Accelerating Government Spending

We finally got a look at Premier Lord’s new Accelerating Greater Prosperity funding request to the feds. He wants $1.5 billion from the federal government. Now, remember that government spending in New Brunswick is already up 36% since 1999 – mostly using more federal government funding. Now they want another $1.5 billion.

Here are the spending buckets:

Investing in People – Recruitment, Retention and Repatriation
• Increased Immigration to New Brunswick
• Transitioning New Post-Secondary Graduates in to the Workplace

Skills Training and Retraining
• Transitioning Adult Learners to the New Economy through Enhanced Workplace Skills
and Literacy Training
• Improving the Competitiveness of New Brunswick Businesses through Workplace
Training for SMEs

Reducing Barriers to Work
• Encouraging Self-Reliance and Economic Opportunity
• Tax Free Low Income Threshold
• Guaranteed Annual Income (Research)
• Affordable Housing

Quality Learning Agenda
• Youth, Technology and Learning – Notebook Rollout
• Post-Secondary Infrastructure Renewal (Universities and NB Community Colleges)
• Cultural Centres: Official Languages

Building Strategic Infrastructure
National Highway System (Routes 1, 7, 8, 11 & 17)
Municipal and Green Infrastructure

Creating a Competitive Fiscal and Business Environment
Competitive Taxes
• Corporate Income Tax Reduction
• Capital Tax Reduction
• Provincial Non-Residential Property Tax Reduction

Embracing Innovation- Technology Adoption and Commercialization
• SME Financing and Commercialization
Research and Development
• R&D Critical Mass and Cluster Development
Total Development
• Total Development Fund
• Fundy Trail Parkway (Phase II)

Now, let me tell you why this is a flawed strategy.

1. Attracting immigrants to no jobs won’t work – everyone knows this.

2. Putting more money into education only greases the wheels of out-migration. The more education people have the more likely they are to leave (this is a documented fact). Without jobs for these ‘educated’ folks, they will leave.

3. New road spending. Don’t get me started. If they hadn’t spent $600 million to scuttle the toll highway – we would be building a four lane highway across the top of New Brunswick right now opening up that region for economic growth. Now they want the feds to pay for this very strategic blunder.

4. Cutting taxes – sheesh – no comment here.

5. SME R&D – here’s a little advice to the Premier – SMEs don’t do R&D – take five minutes and look at the national data. If you want more R&D, go find a few large firms and incent them to come here and do R&D – just like Ireland did.

But the #1 reason why this strategy is crazy is that there is not one dollar to try and attract investment to the province. Not one. Not a penny to set up an office in India. Not a penny to aggressively market the province outside our borders. Nada.

SMEs grow when the economy is growing – SMEs do not grow an economy. Cripes. You would think after the second worst SME growth rate in Canada, they would get this. You bring a 500 person Michelin plant to the Miramichi and you will see the small business sector grow. But mini tax cuts combined with escalating costs everywhere else (power, insurance, WCB) will do nothing to promote growth.

Is Lord a fiscal conservative? He has been spending like a drunken sailor and now he wants the Feds to give him $1.5 billion more to spend.

Finally, here’s my plan to ‘accelerate prosperity’ in New Brunswick:

Strategic investment fund $500 million (much less than Ontario but it’s a start) – to attract top shelf, excellent grade, good corporate citizen companies to the province.

Marketing fund $200 million – to set up 6 international offices, hire the top marketing/sales professionals and tell the world New Brunswick is open for business.

R&D fund $300 million – to attract world class companies to do R&D with our local firms.

A few bucks more – for immigration.

I would not cut one tax.

The highway issue is more problematic but weighing the priorities – I would leave this investment until the economy actually starts growing.

Post-Secondary education? I am loathe to invest there but if we can see some reduction in the out-migration coming from the investment attraction above, I would then allocate more funds. But I am serious when I say that I don’t like New Brunswick being the labour market incubator for Ontario and Alberta. It costs us way too much money. But if we can start bringing in Ontario graduates, now that would be something.

What’ya think? I know. I know. Cold day in hell and all that jazz.

But it’s therapy for me to get it down in cyberspace.

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0 Responses to Accelerating Government Spending

  1. scott says:

    You know what Lord should do. I’ll tell you what he should do. He should hire you as a business consultant to a) better the economy of NB, and to b) get you off his proverbial back. lol

  2. Anonymous says:

    Keep in mind that this is all FEDERAL money, and a lot of it is just to tread water.

    On education its a catch 22, yes, it means you leave once educated, but it also means you at least contribute to canadian taxes which provides equalization to New Brunswick. Plus, if you DON”T have education you find no job and live off the state.

    The one that really got me was decreasing property tax for non residents! Thats outrageous, come and buy more of our province for cheaper!

    I’m not sure more salespeople is the answer, although clearly the RIM deal shows they have no idea what they’re doing. There is no such thing as a fiscal conservative, it ALWAYS leaves your pocket somewhere. Lord is a ‘financial conservative’, meaning they want the government to rely on ‘the market’ to do as much as possible. Even social programs rely heavily on the private, or pseudo private sectors.

    This is why he’s so chummy with Harper because they have similar ideas. Personally, for those large companies I’d hire those people not to run around with fancy brochures but to actually invest in their companies-specifically the NB pension fund which sits in New York and gets blended with the economy.

    Go to Mercedes and tell them you’ll invest in their Smart Car line so that they can build here more cheaply than import and so they’ll have a ready supplier.

    However, I don’t ‘quite’ agree about SME’s, it depends just what size we are talking about. Even most ‘large’ corporations are getting quite small in terms of actual workforce. Take Paderno, which seems to be everywhere now, but whether they are ‘large’ is debatable. ANYBODY who brings in outside money is ‘growing the economy’, just at a different rate.

    That’s basic math, a company that brings in fifty jobs is no different than fifty one man operations, so long as their money comes from outside the local economy.