The facts of government economic development incentives

The old saying “you are entitled to your own opinions but not your own facts” keeps coming to mind when I read commentary about ‘incentives’ used by government to encourage certain behavior by businesses.

First of all, the commentary this week in the paper than insinuated that New Brunswick widely uses property tax breaks for corporations while putting it to residents is untrue.  There are a very few property-based tax incentives for business in New Brunswick.  There are a few legacy ones such as the oil tank farm in SJ but in general almost none.  Now GNB doesn’t levy a property tax on what is in buildings (i.e. the equipment) like a few jurisdictions in North America.

Second, most of the large U.S. incentives given to business are either tax-based or related to corporate taxes paid.  Amazon is in the news because of HQ2 and the $1.52 billion worth of incentives over 10 years just for the New York location.   In New Brunswick, these firms would pay much lower corporate income tax to begin with.  In many U.S. states upwards of 20% of total state government revenue comes from corporate income tax.   In New Brunswick it is less than four percent.  My point is that when government looks to attract industry here and they are ‘competing’ with a $1 billion corporate income tax incentive – the firm would have likely only paid a couple of hundred million in New Brunswick (apples to apples).  So is that a $800 million incentive?

In fact, as I have pointed out before, something is a little fishy with corporate income taxes in New Brunswick.  The total corporate income tax revenue in New Brunswick amounts to about 3.8% of total revenue compared to 9.9% in Ontario.  Well, you say, Ontario has a larger and stronger economy.  Okay, even as a share of GDP, corporate income taxes are twice as high in Ontario.  And corporate income tax rates are even higher in New Brunswick (top rate of 14% compared to 11.5% in Ontario).   So either NB firms on average are far less profitable or companies are booking profits in Ontario that in another universe should be applied to New Brunswick. 

This is a digression from the initial theme but an important one.  Ontario generates slightly higher personal income tax as a share of the budget 23.3% compared to 19.2% in New Brunswick which makes sense because of the higher incomes in Ontario (even though top marginal tax rates are lower).  Ontario generates a little more HST revenue as a share of the budget even though the provincial sales tax rate is lower -again makes some sense because of the higher personal incomes.

But more than double corporate income taxes even as rates are lower?  I have never received a good answer about this.

It matters because if we were generating 9.9% of total GNB revenue from CIT it would cut our need for Equalization payments by over 30%.

Back to my core theme about truth in incentives.  New Brunswick doles out a few bucks here and there to firms – usually in the range of $10,000/job or so.   There are multiple studies that show NB gives less money out in the form of incentives than most other provinces and certainly most US states – using the broad definition of incentives.

I have said before if all the provinces and states got together and agreed on a framework to eliminate state aid to firms, I would support that.  It would be fiendishly hard because governments disguise incentives in the form of R&D, training, ‘public’ infrastructure, etc. but if they could agree I think it would make sense.  But I don’t agree with unilaterally disarming on this.  If an incentive of x dollars brings in five times that amount in incremental tax revenue over 10 years and if our competition is offering even higher incentives – why unilaterally disarm?  On principle?

Finally, all the debate about incentives is a distraction.  Very few firms would ever make a location decision based on a small government incentive.  Imagine a firm that gets an incentive $10,000 per job for jobs paying $60,000/year.  It is likely that firm (let’s us an office for example) will end up spending closer to $120,000 per job on salaries, overhead and supply chain in New Brunswick).  Over 10 years, the firm will spend $1.2 million per job in New Brunswick.  The ‘incentive’ works out to be 0.8% of total firm costs over 10 years.  Even if you make the incentive $20,000, the incentive works out to be 1.7% of total firm costs over 10 years.

Do you think a firm would make a major investment decision based on 0.8% or 1.7% of total costs?   No.  Incentives are mostly a goodwill gesture meant to help with upfront location costs.

