East Coast needs common economic rules

Atlantic Canada’s economic future looks dim.

Or, as the Atlantic Provinces Economic Council (APEC) puts it, the region is facing a “slower for longer” economic outlook. Ouch.

The East Coast economy lags behind the rest of Canada and has for generations. APEC seems to be telling us to hunker down for the longer, leaner haul, or do something different, starting now.

As it happens, in each of the four provincial capitals, government types are trying to do something quite different.

APEC fully supports the Atlantic premiers’ effort to rationalize regulations, labour standards and such, across their four provinces. In fact, the think-tank is doing what it can to light a fire under the thing, make sure it survives shifting political priorities or changes in governments, and maybe drum up some much-needed vocal support from regional businesses that stand to gain from easier access to a bigger market.

This is a region of traders – local, regional, national and international – but most of the action is interprovincial. A new set of regulations and different labour and other standards stand guard in every province and territory. The cost of complying with all the different rules acts as a formidable barrier to economic growth and is beyond the capacity of many enterprises.

But, slower than some would like, across the East Coast work continues on the big idea, championed vociferously by Nova Scotia’s Premier Stephen McNeil, that licence to operate in one province should open the doors in all four. That day is a way off, but progress is being made and the economic potential it can unleash is substantial.

With more than half the Atlantic economy dependent on interprovincial trade, the time was ripe two years ago for the Atlantic premiers to form a Joint Regulatory Office to drive the harmonization effort.

A year ago, all provincial and territorial leaders – the Council of the Federation – warmed to the concept, ratified The Canadian Free Trade Agreement (CFTA) and kickstarted a national process of regulatory reconciliation in an effort to remove barriers to intra-Canadian enterprise. The stakes are highest in Atlantic Canada. Economists estimate that more than $8 billion a year could be added to the region’s $114-billion economy if the provinces and territories adopt a uniform set of business, industrial, labour and professional regulations and standards.

For scale, that’s like adding an additional, booming Prince Edward Island to the regional economy. It works out to an extra $2,000-a-year for every child, woman and man in the four provinces, after taxes.

The national effort will progress as national efforts do, but in Atlantic Canada, where the initiative has a head of steam there is an opportunity to loosen constraints on economic growth while showing the rest of the country how it’s done.

What’s not to like about that?

A common market of 2.3 million Atlantic Canadians won’t solve all the region’s economic woes, but it will move the needle on economic growth, and as APEC points out, the region can’t miss out on any opportunities to do that. So, it’s a no-brainer, right? It is, but it’s not easy. Bureaucracies get used to doing things a certain way, and this initiative is all about getting them to change, and maybe even replace some of their own rules with those of another province.

It’s also complicated, as anyone who has to comply with regulations in just one jurisdiction will tell you. Multiply that by four to do business across Atlantic Canada, or by 14 nationally, and the drag on the economy becomes clearer.

Canada is a hidebound, economically-self-defeating regulatory maze.

As difficult and complicated as change may be, the alternative – doing nothing – is singularly unappealing, particularly down east.

In addition to a doddering economy, APEC notes the region’s aging population and diminishing labour supply will lead to the erosion of public services and/or higher taxes, unless the full potential of the economy is unleashed, and the public cost of enforcing four sets of rules is reduced through rationalization.

Lest any provincialists sense danger, no one is even hinting at political union or sweeping de-regulation, merely a rational, common set of rules.

Think about the relative advantages and disadvantages of a business operating in Guelph, and another in Gander. The Ontario operator complies with one set of provincial rules and has access to a market seven times the size of Atlantic Canada, while the Newfoundland business needs to clear four sets of regulatory hurdles just to operate across the much smaller regional marketplace.

The Atlantic Premiers have it right and need to make this a priority.

Jim Vibert consulted or worked for five Nova Scotia governments. He now keeps a close and critical eye on provincial and regional powers.