public policy stanli ess steele€¦ · immediately commissioned a consultant’s report to show...

38 | ATLANTIC BUSINESS MAGAZINE | May/June 2012

“It’s a great day to be a Jets fan,” Graham Steele beams. It’s shortly before 8 a.m. and – if this is February 24th – we must be at the Holiday Inn in Stellarton.

Steele, Nova Scotia’s finance minister, has come here for a breakfast meeting with the New Glasgow-Pictou County Chamber of Commerce. It’s the sixth of nine “dialogue sessions,” 15 “stakeholder meetings” and three community group gatherings he is staging as he criss-crosses the province, asking Nova Scotians for their input in the lead-up to his next provincial budget April 3.

Last night at the hotel, Steele did four local media interviews. Later this morning, on his way to Port Hawkesbury for a luncheon session with the Strait Area Chamber of Commerce, he’ll stop in at CJFX-FM radio in Antigonish for a sit-down interview with its news director.

Though the real subjects of all these sessions are the still-woeful-but-becoming-less-so state of the province’s finances and the important question of how best to

bring the fiscal state “back to balance” and better, Graham Steele can’t help but begin this morning by crowing that his beloved Winnipeg Jets had squeezed past the Tampa Bay Lightning the night before, keeping their f lickering NHL playoff hopes alive.

Steele, a Winnipeg native, was a hockey-crazed kid back in the 1970s during the Jets previous NHL incarnation. When a local radio station staged a sports trivia contest in which the prizes were tickets to upcoming games, Steele would plant himself by the telephone, surrounded by his collection of hockey trivia books, and eagerly wait for the announcer to ask a question. He won so often he eventually had to disguise his voice and use other people’s names when he called.

Steele doesn’t mention his trivia prowess this morning, but few among the three dozen local business and community leaders attending would probably be surprised. There is a nerdy, earnest yet cheerful obsessiveness to Steele. And he is clearly the smartest person in any room he is in.

“I’m not here to make a speech,” he says, easily shifting gears to the matter at hand. “I’m here to hear what you have to say.” But then, of course, he makes a speech; his promised 15-minute Powerpoint presentation “to lay the groundwork” stretches into 30.

There is a lot to say.When Nova Scotia’s New Democratic

Party swept into office in June 2009 – the first time the NDP had ever formed any sort of government in Atlantic Canada, let alone won a majority – there were great expectations, many of them created by party leader Darrell Dexter’s rosy, read-my-lips, new-programs-balanced-budget-no-tax-increases mantra. There were just as many trepidations, fueled not only by exactly those promises but also, in some quarters, by the stunning reality that conservative, mainstream Nova Scotians had actually elected a “socialist” government.

Once in office, however, the new NDP government didn’t simply do a 180-degree turn on the economic promises it had

Stainless Steele

Nova Scotia’s money man says his government won’t lose sight of balanced budget in its quest for re-election

By Stephen Kimber

PUBLIC POLICY

Online extras: atlanticbusinessmagazine.com | 39

campaigned on; it threw in a couple of double back f lips for good measure.

The new government – like new governments of every stripe these days – immediately commissioned a consultant’s report to show how badly the previous administration had mangled the province’s finances, creating the mess they were left to clean up and, of course, forcing them to declare all previous promises null and void.

The consultants obliged, concluding that, if nothing changed, the province was on a collision course with reality. By 2012-13, the annual deficit would be an unsustainable $1.5 billion while long-term debt would top out at a future-defying $17 billion.

A follow-up report by a blue-ribbon panel of economic experts recommended the government commit to completely eliminating its annual deficits by 2012-13 and “implement tax increases, introduce significant spending restraint measures and focus more on economic growth to achieve this goal.”

The man Premier Darrell Dexter charged with playing Paul “Dr. No” Martin to his genial, optimistic Jean “Regular Guy” Chretien was Graham Steele.

He chose well.

THOUGH BORN AND RAISED in Winnipeg of Scottish immigrant parents, Steele says his most formative experiences came during his pharmacy-professor father’s year-long sabbaticals – to Switzerland when he was in grade four and North Carolina in grade 11. Discovering a Europe where everyone didn’t speak English and a North Carolina that wasn’t anything like Manitoba “opened my eyes to the world,” and encouraged his love of travel.

His interest in the wider world was also stoked by a Winnipeg Free Press paper route; he says he “managed to read the whole paper” each day while he folded copies for home delivery.

”I’m not sure I can explain why now,” he allows with a smile, but the young Graham Steele also became a Young Liberal. “Somewhere,” he even has a John Turner Youth T-shirt from the party’s June 1984 leadership convention.

But by then, he was on his way to Oxford University for two years in Thatcher-era England as a Rhodes Scholar, where his focus would not be on politics with a partisan “P” but on loftier ideas about “government and public affairs.”

In 1986, he returned to Canada to figure

out “something practical” he could do with two undergraduate degrees. Law school – where he could follow his fascination with what he calls the “laws of government” – seemed an ideal fit. He considered schools in Toronto and Halifax, choosing Dalhousie in large measure because “I’d never been to this part of the country.” His plan, he admits, was to get his degree and get out, on his way to a successful career somewhere else. He even did an internship at Blake, Cassels & Graydon, a powerful Bay Street law firm.