New Brunswick needs to work on its core value proposition.  You can’t gloss over a weak value proposition with a few bucks worth of incentives.  If New Brunswick is a great place for investment – in mining, in aquaculture, in cybersecurity, in IT, in energy, – whatever – we need to package it up and sell it to the world.  Trying to induce firms to come here and make multi-million dollar decisions for a few thousand bucks worth of incentives is a losing strategy.

 

 

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The Upham conundrum

For me the potential gypsum mine in Upham is an ideal example of the challenges we face in this province particularly with rural economic development.

As I have stated many times before, I believe there will be cases where a mining project should be rejected because it poses an above average risk to the natural environment or for other factors.  As well there should be an open and transparent process that decides these projects. Further, I also believe that the view of local residents should be an important consideration in the decision.

But there seem to be fewer and fewer advocates for economic development in these smaller communities.  Someone can set up Save Upham Facebook group and committee (which is their right) but there seems to be few “I love the mine” Facebook groups.  And the media tends to be cautious when reporting about these projects.  Although I will say the most recent story I read discussed in great detail the trees, watercourse, noise and trucks on the road but didn’t mention the economic opportunity, job creation, new income flowing into Upham.

As I have also written about many times partly this is a sign of the times.  In the 1970s when Upham was much younger (on average), I assume people would have loved to see $75,000+ jobs in the community.  Now, people want to live in a pristine place and work elsewhere.  Of the 345 people that have a formal place of work who live in Upham, only 20 actually work in Upham.  In another universe there would be lots of folks that would love a good paying job close to home.

The number of people who are unemployed and live in Upham has dropped by 43% in the past 20 years.  At the time of the Census only 80 people out of 1,045 adults 15+ were unemployed and I suspect even that had something to do with seasonal jobs.

So who will advocate for this project?  The elected mayor?  Nope. Upham is an LSD.  Local business leaders?  Which ones?  There are only 16 businesses in all of Upham (with employment) and only one has more than 10 employees.  One farm with paid workers, two small trucking firms, two tiny logging firms and a few construction contractors.  That’s it.

We need advocates for economic development.

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Should NB communities have more control over their destiny?

In 1921, there were 4.3 million acres of farmland in New Brunswick or about 11 acres per person living in the province. By 2016, according to Statistics Canada, the total area of farms had dropped to only 835,000 acres – a decline of 80%.  Your first response will be that this is a trend across Canada.  You would be wrong.  The total acreage of farmland across Canada has risen slightly over the nearly 100 year period (up 13%).  Your next retort will be that in 1921 it was all small farms providing individual families with sustenance and that would be more true.  The average farm size in 1921 was 116 acres and now it is 370.  Across Canada, the average farm is now 820 acres reflecting mostly the large scale operations in western Canada.

Why has all this farmland disappeared or gone fallow? Has there been massive urbanization encroaching on agricultural lands like parts of Ontario? No, New Brunswick’s urban centres have expanded very little over the past decades.  Hardly enough to put a tiny dent in the agricultural land.

Why am I talking about farming when the title of the post is “Should NB communities have more control over their destiny?”

Because agriculture is a perfect example of why local communities should be far more engaged in their own economic development.

Consider Salisbury.

By my estimation there is both underused agricultural land and a growing number of farmers aged 60 and older looking for a way to transition out of farming with no children interested in taking over. So, why not put together an inventory of available land, the size potential of the farms, the potential crops/animals that could be farmed profitably and then take that to Europe and try to attract another wave of immigrant farmers to our province?

Right now that would the responsibility of the provincial government.  I think it should be led by the local community.  The mayor sets up a task force on the future of agriculture in the Salisbury area, engages local volunteers and farmers to join the task force which spends three months going door to door gathering intelligence on the potential to attract a new wave of immigrant farmers to the region.

They package this information up and take it to the Immigration folks at GNB and I almost guarantee they would happily promote those farming opportunities in Europe.

