NOVA SCOTIANS OFF TO THE POLLS IN A JUNE PROVINCIAL

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SIPDIS

SENSITIVE
SIPDIS

FOR WHA/CAN

E.O. 12958: N/A
TAGS: PGOV ETRD ECON CA
SUBJECT: NOVA SCOTIANS OFF TO THE POLLS IN A JUNE PROVINCIAL
ELECTION

REF: A) HALIFAX 35; B) HALIFAX 90

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SENSITIVE BUT UNCLASSIFIED -- PROTECT ACCORDINGLY


1. (SBU) SUMMARY: Conservative Premier Rodney MacDonald has
called a provincial election for June 13. Issues of potential
bilateral interest will be: offshore energy and liquefied
natural gas (LNG) policies, subsidies to forest products
companies, legislation aimed at shielding personal data from USG
access and enhanced ferry service to the U.S. Although
MacDonald's early poll numbers look good, don't count out Nova
Scotia's New Democrats, who have a decent shot at forming the
first NDP government in Atlantic Canada. END SUMMARY


2. (SBU) In what was the worst kept political secret of the
year, on May 13 Tory Premier Rodney MacDonald called an election
for June 13. Although there are over two years left in the
mandate that MacDonald inherited from former Premier John Hamm,
MacDonald has been anxious to put his own stamp on the
legislature. In addition, the rookie Premier, who has been on
the job since February, wants to end the increasingly cumbersome
and weakening coalition that Hamm had skillfully forged and run
with the two opposition parties to keep the government afloat
and pass key legislation (ref A). The 2003 election left the
Tories without a majority and they hold only 25 of the 52 seats
in the provincial legislature. The official opposition New
Democrats have 15, while the third-place Liberals have 10.
Currently, there is one vacancy in the Legislature and one
member sits as an Independent, a former Liberal who previously
indicated that he would run as a Conservative when an election
came.


3. (SBU) Also influencing the Premier's decision to call the
election is his standing in public opinion polls.
Election-watchers believe that if his numbers hold at their
current 39% level, MacDonald could walk away with a majority
government. However, these are early predictions that do not
take into account how the two opposition parties will structure
their campaigns and what the response from the electorate will
be. While Macdonald can be expected to craft a platform focused
heavily on the Tory record under the well-respected John Hamm,
he has also tried to out-flank the NDP by introducing a
relatively free-spending budget that takes several items from
the New Democrats' platform, including a tax rebate on heating
fuel.


4. (SBU) From the opposition side, the NDP, behind leader
Darrell Dexter, will try to sell the party as a viable and
experienced alternative to the Tories. We can expect Dexter to
make a strong effort to keep the momentum going for his party
which just a few short years ago was in a distant third-place
position in the province. NDP officials have their eye on the
history books -- if they succeed in forming a government it will
be the first for the party in Atlantic Canada. For Liberal
Francis Mackenzie, who observers generally agree has had a
lackluster tenure as party leader so far, the main challenge
will be to keep the 10 seats he now has, plus ensure that he can
win election himself and get his own seat in the House.


5. (SBU) Issues in the campaign undoubtedly will be the basic
bread-and-butter items such as health, education, the size of
the provincial debt and creating a more favorable climate for
business and industry. Four issues likely to emerge that will
be of interest to the United States are: the energy sector,
subsidies for forest products companies, privacy legislation and
transportation.

-- ENERGY: Whoever forms the government will need to deal with
declining interest in Nova Scotia's offshore energy resources,
which have proven harder to find and produce than expected. The
MacDonald government is committed to moving ahead on development
of offshore energy and is also looking at expanding LNG
facilities in the province. The other parties can be expected
to come up with own ideas in these areas which will probably
take until the campaign gets fully underway.

-- SUBSIDIES: The government has already proposed paying paper
maker Stora Enso C$65 million over six years to help it keep
operating a plant in Cape Breton, a high unemployment area and
the Premier's home region (ref B). In addition, the government
announced the day before the election that it would buy land
valued at C$26 million from Bowater Mersey, a paper
manufacturer. The Liberals have said that more needs to be done
for Stora Enso, and other forest products companies have already
started asking: "Where's mine?"

-- PRIVACY: Shortly before the election was called the
government introduced legislation that aimed at keeping data on
Nova Scotians held by U.S. data processing companies out of the

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reach of the USG. This issue has been important for the NDP as
well so regardless of who wins the election we can expect to see
new legislation proposed by the next government.

-- TRANSPORTATION: The issue of government help for improved
or new ferry links from southwestern Nova Scotia to New England
might emerge as an issue in those areas, especially in those
districts where there are tight races.


6. (SBU) COMMENT: While the campaign is just starting, this
seems certain to be a close and exciting race. Of paramount
interest will be how the new Premier handles himself in his
first electoral campaign as the head of Nova Scotia's
Progressive Conservatives. The other big story will be whether
the NDP can build on its improved standing in public opinion and
win enough seats to form the government. END COMMENT.
HILL