Equalization and ACOA

The Telegraph Journal is reporting that New Brunswick’s Equalization payment from the Federal government for the next fiscal year will be $1.43 billion – an $84 million increase from the previous year.

Now to put that in perspective, that’s about $1,900 per New Brunswicker and over $4,000 per employed person in New Brunswick.

So if you set that in the context of Premier Lord asking for more Equalization (as a matter of fairness) and Ontario Premier McGinty lobbying hard to redress the ‘fiscal imbalance’ in Canada (i.e. he wants Ontario to pay less), you can quickly see this most likely is going to come to a head sooner rather than later.

What’s the breakpoint? $5,000 per employed person? $6,000 per employed person? At some point within this generation – especially if Lord gets his way and gets more Equalization – we will get more money from Ontario, Alberta and BC to pay for our public services than we generate in the province.

I reminisce about the days when New Brunswick politicans at least ‘talked’ about self sufficiency. About reducing dependancy on Equalization. Those days are long past.

And in the same edition of the TJ, the editorial whips up negative sentiment about ACOA – once again without offering any concrete alternatives. And, as usual, the TJ offers up the same tired line about ‘handouts and subsidies’ once again without mentioning that those ‘handouts and subsidies’ are less then the amounts given out in most other provinces.

So New Brunswickers are left thinking that we are poor and highly subsidized.

But for the sake of the TJ, T&T, AIMS and every other voice out there complaining without offering real alternatives, let me restate my position. New Brunswick is highly subsidized – but not when it comes to economic development investments. The Feds spend the least amount of money on R&D in New Brunswick and the provincial government is also among the lowest funders of R&D. The Feds and the Province spent among the least amount on business ‘subsidies’ i.e. money designed to attract new investment among all the provinces.

Subsidized yes but not for investments into economic development. These large subsidies go into health care and every other ‘expense’ of the province.

So, back to my main thesis. New Brunswick must become a lightening rod for business investment from across North America and globally. We must stop all this tinkering with small businesses, ‘innovation’, ‘capacity building’ etc. which expend government dollars but do nothing to leverage the global investment flow.

Want my model? Here it is. Put an ACOA office in Bangalore, Beijing, London, Dublin, Paris, Sao Paulo, Altanta, Toronto (for multinationals located in Canada), Singapore, LA, Mexico City and then sell, sell, sell. And back home, we should look at investing in infrastructure, training, R&D and other elements that will be attractive to companies looking to make investments (either greenfields or into local SMEs).

You may not agree with me but unlike the editorial pages of the T&T and TJ, at least I am proposing an alternative and not just lashing out at anything that breathes.

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0 Responses to Equalization and ACOA

  1. The Virginian says:

    I absolutly agree with you Dave, we need to have a presence where there is potential to attract companies from the US to Canada and anywhere else. I know for exemple the province of Ontario has 8 economic development officers covering Europe, the province of Quebec 12 (large presence in France), NB NO ONE (0), ZILTCH. I don’t have numbers for the rest of the planet, but no doubt the major provinces are present. 84M$ extra just take 10% of that and invest it in economic development. You only need one big fish to kick start an industry and its second and third tier of suppliers.
    From what I have been reading in the local papers it appears that Bernie is spending his way into an election campaign, short sighted, no long term vison.
    I don’t want anyone to get teary eyed now, but Barbie Doll Blaney would have to feel encouraged by a long term plan to create employement.

  2. David Campbell says:

    Virginian, I still think you’re a closet economic developer – but in order to understand the value of having sales guys/gals in foreign markets you have to buy in to the notion that attracting investment – in a serious way – is a good way to do economic development. I’m not sure that our guys believe this. I still remember an ADM at the economic development department in Fredericton (circa mid 1990s) saying “Why would company X ever want to locate in New Brunswick?”. And I thought then, as I do now, that if you don’t have leadership that actually believes we can attract companies then obviously you won’t attract companies.