So why isn’t this done?  I don’t have a great answer except that over time the view has been that because we are a small province, economic development activity should be centralized in Fredericton.  Another answer might be that some experts have said we need to urbanize so we shouldn’t think about development opportunities in non-urban areas.

I’m trying to derive a principle here.

A few weeks ago a friend of mine took me on a drive of the Dorchester area in southeastern New Brunswick.  I was fascinated.  He told me about all the proposed development in that area in the 1960s and 1970s.  He took me to the industrial park (now just trees and dirt roads).  Showed me where the floating dock was in the Petitcodiac River.  We drove by the old copper mine and the site of a proposed munitions (?) factory.   There was a proposal to build a third Kings Landing/Village hstorique acadien in that part of New Brunswick.  Apparently Irving Oil had looked at putting a tank farm in the area.  We drove by the now all but empty Atlantic Industries factory complex.   Then he told me about all the potential that still exists for development.   The fibre optic hub, the natural gas connection point, the tourism potential, agricultural opportunities, potential ways to leverage the prison for new economic activity.   The First Nation down there could be a partner in new investment opportunities.

Who is working on all this?

Nobody.  A few volunteers trying to muster some basic information.

Another friend of mine took a part time job related to economic development in the Woodstock region.  Within weeks he had identified multiple projects that could possibly have been sources of significant new investment in the area.  How many people are working on these projects.  You guessed it.

A old friend of mine moved to Albert County – a tiny rural area – and just loves it.  And other people are buying up the cheap housing as old timers pass on.  They love it too.  I told him that Albert County used to generate a lot more economic activity than it does today.  Shouldn’t somebody be working on Albert County economic development?  There is a massive stock of maple trees in the area with some commercial development but a fraction of what we see in northwestern NB.  Who is working on it locally?  You guessed it.

Here’s the risk.

As old people pass on, people from across Canada will decide to retire down here because of the cheap housing and pristine rural setting.  They will expect high quality health care, road maintenance, broadband, subsidized electricity, low property taxes, etc. but chafe against any economic development.  We have seen this play out in Albert County, in the Stanley area and elsewhere as retired folks from away have said they just want to be left alone.

Take a look at the interprovincial migration rate for the Dorchester Parish and Village – 15% of everyone aged 5+ living in the parish in 2016 lived elsewhere in Canada in 2011.  They are buying up cheap housing or building on cheap land and many of them “Just want to be left alone.”

So the time is right now.  We need to figure out how to get communities large and small deeply engaged in local economic development.  Do we need a physiotherapy office in Minto?  Build the case and go attract one.  That is economic development.  Do we need housing for new immigrant workers in Charlotte County?  Get it done. That is economic development.  Do we have agricultural land available for development in Saint Marie?  Package it up and sell it.  Minerals in the ground between St. George and Fredericton?  Push on it.

We need provincial level economic development.  Absolutely.  The province is way too small to have every small community out trying to attract international investment, as an example.  But the development of local opportunities should heavily involve the local community.

Let’s get a wave of local stakeholders and citizens engaged in the development of their own economic future.

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The “tell me something I don’t already know” problem

You ever feel like Bill Murray in Groundhog Day?    You keep waking up and its the same day all over again?  How many times can you read in the paper, hear on the news or read on social media that New Brunswick needs to balance its budget, attract more population and achieve stronger economic growth?  It’s almost like one generation of newspaper editors and pundits keeps saying it, they leave and a new crop come in and start saying it, then they leave and a new crop come in, ad infinitum.  Rinse and repeat.

This is not the problem.  If you stopped a random person on the street and said “should government balance its budget and try to grow its economy?” how many people would say no?

The problem – or challenge – is how.

