Strategy

Shawn Graham's perfect storm

Days before the election, the N.B. premier is headed for almost certain defeat.

Shawn Graham is starting to look like a one-hit wonder. Thanks to the New Brunswick premier’s bold — and politically disastrous — attempt to unload the province’s debt-laden electrical utility on Hydro-Quebec, polls heading into the Sept. 27 provincial election show the Progressive Conservatives surging ahead of Graham’s foundering Liberals, making it almost certain that, for the first time since Confederation, a N.B. government will be defeated after a single term in office.

“There is a fury in the province directed at Shawn Graham and the Liberals because of the NB Power fiasco,” says Donald Wright, an associate professor of political science at the University of New Brunswick, “and David Alward is now reaping the benefit of that.”

Alward is the 50-year-old PC leader, a former agriculture minister in the Bernard Lord government who’s poised to become the province’s 32nd premier. Six months after Hydro-Quebec pulled the plug on the complex $3.2-billion deal to buy the utility’s key assets, Alward’s still using it to score points: in a televised debate, he reminded voters that Graham tried to dispose of NB Power “behind the people’s back.”

The problem is, a failed power deal is the least of New Brunswick’s problems. The province is running a $750-million deficit, and debt has ballooned to $8.3 billion from $6.7 billion in just four years, with no end in sight. “The province finds itself in a situation where it could be staring at a structural deficit,” warns David Plante, a regional vice-president of Canadian Manufacturers & Exporters, yet “for most of this election, there has been very little talk with regard to the fiscal situation.”

Instead, Graham is touting almost $100 million in new spending, including $20 million to help small businesses, farmers and forestry. Alward’s platform promises weigh in at a hefty $142 million, yet both candidates claim they can balance the books within four years without hiking taxes or slashing services. Graham says he’ll do it by creating 20,000 jobs and attracting 12,000 newcomers, providing the economic boost needed to put the fiscal house in order. Alward says he’ll freeze power rates for 30 months and field an army of experts and consultants to trim spending and make government more efficient.

Wright is buying none of this. “They know in their heart of hearts that taxes will have to be raised and services cut drastically,” he says. “The piper’s got to be paid.” Donald Savoie, an expert in public administration at the University of Moncton, is convinced New Brunswickers face “a massive hangover” come October, and not just from all the red ink. “New Brunswick is looking at a perfect storm in the making,” he warned in a pre-election commentary for the CBC. “[It has] an aging population, a significant out-migration of the province’s youth, an inability to attract new Canadians, and many rural communities are dying.”

Compounding these challenges, New Brunswick’s economy is heavily dependent on U.S. markets, particularly for energy, and exports dropped a whopping 22% in 2009. While Export Development Canada predicts a full recovery by 2011, the province remains vulnerable to hiccups in the American economy and protectionist sentiment in Washington.

No matter who prevails on Sept. 27, Plante worries fiscal reality will undo the Graham government’s plan to kick-start the economy by lowering the corporate tax rate to 8% by 2012. “It would be shameful,” he says, “if that were put at risk due to a lack of discipline in spending.”