Get the economy blazing again? A review of the NS economy under Stephen McNeil

Stephen McNeil will be immortalized for telling everyone to “stay the blazes home” to stop the spread of Covid-19.   The Premier announced he would be stepping down last week.  How did the economy do under his leadership?  Did it ‘blaze’?

Obviously these things are tricky.  First of all when a new Premier/government comes into office even if they have great policies it might take several years for liftoff.  Also, there are so many things out of the control of a provincial government (e.g. the loss of the offshore gas industry).  However, with these caveats, we should be scoring our governments on their economic performance in this region.

So how did McNeil do?

On the broadest measure, real GDP growth, things improved under McNeil but still lagged relative the median province.

Between 2009 and 2013, real GDP growth in NS averaged 0.4% per year.  Between 2014 and 2019 it jumped to 1.4% per year.  Still considerably below the longer term post-recession average of closer to 2.5% per year – depending on what time frame you use.  To my point about lag time, however, in the past three years, real GDP growth averaged 1.8% – above NS, SK and NL but below the rest of the provinces.

If you back out public sector GDP – public admin, health care and education – real GDP growth was slightly faster in NS 1.9% per year over the past three whereas in NB it goes down a bit 1.2% per year.  PEI continues to ‘cook with gas’ as my dad used to say – 4.4% real GDP growth on average per year over the past three.

If you consider population growth, again NS was significantly better compared to the past but not as much compared to peers.  Over the time he was in office, the population in NS rose by 4.1% – compared to 7.7% across Canada.  Only NB and NL had slower population growth.  PEI’s population expanded by 10.2%.  The good news is the population growth rate was improving each year since his arrival on the scene – rising from a slight decline the year he took office to 1.2% in 2019.

Like his peers in the Maritimes, McNeil realized the importance of immigration early on – and the number settling in NS in 2019 was more than double the number in 2014.  And, like the rest of Canada, NS significantly increased its non-permanent residents in large part to meet labour demand.  Including both immigrants and net non-permanent residents, the number increased by 3.5 times between 2013 and 2019.

This helped push up population and helped bring the median age down slightly for the first time in years.  The median age in 2019 was 44.9 compared to 45.1 in 2017.

Finally, how did he do fiscally?

According to RBC Economics, he ran five straight surpluses (only 3 provinces achieved that).

The growth in per capita provincial government expenses on programs increased more slowly in Nova Scotia than all other provinces except one between 2014-2015 and 2019-2020.

In summary, it looks like Nova Scotia is moving in the right direction while keeping the public spending taps turned to low.

There are  no easy solutions to building a sustained economic growth trajectory for a province such as Nova Scotia.

I think I would give McNeil a B grade on his economic development scorecard and I would humbly suggest that his successor double down on an economic development agenda that includes a major focus on people attraction.  While challenging it should also not rely entirely on Halifax.  I think there continues to be significant opportunity to develop export-led sectors across the province assuming the talent pipeline is robust.   Post covid-19 there will be even more opportunity to develop agriculture, forest products, minerals (I hear this one is a big federal focus), and I would suggest post-secondary education – particularly at the college level.