How do you balance a budget when you have 0.5% economic growth, on average, for a decade?  The NB government spending per capita (program spending per person) averaged $11,006 in 2016-17 according to the folks at RBC Economics.  This was lower than Manitoba, Saskatchewan, Alberta, and Newfoundland and Labrador.  Sure it was $1,200/per person higher than Nova Scotia which points to potential for more savings but even if you cut spending by another $1,000/person does that put you on a path to fiscal sustainability with 0.5% growth and a shrinking labour market?

Anyway, I’m tired of reading the obvious.  The great pundits saying the sky is blue or the earth is round.

I want to read about solutions.

That is what I have tried to focus on here and will double down going forward.

In the coming days I’ll write about a revolution in localism in New Brunswick.   I think empowering and engaging local people to help shape their own destiny may be something we have tinkered with but now should go all in.

I’ll write about natural resources development, the gig economy and flooding New Brunswick with international students.  I want to stuff our community colleges to the gills with international students and inflate the pipeline of future workers that are here and willing to work.

You might hear some stuff that sounds obvious but it will be a little more specific than “balance the budget” or “municipal government reform”.

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Now we know. Paramedics are responsible for the longest period of economic stagnation in recent NB history.

The paramedics are responsible for the longest period of economic stagnation in New Brunswick in recent history. And, they have caused the provincial labour market to start shrinking after decades of strong growth and, to top it off, they are responsible for New Brunswick having the most turbulent provincial political environment among the 10 provinces across Canada over the past 15 or so years.

That’s right. You may not have looked at it recently, but no other province has had the most unstable politics since the early 2000s. We haven’t had a Premier serve two full terms since Frank McKenna did it in the late 1980s and early to mid 1990s. He was elected three times. Bernard Lord had to call an election early in his second term because Peter Michaud quit politics triggering an election. Shawn Graham won and then lost after one term. David Alward won and then lost after one term. Brian Gallant won and then lost (it seems?) after one term. Now we facing a minority and likely unstable government for at least some time.

For a 26 year period starting in 1981 and ending in 2006, the New Brunswick economy grew by an average annual (inflation adjusted) rate of 2.5% a year.  Not stellar growth but solid growth.  This expansion was fueled in large part by an expanding labour force as young people graduated from high school, college or university and wanted to work.   In fact, some people argue we had a surplus of labour and that is why so many left over the years.

As the figure shows, labour force growth has also collapsed in recent years and, in fact, has turned negative – peaking at 395,200 in 2013 and dropping to 383,900 in 2017.  It is set to decline further as the Baby Boomers start to retire in full force.

So, why blame the paramedics?

Look at the political response.  Read the paper, listen to CBC.  What has been the top response by politicians?  We’re going to fix the paramedics.  That’s how we will endear ourselves to the voters and ensure a long and stable period of political harmony in New Brunswick for the next decade or so.

There was a headline that read something like “The first thing Blane Higgs will do as Premier” and I hoped to see a story talking about an economic swat team – the best and brightest minds put to work to solve this decade long puzzle – but nope.  His first action will be to fix the paramedics.

Of course much of this post is in jest because we all know that while the voters tell Don Mills the economy is their top concern (CRA polling), they don’t really vote that way – or at best this is an indirect rationale – they vote out of anger and frustration related to specific issues – paramedics, taxes, perceived fairness, etc.

But the truth remains.  New Brunswickers are restless and I think it is at least loosely tied to the economic crisis.   They see it in their local community.  The nursing home can’t find workers.  A foreign-looking and sounding worker suddenly showed up behind the counter at the local Subway restaurant even as little Jonny sits on the couch playing video games because he “can’t find a job” that interests him.

Think about Brad Wall.  The most loved Premier over the past decade plus – he resigned with 70% approval ratings – practically McKennaesque. Why?  He 1) presided over a period of rapid economic growth and 2) he was seen by his constituents as a tireless champion for the province – standing up to Ottawa, and fighting for his province.

IMO, carbon taxes, glysophate, paramedics, nursing homes  et. al. are just flash in the pan issues that will have some effect on the economy and government finances but in the end if we don’t solve the shrinking labour market and if we are not able to encourage investment in new growth industries we will be right back at the polls again and again and again.