But somewhere along the line, he met a fellow student, Tilly Pillay, a South African-born woman whose family had moved to Nova Scotia when she was nine. They fell in love and decided to make Halifax home. Today, he and Pillay – who practices law with the province’s Justice Department – have two children.

“Nova Scotia,” Steele likes to point out, politician-like, “is the place I chose to live.”

But he didn’t choose what he saw as Nova Scotia’s peculiar brand of “tribal politics. People here voted Liberal or Conservative, not because of ideas but because of the way in which their parents voted, and that went back generations.”


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An incident early in his time in Halifax helped cement his aversion both to old-style politics and also to the province’s old-line political parties. To help make law school ends meet, Steele had taken a position as a residence don at the nearby University of King’s College. One day, the university’s then-president, John Godfrey, invited Steele (whose time as a Rhodes Scholar had given him a certain campus cachet) to the president’s lodge to chat informally with two of the province’s best known political partisans, former Tory MP George Cooper and soon-to-be Liberal MP Mary Clancy. “The whole conversation,” Steele recalls,

“was about people, about who they knew. There wasn’t a single word about ideas. I just sat there for an hour and said not a single word.”

But as he eventually settled into life in Nova Scotia in the early 1990s – Steele had joined Stewart McKelvey, the city’s largest corporate law firm – he realized he needed an outlet for his own ideas about government and public policy. He remembers getting a f lyer in his mailbox one day from his district’s freshly elected NDP MLA, Robert Chisholm, announcing a party meeting. Steele went and, in 1991, joined the NDP. At the time, the party held just three seats in the

52-member legislature. “There was room for ideas in the NDP,” Steele explains, insisting he isn’t “highly partisan, though I can be when I have to.”

Stephen McNeil chuckles when I quote Steele’s words to him. “I apologize for laughing,” Nova Scotia’s Liberal opposition leader says. “But Graham was highly partisan in opposition and he’s just as partisan now that he’s in government.”

As a corporate lawyer in the early nineties, however, Steele managed to keep his political involvement low key, even lower after he joined the provincial Workers’ Compensation Board as an in-house lawyer in 1994. The last thing the Board – which was trying to cleanse its reputation as a refuge for patronage appointees – needed was for one of its key staff to be seen as a partisan.

But after Steele returned to school for his master of law degree in 1997, he ramped up his political activities, campaigning openly for a successful NDP candidate during the party’s breakthrough 1998 provincial election.

In that election, the party leapfrogged the Tories to become the official opposition and came within one seat of forming a minority government. That opened up new behind-the-scene party jobs, including one as director of research. Steele, who had completed the course work for his master’s degree but not his thesis and had “run out of money,” applied. He was hired.

Two years later, popular Halifax MLA Eileen O’Connell died of breast cancer, and Steele won her seat in a bye-election.

Initially, he admits, “I didn’t like campaigning. I felt like I was bothering people.” But he soon realized “nothing that happens on the doorstep is personal. Was the person indifferent? Were they angry? You leave the doorstep with a useful piece of information. Now, it’s one of my favourite parts of the job. There’s no better way to spend time.”

Which is one reason why – after he was appointed finance minister in 2009 – he was keen to shake up what he saw as an entrenched pre-budget non-consultation consultation process. “The minister would receive six or so interest groups, and then make a few speeches to the larger chambers of commerce and call that consultation,” he explains. “I wanted to do something different.”

Steele acknowledges there was resistance – “I shouldn’t say that” – from within the finance department bureaucracy to his idea for broader consultation. But he is quick to describe that first year’s road show, during which he met with 19 different groups from Whitney Pier in Cape Breton to Yarmouth

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and even hosted a province-wide video conference session with Acadians, as “the single best, most enjoyable part of my job and the part of which I am proudest. I heard from groups that were never heard before instead of the same people all the time. It widened the democratic process.”

Not everyone agrees.Liberal Opposition leader Stephen

McNeil, for example, who has spoken to many of the same groups as Steele (he was scheduled to address the New Glasgow-Pictou County Chamber the month after the finance minister) describes Steele’s traveling road show as a “charade,” based from its beginnings on contrived numbers and a false premise designed to lead to a pre-determined conclusion. “It was, ‘Pick your poison. Which programs do you want me to cut? Or which taxes do you want me to increase?’ The government’s real budget plan was set long before most of those consultations took place.”

Even some on the left tend to agree. “We certainly had a serious and engaged exchange with the minister, and various officials within the finance department,” explains Christine Saulnier of the Canadian Centre for Policy Alternatives, a left-leaning think tank whose “alternate budget” champions targeted spending and a longer time frame to balance the budget. “I think he [Steele] listened, but has framed the problem and the solutions in a way that precludes our proposals.”

Perhaps surprisingly, given initial expectations, business has been happiest with Steele. When the NDP was first elected, allows Valerie Payn, the president of the Halifax Chamber of Commerce, “some people were quaking in their boots.” But, she says, business has been generally satisfied with the NDP’s performance so far, particularly with Graham Steele.

