Low levels of economic freedom chasing young people away from Atlantic Canada

Once again, for the third year running, all four Atlantic Provinces have scored below all other Canadian provinces and U.S. states in economic freedom, according to the Fraser Institute’s new report.

This is another warning sign for the future of Atlantic Canada. Globally and across North America, comprehensive data show people moving in great numbers from places that lack economic freedom to places with greater economic freedom. This perfectly reflects—in fact predicts—one of the greatest threats to Atlantic Canada’s future, an aging and declining (or stagnant) population.

Atlantic Canada has suffered significant “outmigration” over the last 20 years, particularly to the economically freer Ontario and Alberta and also to the United States. Over that period, 66,396 more people left Atlantic Canada than moved into the region. Roughly speaking, this means that over the period, the region lost one in every 36 residents to net outmigration. While the COVID crisis has reversed that trend, the underlying conditions have not changed and the current uptick of in-migration is likely temporary.

Economic freedom—the ability of individuals to make their own economic decisions about what to buy, where to work and whether to start a business—is fundamental to prosperity. Economic freedom requires openness to trade, sensible regulation and reasonably-sized government.

According to the report, out of all Canadian provinces and U.S. states (that’s a total of 60 jurisdictions), Prince Edward Island is the least economically free and ranks last at 60th followed by Newfoundland and Labrador (59th), Nova Scotia (58th) and New Brunswick (57th). Alberta (33rd) is once again the top-ranking Canadian province.

An immense body of research shows that economically free jurisdictions grow faster, create more jobs and reduce poverty at much higher rates than non-economically free jurisdictions. So it’s hardly surprising that economically unfree places continually suffer outmigration to freer jurisdictions.

In Atlantic Canada, the key problem is oversized government, which replaces free exchange with government fiat. Consider this—across Canada, government spending equals 40 per cent (on average) of the economy compared to 55 per cent in Atlantic Canada (in 2019 pre-COVID). In Sweden, a country known for its large government sector and generous social programs, government spending equals only about 50 per cent of GDP.

Atlantic Canada also suffers from a much less business-friendly environment than Sweden. Although data are not available at the provincial level, Canada ranks 23rd in the world in the World Bank’s “Ease of Doing Business” report compared to Sweden’s 10th; in Transparency International’s corruption measure, Canada ranks 12th compared to Sweden’s 4th. So Atlantic Canada has a larger government than Sweden and a less friendly business environment. This undermines economic growth and leads people to seek freedom and opportunity in other places.

Again, for Atlantic Canada, outmigration is greatest among the most-needed demographic for the region’s future. Six out of 10 of the net migration losses were people between 20 and 44 years of age, contributing to the aging of the region.

Consequently, the Atlantic provinces have the largest share of seniors (as a portion of the population) among all provinces, led by Newfoundland and Labrador at 21.4 per cent of its population followed by New Brunswick (21.3 per cent), Nova Scotia (20.8 per cent) and Prince Edward Island (19.7 per cent) compared to Canada’s provincial average of 16.7 per cent.

The net outmigration of Atlantic Canada’s most productive demographic further threatens growth and government revenues, hurting the region’s already weak government fiscal position. To illustrate, each Maritimer is on the hook for about $50,000 in government debt; in Newfoundland and Labrador, that number jumps to $65,200 per person.

For Atlantic Canada to regain dynamism and ensure a future for its young people, governments in every provincial capital must empower Atlantic Canadians to produce the prosperity and growth that will keep people in the region and attract new people.