No one really knows what another 10 years of 0.5% growth per year will do to the province.  The last 10 years saw a doubling of provincial government debt.  Another doubling along with a rising interest rate environment would not be good.

Of course, the federal government could save our bacon.  It could offer 6-7% increases in transfer payments to make up for the structurally weak economy here.   Unlikely but I guess theoretically possible.

One of the biggest issues is that government officials (elected and bureaucrats) don’t really believe government can do much to positively impact the economy.  They see economic development as government setting up a pot of cash and doling it out to businesses in the hope they expand.   When the economy doesn’t grow the response is that it is hubris to think that a government can actually shift the trajectory of an economy – at least in the short run.

I’m sympathetic to that view in general but there are very specific ways government – right now – can positively impact the economy.

  • Dramatic boost in international students in the post-secondary education system – particularly colleges – as a direct feeder into export-focused industries.  I would flood the system with students – many will end up graduating and leaving but many will stay.
  • Encourage one or more firms to start searching for natural gas again.  We think we may be sitting on a vast sea of gas and we don’t even know if it can be extracted in a commercially viable way – why not at least try?  New Brunswick uses a lot of natural gas – mostly in industry – and it is almost all coming in now from Alberta, the southern US and other countries.  Why are we putting our firms and industries at a competitive disadvantage?
  • Try and encourage one or more mining projects.  We have potash, tungsten, manganese – I think there are something like 90 active claims right now and mining GDP has collapsed from more than 8% of the economy to less than 1%.  Be creative.  Hustle.
  • Encourage investment in the tourism sector.  This can be immigrant investors or young people looking to advance their career by owning a business.  Push on this.
  • Encourage investment in agriculture – we have a large swathe of agricultural land that is fallow – and we have aging farmers.  This has been one of the bright spots in the economy in recent years.  It’s time to turbo charge.
  • Double down on business services.  We have some of the best know firms in Canada serving national markets from Moncton, Saint John, etc.  This brings upwards of $1.4 billion in export revenue to the province. Instead of holding on for dear life – and hoping these firms can find workers – let’s set a goal of $2 billion and flood the province with workers for that sector (hopefully college grads from local schools).

There are many other examples but you can see the common theme is that they all involve government policy – and not just doling out government cash.  In fact, most of the opportunities above wouldn’t require direct transfers of cash from government to industry.

Or we can sit around debating how to whip the paramedics into shape.

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The Golden Girls helping to attract newcomers

The Miramichi New Conversations tour stop last night was very well attended.  I counted over a hundred folks in the room.  There was a lot of good discussion and testimonials and some frank, straight-talk express stuff about the challenges.

After my talk I notice a table of four ladies all in their 70s and possibly early 80s (although they would never tell) and I was quite curious as to why they were in the room.  It turns out Carolyn, Elaine, Colleen and Maureen are all big advocates of immigration and have been working with their local church to attract immigrants to their community.

I had a heartfelt and uplifting conversation with the Golden Girls and came away thinking that if we could put these folks in front of prospective newcomers our changes of successful recruitment and retention would go up markedly.

Essentially we want newcomers to become Miramichiers.  Sure they will put their own twist on what it means to be from the ‘Chi.  They may never master the local dialect – although there were a few immigrants in the room that could slip into the subtle but distinct way of speaking.  But they can and will become Miramichiers.  I met several immigrants last night that had been in the ‘Chi for 20 years or more.

I think people – at least last night – get it.  They want the Miramichi to thrive.  Sure they have questions but that is the reason why the New Conversations tour was developed.

Carolyn, Elaine, Colleen and Maureen have not real reason to actively support immigration.  They have families, hobbies and,  it seems, a good life.  Why bother?  Because they care about more than just themselves and they enjoy working to help their community.

Bring it on.

