cent or so of the gross domestic product of Nova Scotia is a federal transfer of some sort," Mr. Sinclair said. "That's been roughly constant for 30 years or more . . . PEI and Newfoundland are even more dependent." Copyright Deborah Jones 1990 About this website: Text and photos by Deborah Jones except where otherwise noted. Please contact me for reprint rights. All material copyrighted ../About.htmlshapeimage_1_link_0
Business bites its nails in Atlantic Canada
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