Why the Trudeau deficit gambit won't fly in Nova Scotia's election

Less than two years ago, Nova Scotia voters enthusiastically embraced Justin Trudeau's plan to spur the economy through hefty deficit financing, handing the federal Liberals every riding in the province.

The free-spending approach appears to be getting little traction, however, as Nova Scotia's provincial election campaign draws to a close.

The Liberals under Premier Stephen McNeil are seeking a second consecutive mandate by pledging four deficit-free budgets, having already tabled two consecutive balanced budgets during a term marked by a tight-fisted approach to public spending.

Their main rivals, the Progressive Conservatives led by Jamie Baillie, are also promising four more balanced budgets if elected on Tuesday.

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Economic growth lagging

Tom Urbaniak, a political science professor at Cape Breton University, said Nova Scotia voters understand the country as a whole has a greater capacity to deal with deficits than their province does.

"Nova Scotians have very limited experience with economic growth," he said, noting Nova Scotia's growth on average has lagged virtually every province for more than 25 years.

The country as a whole is used to steady economic growth, and population growth. Not so in Nova Scotia.- Tom Urbaniak, CBU political science professor

"At the federal level, a pledge for deficit spending for infrastructure is more easily understood as being a bridge between a slow period and a more robust period of economic growth. The country as a whole is used to steady economic growth, and population growth. Not so in Nova Scotia."

McNeil has repeatedly said Ottawa's plans can't be compared with Nova Scotia's, because the federal government is expected to benefit from an eventual rebound in world oil prices.

Trudeau's government is forecasting a $28.5-billion federal deficit in 2017-18.

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NDP deficit financing

Inspired by the federal Liberals, Nova Scotia's New Democrats have committed to adding close to $1 billion in red ink over the next four years if they take power.

"The answer the federal Liberals gave in their last budget and in their last platform about this was the right one," NDP Leader Gary Burrill said when his party released its platform halfway through the campaign.

Burrill, elected leader just over a year ago, was immediately condemned by the Liberals as a left-leaning "anti-capitalist," while a Tory spokesman called the projected deficits a "reckless spending orgy."

The NDP's commitment to deficit financing stands in contrast to the province's recent political history. For 17 years, successive governments have promised balanced budgets. And at one point, the province had a balanced budget law.

Even the province's first NDP government, which held office under Darrell Dexter between 2009 and 2013, pledged to table three consecutive balanced budgets a promise they eventually broke.

Burrill has said times have changed, but the polls suggest otherwise. The party has consistently trailed in third place since the campaign began in early May.

"The greatest enemy for Gary Burrill and the NDP is time," said Urbaniak.

"They need more time to articulate the planks of their platform ... It's not necessarily unpalatable to run a deficit in this province, but it has to be tied to a comprehensive program of economic growth and good governance."

The Tories, meanwhile, have been outflanked by the Liberals.

"The [Liberals]are behaving more like traditional Progressive Conservatives," said Don Mills, CEO of Halifax-based Corporate Research Associates. "That's left Jaimie Baillie with very little space to go ... The Liberals are actually further to the right of them."

'Risk factor' for Liberals

Since 2000, Nova Scotia's debt-to-GDP ratio a key indicator of economic health has been declining. The province now sits in the middle of the pack when its ratio is compared with other provinces.

But the Nova Scotia government is still paying an estimated $850 million annually in debt-servicing charges on a $10.5-billion budget and the McNeil government seems determined to reduce that cost.

The problem is that the Liberals have spent a great deal of political capital on reining in spending and holding the line on wage increases for the public sector measures that have led to charges of ruthlessness and protests at the legislature.

"The back-to-balance journey has been associated with a lot of pain for many Nova Scotians perhaps more pain than was necessary," Urbaniak said. "That is a risk factor for the Liberals in this campaign."

To soften their image, the Liberals spent $130 million on pre-election goodies, the Conservatives say. And the Liberals followed up by tabling a feel-good budget last month that promises broad tax cuts.

Mills said many voters don't care about the province's fiscal plan, but most know the economy has been lagging for years. According to research compiled by his firm, 60 per cent of Nova Scotians have not seen a raise in the past two years.

"Most households are feeling the pinch," he said. "They understand how difficult the economy is because they're experiencing it."

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