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Leadership: Perspiration versus inspiration

I’m not exactly Dave Veale, but I do understand the importance of leadership to successful organizations.   As I see it there are leaders who are the hardest working people you will ever meet.  They are also usually smart.  They have a sense of strategy. They know all the files back and forth.  They can quote Nietzsche and Sun Tzu. But, unfortunately, many of them can’t inspire people.

I was thinking about this last night at the NB Multicultural Council event in Moncton.  There is almost no doubt in my mind that New Brunswick will need to attract substantial new migrants over the next decade just to ensure existing employers have enough workers and many more if we actually want to grow the labour force and economy.

But hard working leaders on this issue will not be enough. We need inspirational leaders to get people excited about the potential and how the local population can mobilize at the  community level to make it successful.

It can be done, of course.  Consider the following four communities: Brooks and Banff in Alberta, Lloydminster in Saskatchewan and Whistler in BC.  These communities have the distinction of having among the fastest growing immigrant populations (adjusted for population size) in Canada even though they are tiny and rural (these numbers excluding temporary foreign workers).

Can you imagine?  This would be like Campbellton attracting 2,220 immigrants in the next five years or Miramichi attracting 5,000.

I want to be clear about the data here.  In Brooks, 16% of everyone is a new immigrant,13% in Lloydminster, etc.  In Toronto the rate was 7%, Vancouver less than 6%.

Why would these communities attract so many immigrants?  Very simple.  To protect their economies.  Look at the following chart.  I have highlighted the only numbers that matter in red.  Lloydminster has over 9 times as many people working in mining compared the rest of the country, Brooks 6 times.  Look at Whistler and Banff – the two largest tourism economies in Canada.  That’s it folks.  They are protecting their industrial drivers.  By the way, we don’t have good data on this but anecdotally the immigrants being attracted into mining and oil and gas communities are not working in mining they are mostly in the service industries that support mining.  In other words, they are bringing in immigrants to work the jobs in demand to support their strategically important industries.

Charlotte County recently issued a report warning of the significant labour market shortages facing the tourism industry in that region of New Brunswick.  To paraphrase Jerry Seinfeld’s exhortation to Elaine “Look to the cookie!”, I say look to Banff.

Our elected leaders need to step up on this issue.  This is where inspiration comes in.

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Let’s have a fact-based conversation about property taxes

It would be kind of cool if we could use facts when debating public policy options in New Brunswick.

I’m not a big fan of property taxes.  I pay something like $4,500 a year on my house and it is harder for me to connect that cost to the services I receive.  The City of Moncton in recent years starting publishing a “where your tax dollars go” document that actually helped me make that connection.

But all the talk about how NBers are overtaxed in this area is hard to square with reality.  I just saw Kris Austin say the double tax on property was a main reason why investment is being held back in this province.

As someone who studies – in great detail – what is holding back investment in New Brunswick, I can tell you that this is not a main reason why investment is being held back in this province.

First for the facts.  KPMG looks at property taxes for businesses in 150+ global cities and publishes them on a per square foot basis. I have studied this data backwards and forwards and I can tell you that New Brunswick is not the lowest but neither is it anywhere the highest.  This graph gives you some examples.

Further, property taxes are on average 1% of total operating costs for the average business in the KPMG study.  Wages, the cost of real estate, even energy costs are much higher for the average business.

Now, what about the claim that the government is charging way too much in property tax?  I have heard this from people that move here from Calgary or Toronto expecting their property tax bills to go way down.   As shown below, New Brunswickers in all five income quintiles pay a lower share of their income to property taxes than Canadians as a whole.  What people conflate is property tax ‘rates’ versus property taxes ‘paid’.  Rates are higher, assessments are lower and so in the end people on average pay a little less – not a lot less – of their income to property taxes.  Remember the average household income in New Brunswick is 19% below the Canadian average so in real dollar terms, the average household pays in New Brunswick pays 29% less.  For those of you keeners out there this is partially a rural/urban issue.  The bottom line is that if you own a house Fredericton or Moncton or Bathurst you are likely not paying any more for property taxes than you would pay – on average- anywhere else in Canada.

