Nova Scotia’s hub city needs more fuel if it’s to keep pulling above its weight class

If construction cranes are a sign of an expanding city and a healthy economy, then Fred Morley welcomes the presence of the looming giants in his city.

“Over the last year or so we’ve probably had five or six construction cranes in the downtown at any given time,” says the executive vice president and chief economist of the Greater Halifax Partnership, an economic development group funded by both the city and the local business community. “And that’s after having not seen a crane for about 25 years.”

The Halifax economy, Morley says, marched through the Great Recession without the job losses experienced in other areas of the country. And now the Nova Scotia capital is experiencing a “resurgence” in both public and private investment — on both sides of the harbour. He points to construction of a new downtown library, a new convention centre, and the emergence of additional condo and apartment complexes.

As well, the Irving shipyard is undergoing a $300-million upgrade to prepare it for an expected $25 billion in federal shipbuilding contracts. Such activity, combined with the city’s stable economic base of health care, universities, regional offices and the navy, has the Conference Board of Canada pegging Halifax’s economic growth at 2.75 per cent for 2014.

It’s further positive news for a city that now dominates the provincial economy. In 2012, Halifax’s real GDP exceeded $15 billion for the first time. That means the city accounted for 54.6 per cent of the total value of goods and services produced in the province that year, up from 50.2 per cent in 2011. (Halifax also produced 20 per cent of Atlantic Canada’s GDP).

Meanwhile, many rural Nova Scotia communities are struggling with outmigration, greying populations, and job losses. Most rural economies are in a state of stagnation or decline.

David Chaundy, senior economist at the Atlantic Provinces Economic Council, notes that Halifax added 14,500 jobs between 2008 and 2013, pushing employment in the city nine per cent above 2008 levels.

“Every other economic region experienced some job losses … Cape Breton, Southern Nova Scotia, the North Shore, the Annapolis Valley … they were all down,” Chaundy says. “We’re losing jobs in those rural communities, particularly in the resource industries and resource-based manufacturing.”

Halifax, on the other hand, now boasts more than 50 per cent of the province’s GDP, half the jobs, and nearly half of the provincial population. The contrasting fortunes of urban and rural Nova Scotia raise many serious questions. Is Halifax’s economy too dominant? And what are the implications of having one growing urban centre and numerous stagnant or shrinking satellites?

Glen Hodgson visited Halifax last July. The senior vice-president and chief economist at the Conference Board of Canada says he was “really struck” by Nova Scotia’s “two-speed economy”. Hodgson concedes it’s not a new trend, but he believes the difference in speeds is becoming more noticeable.

“The challenge ahead for Nova Scotia’s provincial government is pretty obvious,” he later wrote in a blog post. “It will be stretched to provide comparable public services and economic opportunities to the slow-growth areas, while relying ever more on the city population for revenues.” He went on, “There will be recurring pressure to rationalize and even downsize public services, such as health care and education, in the slow-growth areas, and, indeed, to shift resources into the Halifax region to serve the stillgrowing population base there. The politics and policy of this resource shift will be complicated and will not unfold in a straight line.”

Hodgson acknowledges that a boost in offshore natural gas production and proposed LNG export facilities could help some rural areas. But overall, he says, it will be difficult to counter the sagging demographic trends in rural zones. “Rural Nova Scotia is not attracting people,” he said in an interview. “If you don’t have strong population growth outside the dominant metropolitan area, how do you keep investing in hospitals and schools and other public services?”

Fred Morley is slightly more optimistic in his outlook.

He notes that urbanization is a trend seen the world over, not just in Nova Scotia. As for Halifax dominating the Nova Scotia economy, he points to Toronto, which plays a similar role in the Ontario economy. The same goes for St. John’s and the Newfoundland and Labrador economy.

“The urbanization thing is very much a natural trend. And it’s probably not something we should resist,” he says. In fact, Morley argues that growing urban areas actually help struggling rural communities. “If Halifax had a million people instead of 400,000, it would be hard to see how that would be a problem for Wolfville or Bridgewater or Truro,” he says. “The perception of urban-rural tension is a political construct. It’s not an economic construct. Rural and urban economies are linked in a very real sense. The economy doesn’t stop at the town limits.”

Despite its growth, Halifax certainly isn’t immune to sour economic news. The Imperial Oil refinery, which stopped processing oil in September, is being converted to a fuel terminal — a transition that will result in the loss of 200 jobs. BlackBerry’s decline cost the city more than 300 jobs, and the closing of Convergys’ call centre was expected to eliminate 130 positions.

Still, Morley believes Halifax represents the province’s “best hope” for retaining and attracting residents. “There’s a misconception that people are moving en masse from rural areas to the cities of Atlantic Canada,” he says. “Many people are just jumping over Atlantic Canadian cities and heading West. Not because they want to necessarily, but because it’s a perception of opportunities. If you had better opportunities in the cities of Atlantic Canada, we’d be retaining a lot more people.”

In Halifax, that means attracting and retaining more immigrants and convincing more international students to stay after graduation.

“We’re generally doing pretty good,” Morley concludes, “but we could be doing better.”