"The Rising Tide" is the title of a discussion paper prepared by the Atlantic Liberal Caucus in response to the region's lagging growth rates. The report is the blueprint for the federal government's Atlantic Investment Partnership - The Second Wave, its latest economic development and make work project. Unveiled on July 11, it will cost $708-million and be managed by the Atlantic Canada Opportunities Agency (ACOA), Ottawa's local subsidy office.

If taxpayers feel they have heard this all before, it is because they have. The last subsidy wave crashed in prior to the 2000 federal election. And with another election looming, Atlantic MPs are again pouring out tax dollars by the bucket-load. When Prime Minister Jean Chrétien unveiled the first $700-million "development" package, he said the money would help improve the economic fortunes of the four Atlantic Provinces. According to ACOA, the project "achieved remarkable progress toward creation of a more diversified, competitive and knowledge-based 21st century economy in the region." So successful, in fact, that more development money is needed today.

Ottawa will (again) attempt to help local economies by doing more of the same. ACOA will provide training money and try to lure companies to the east coast with fatter grants. Ignored by the Liberal caucus and ACOA is a deep-seated problem, which is that the region remains a poor place for businesses to invest. But why is this Atlantic Canada, for the most part, has a good highway system. It has access to ports, railways, and the huge eastern U.S. market is nearby. Atlantic Canada has more universities and colleges than any other part of the country.

The economy is hurt by a high tax burden and an expensive labour market - caused by generous unemployment benefits - which keeps entrepreneurs and investment dollars away. Few businesses are willing to risk capital with better opportunities elsewhere, and many talented locals pickup and move away. This will not change with more ACOA money. Ottawa, meanwhile, shows no willingness to reduce business taxes or punitive personal incomes taxes.

Whether by accident or design the "rising tide" slogan is how the pro-growth economic policies of two U.S. Presidents are frequently described. To boost a slowing economy, Democratic President John Kennedy slashed the top U.S. tax rate in the 1960s. At the time, he said that "a rising tide lifts all boats" and he was right. Again in the 1980s the rising tide expression was popularized by Republican President Ronald Reagan when he dramatically lowered income taxes to boost economic activity and encourage entrepreneurial initiative. Today, both parties in the U.S. understand economic growth is tied to low taxes, not government meddling in the economy. It is an altogether different story in Atlantic Canada where job-creation schemes rule and the economy continues to underperform.

Most Atlantic voters understand government handouts do not create lasting jobs or strong economies. They know from experience the jobs too often disappear when the money runs dry. But local politicians prefer to handout tax money at election time.

"I don't think you'll find an MP from any party in Atlantic Canada who is against the kind of things that we're doing here," ACOA Minister Joseph McGuire told reporters. Conservative MP Greg Thompson, who serves as opposition ACOA critic, proved him right. He says subsidies will continue under a Conservative government.

President Reagan's record, like Mr. Kennedy's before him, demonstrates that lowering personal and business tax rates results in higher living standards for all segments of the population. As an economy grows, individuals benefit from higher wages, more jobs and better productivity. As long as tax-tax and spend-spend policies are implemented in Atlantic Canada its economy will remain beached. The tide does not rise when government policies work to keep businesses away.