There is one more data point that should put your mind at ease about your government gouging you with property taxes.  If you look at how much revenue government generates from property taxes – all classes – business, household, etc. on a per capita basis it is similar to the rest of Canada.  I show Saskatchewan in the chart below because I can’t find my province  by province comparison but again, NB is pretty well average.

Now, of course, you say I have avoided the biggest point – the double taxation on rental properties and on second homes/cottages.  That is what is getting Kris Austin, et. al. all in a tizzy.

Governments make policy decisions.  They ‘double’ tax rental properties which, in theory, is more of an incentive to encourage people to own homes.  In practice, apartment rental rates in New Brunswick are competitive and much lower than larger urban centres because again the impact of property taxes on the overall monthly rental cost is fairly low.  But it is clear that if government wanted to encourage more renting of apartments, houses, etc. getting rid of the double tax would help.  I’m just not sure they want that.

As for the cottage owners?  I’ll let you draw your own conclusions.

Three bottom lines:

There is no evidence that property taxes in New Brunswick are a major barrier to business investment.  They can be annoying to small business owners who – like my point above – don’t see what they are paying for.

Landlords and cottage owners also tend to be donors to political parties and can get the ear of politicians and potential politicians. However, when successive governments have looked at this – even with the pressure from landlords and cottage owners – they have not changed the system – because, one assumes – they are loathe to raise other taxes to compensate.  If you cut revenue from property taxes by 30% you would have to raise HST by another one percentage point.  What government will do that?

Finally, I am certainly not opposed to property tax reform.  Unfortunately much of the issue is related to the imbalance between urban and rural property taxes paid (yes, even adjusted for services provided) and that is politically toxic – particularly for Kris Austin’s base of support.

Property taxes, like all taxes, should be set not just as a source of revenue but based on how they impact the competitiveness of the province to attract industry and to attract and retain people.  It’s pretty well known that people accept certain taxes more than others.  Sales taxes seem to be the most accepted and property taxes seem to be the least loved.

But when we discuss these issues let’s do so with facts.

 

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Putting down roots in a transient world

resirgpI have been thinking a lot lately about how we encourage people to put down roots in a specific geography even as societies are becoming more open.  One way is to encourage a kind of Trumpian nativism where people long for a golden age in the past when things were so much better and harmonious.    The outcome of that is to encourage stronger borders, internalizing trade and investment and limited the flow of people.

I’m not sure going backwards is the way to go.

I would prefer to come up with a new regime where people are deeply connected to the place they live even as they are firmly positioned in a global economy and populace.

When I first moved to Moncton 20 years ago I checked out Resurgo Volumes 1&2 from the library and read them cover to cover.  Resurgo was written as a summary of the region’s history going back 200 years.  It’s not as easy read as it was written basically as a summary of what went on each year pulled from newspapers and other sources.

But it was fascinating to read.  If you can handle the clunkiness you read all the colour and all about the interesting people in this area (including Oscar Wilde’s visit) going back two centuries.  There are stories about the fist fight between a mayor and a newspaper editor, about the use of Albert County natural gas as an energy source in Moncton, about a politician out surveying in his rubber boots in the muddy Petitcodiac right before an election to make it seem like if he was elected we would get a new bridge.  The first ‘bilingual’ men’s clothing store 50 years before Len Jones.

I’d like to find a way to get all high schoolers in the Moncton region to read Resurgo or maybe read chunks of it and report back on the highlights to their classmates.  I don’t know.  All I know is that my kids know more about the founding of the United States than their own province or city.

Whether it is our young people or new immigrants, we need to be more intentional about this issue of putting down roots.