“Actually, he’s been quite good,” says Payn, who has worked with finance ministers from all parties during her 20 years at the

I didn’t like campaigning. I felt like I was bothering people.” But he soon realized “nothing that happens on the doorstep is personal. Was the person indifferent? Were they angry? You leave the doorstep with a useful piece of information. Now, it’s one of my favourite parts of the job. There’s no better way to spend time.”

“


Chamber. “He consults with us regularly. He has his own style, of course. He’s not shy at all about engaging – and he’s not shy at all at coming back at you. And you’d better have your facts.”

The larger question perhaps is, did the consultations change any of Steele’s budget plans? If you ask Steele to name one new, innovative idea he picked up during the consultation process, he demurs. “It’s not about coming up with some idea no one has ever heard of,” he tells me. “It’s about giving people the chance to be heard, to be part of the process.”

It is also, to be fair, about shaping the debate.

“THIS IS THE THIRD YEAR of our four-year ‘Back to Balance’ program,” Steele tells his local business audience this morning, “and the third year that I’ve been back to Pictou County as part of our pre-budget consultations.”

This year, in addition to the face-to-face sessions, the finance department has gone online with an interactive, you-be-the-finance-minister website (backtobalance.ca) that allows voters to tinker with everything from lowering the HST to cutting payments to doctors to increasing taxes on the wealthy – and see instantly the impact on the province’s bottom line. By budget day, the site had received 575 website budget submissions.

“The first year we said, ‘let’s start with the facts,’” Steele explains. “We said to people, ‘Look, this can’t go on. Let’s look at the options. Where’s the consensus?’” That shaped the province’s own plan to eliminate the deficit in four years, which is on track and which Steele claims is still broadly supported by the public. The key questions for this year, he says to his audience this morning: “Should we continue to stick to the plan? And what comes after?”

What comes after, one is also tempted to ask, for Graham Steele, now Nova Scotia’s most powerful politician after Darrell Dexter? Does he have higher political ambitions, perhaps to be premier himself? His answer is quick – and clear. “I know myself and I’m not capable of political leadership, the kind of leadership that articulates a vision and can inspire people,” he tells me later. “My ability is to work in a supporting role to those true political leaders and help them achieve that vision.”

Which is what he’s doing today. Standing in front of his audience this

morning wearing a wireless headset microphone, Steele, more professor than politician, employs a series of colorful

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16 | ATLANTIC BUSINESS MAGAZINE | January/February 2012

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charts and graphs to highlight his own government’s successes at managing expenditures – there is no mention of his own party’s previous election promises – and lay out what he sees as the possibilities and perils moving forward.

Steele’s success can be measured in many ways, not least by the fact he’s managed to increase the province’s HST by two per cent, impose across-the-board budget cuts on school boards, rein in spending by health districts and hold most public sector wage increases to one per cent – without provoking the kind of public outrage one might have expected. So far, at least.

Graham Steele has, without question, shaped the debate.

At the same time, thanks to a combination of cutting departmental spending and the good fortune of continuing low interest rates, he’s managed to reduce – shades of Paul Martin – this year’s projected deficit of $390 million to “only” $261 million. The goal continues to be to balance the budget in 2013-14.

Which will, of course, just happen to coincide with the end of the NDP’s first mandate.

That is the inevitable point where a government’s policy of restraint inevitably

meets a political party’s prospects for re-election. Nova Scotia’s NDP government wouldn’t be the first to squander four years of belt tightening and budget balancing in an orgy of pre-election spending.

Graham Steele is careful when I ask if that will happen with his government. “It’s an interesting question,” he allows. “And I guess the proof will be in the pudding. But I don’t think so.”

He says the fact most Nova Scotians have bought into his government’s back to balance plan for the past three years means they “would look dimly on a government that does one thing for three years and then changes course in the fourth year. You can earn more respect by being steady, meaning being steady all the time; thoughtful, meaning thoughtful all the time; and disciplined, meaning being disciplined all the time.”

If his colleagues do become tempted to begin paving everything that moves, he adds, “all they need to do is remember what happened to the last government in Nova Scotia.” That Tory government lost office in spite of attempting to “put icing on everyone’s cake [in the 2009 election]. If that method worked, they would have been returned to office with a huge majority. But they weren’t – because that’s not what people

want, not what they expect from us.”The proof will be in the pudding. And the

icing.

ON APRIL 2, 2012, the night before Graham Steele was to deliver his budget, Premier Darrell Dexter pre-empted his finance minister with the good news that, starting in July 2014, the province would begin rolling back the much-loathed two per cent increase in the HST it had tacked on in 2010.

The next day, Steele formally announced the province was already doing so well he had been able to lard in some immediate, if modest tax relief. His budget increased non-refundable personal income tax credits, hiked the affordable living tax credit, cut the small business tax rate and eliminated the large corporations tax. Steele even slightly reduced a previously announced three per cent reduction in health care spending.

And this year’s projected $211-million deficit, he said, is still on track to become a $15-million surplus next year. “With continued discipline on the spending front, some improvements in revenues, and smart, sensible decisions, we’re on target.”

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