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The curious economic development example of Dorchester, NB

My go to book when I want a snapshot of what went on in New Brunswick in a specific year or during a particular administration is Richard Wilbur’s New Brunswick: An Annual Review, 1960-2006.  Unfortunately it only covers the period between 1960 and 2006.  It would be great to have a version going back to the early 20th Century and a version keeping relatively fresh.

For those who think about the province’s economy, Wilbur covers most major economic issues throughout the period starting with a flurry of projects in 1960-61 including legislation to expand the Saint John Shipbuilding and Drydock Company and the establishment of the Rothesay Paper Corporation.  Premier Robichaud went to Europe to hustle new business.  Of course the Chignecto Canal never really got off the ground and despite “a tremendous dry campaign spearheaded by the Baptists and endorsed by the Canadian Temperance Federation” the government agreed to allow “liquor [to] be sold
by the glass in taverns, hotels, hunting camps, and railway trains”.  Wilbur’s book is chock full of these little anecdotes.  You might learn a little about your province.

I have been thinking lately about the little hamlet of Dorchester, New Brunswick a short drive from Moncton. I have a friend who is looking at potential economic development opportunities in the village.  In Wilbur’s review, his comments on Dorchester go from positive to neutral to downright negative.

In 1964, Dorchester first shows up as the site of the Westmorland Chemical Park at Dorchester Cape which was described as “a 100-acre industrial park established by the New Brunswick Development Corporation” to initially house a “$4 million fertilizer plant would be built”.  About 400 men would be employed to produce the fertilizer from Trinidad ammonia.

In 1965, Wilbur indicates government had developed a chemical fertilizer plant and invested in “initial facilities, including a floating dock” but then sold it to a Winnipeg firm.

Just two years alter in 1967, Wilbur cites a Daily Gleaner editorial, by the government’s ‘most persistent critic’ the publisher of the Gleaner, for the “whole confused
story of the indirect liabilities” including the Fundy Chemical plant at Dorchester Cape.

In 1971, Wilbur’s description of the Dorchester economic development efforts has turned sour as he describes it as the “more controversial Liberal venture, the notorious Dorchester Cape industrial park” and says there is only one firm in operation.

By 1974, the vision for Dorchester had completely crumbled.  Wilbur discusses the “vacant buildings of Westmorland Chemical Park, itself a multimillion dollar fiasco begun with much fanfare early in the Robichaud era” and states that James Addison, president of the NB Development Corporation, the Stephen Lund of the time,  announced “the sale of the Westmorland Chemical plant and its large storage tank to an American firm. He thought the new buyers would dismantle it and move the equipment out of the province. He also admitted that the Development Corporation had taken a loss of $8.7 million on the park.”

Other than a person’s hunger strike at the jail, there is no other mention of Dorchester in the almost 50 years’ worth of review.

The Dorchester area over the years had been a site for mining.  It played a role as a ‘port’ for ships coming up the Petitcodiac River.  It could have easily been built out as cottage country for city folk – there are beautiful waterfront locations out there that have never been developed.

dorchester

Dorchester has an interesting history.  An early discussion of that history can be found here (interestingly a Wilbur was the second English family to settle in the area).   You have to subscribe to get the full book.

The recent history of Dorchester confirms my view that the best and most durable economic development is led by local stakeholders.  We can and should attract national and international firms here but in the long run the only people who have a true interest in the area are local people.  Any community in New Brunswick waiting around for the provincial or federal government to swoop in and save the day might be waiting a long time.

Provincial and federal governments have an important role to play but in my experience local leaders – government, business, community need to step up first, cast a vision, and put their own skin in the game.  I’m not naive.  I realize that government has been pivotal in the success of certain communities over time – think about the moving of CN Shops to Moncton in the early 1900s – but for the most part local communities need to take the lead.

A process admittedly complicated in New Brunswick when there are only 11 municipalities with a population of 10,000 or more and only three with 50,000 or more.

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