Volpe’s on the road again

Finance Minister Jeannot Volpé is back on the road to conduct pre-budget consultations in New Brunswick.

Once again, the pre-budget consultation document is a marketing piece. They want to ‘consult’ New Brunswickers but they public a ‘consultation document’ that doesn’t even hint at the problems in New Brunswick.

So, the spirit of true consultation, I will reword some of the marketing spin to allow anybody that actually goes to these consultations to be armed with the real facts:

Spin document:
More jobs – Between June 1999 and December 2005, 31,800 net new jobs have been created in New Brunswick. In 2005, the unemployment rate stayed below 10 per cent for the second consecutive year, the best performance since 1976.

It’s the Economy, Stupid Revision:
From 1999 to 2005 (we don’t compare ‘June’ to ‘December’ because there are wide fluctuations in employment – even with the seasonally adjusted data) – using year end data – New Brunswick has 24,000 net new jobs. Canada as a whole had a 50% better job creation rate, Alberta 100% more, BC 60% more, PEI and Nova Scotia both performed significantly better than New Brunswick. New Brunswick’s employment rate is the third worst in the country.

Spin document:
Between 1998 and 2004, growth in New Brunswick’s economy, as measured by Gross Domestic Product per capita, ranked second highest among all Canadian provinces.

It’s the Economy, Stupid Revision:
This one annoys me more than all the others. First, they add in 1998 when they weren’t even in power because it was a very good year for the GDP. Second, they use ‘per capita’ data to take advantage of the declining population (you know, the GDP is a number so if the ‘capita’ is going down, this figure would improve). The reality is that GDP growth in New Brunswick only outpaced the national average once in the last six years and is forecasted to underperform the next three.

Spin document:
New Brunswick was second highest in Canada in annual average growth in manufacturing shipments and third highest in exports of goods and services from 1998 to 2004.

It’s the Economy, Stupid Revision:
I won’t comment on this one except to say that you know that I think reporting this is in extremely bad taste when all the increase is related to the Irving Oil refinery. Without those exports, NB has amogn the worst performance in exports.

Spin document:
The government has made record investments in health and senior care and education every year since its first budget. Since 1999, cumulative new funding for health and senior
care totals approximately $3.4 billion, and $1.2 billion for education. Over the same period, other government spending on a cumulative basis has decreased by $136 million.

It’s the Economy, Stupid Revision:
I don’t think there is much to say here. A 36% increase in government spending since 1999 (among the highest in Canada ‘per capita’) and a decrease in all spending except education and health. ’nuff said’.

Spin document:
New Brunswick also has the lowest provincial small business corporate income tax rate (two per cent) and the highest income threshold for that rate ($450,000) in the country.

It’s the Economy, Stupid Revision:
This is among my favourites. They brag at great lengths about their small business tax cuts and how great that is for business but the forget to mention (remember this is a planning process) that there has actually been a 3% decline in the number of businesses remitting payroll deductions to the government from Dec 1999 to Dec 2005 (i.e. actually have a payroll). Since 95% of all businesses are small businesses, this means the small business sector is shrinking, folks while it has increased significantly across Canada. This is a serious problem, folks. If the government has a stated policy of decreasing small business taxes to stimulate the economy and the number of small businesses is dropping – it ain’t rocket science folks.

In conclusion I think, once again, that the government is mixing its marketing messages. A pre-budget consultation document should state the reality – good and bad. It should ask the tough questions. It should point out the declining population, the tepid job performance, the almost no IT jobs since 1999, the fact that the balanced budgets have been fuelled by massive increases in Equalization, etc. Then folks could have a balanced discussion.

Lobbing a spin document that includes outright exaggerations will do nothing and invalidates the whole process – devolving it to a political exercise.

The Minister should have more sense than that. Not everything is political. Ultimately, New Brunswickers will figure out the truth and hopefully will express anger at the polls for being systematically duped by a large scale spin machine for six straight years.

I believe in the end that Lord and Volpe both would be more respected by New Brunswickers if they told the truth.

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0 Responses to Volpe’s on the road again

  1. David Campbell says:

    One more thing. Imagine if General Motors did a ‘pre budget’ consultation with their board and published a document like this. GM is booming. GM record this, record that but forgot to mention the $8 billion loss last year. The board would throw the management out lickety split. But in a political context, we have learned to expect nothing but spin.

  2. Anonymous says:

    The board of GM doesn’t need to get re-elected (at least by a large constituency).

  3. Anonymous says:

    You seem really good at pointing out what’s wrong. What do you see as the solutions to the problems?

    1) Aging population
    2) A shrinking population
    3) Encouraging IT jobs to setup in NB. Not call centers, real IT positions.
    4) Encourage more start-ups(IT)
    5) Improve literacy rates
    6) Improve post secondary education

    I’m not saying your wrong, I’m just interested in finding out how we get NB to “BOOM”…

  4. David Campbell says:

    Geez, ask a tough question why don’t you? Seriously, there are no easy solutions but the first step is to communicate to New Brunswickers the extend of the challenges (hence my relatively negative posture). If people realize we are in population decline while at the same time government spending is ballooning (using more and more federal government transfers to make up the difference) and if people realize that our industrial base is not evolving like it should – then I think there would be more public interest and influence in forcing government to move on this issue. This last point is key – from 1999 to 2005 there were over 100,000 new jobs created in Canada in the information and cultural industries – and no new growth at all in this area in New Brunswick.

    So my outline view of what needs to be done – is somewhat reflected in your points.

    1. We need to attract significant new business investments in New Brunswick from companies outside the province. And, as you say, the time has come to evolve beyond call centres. How we do this is tricky but it has been done elsewhere. We need to promote the fact that people will move here from other parts of Canada for good IT jobs. This has been proven by OAO and others in New Brunswick that recruited nationally and brought in programmers from Calgary and beyond (mostly ex-NBers). We need to specialize on a few niche but fast growing areas in the IT sector (my personal picks would be animation/games, e-Learning and language-based industries). I think we have the genesis of a story for those three sectors now we have to get really focused. For example, the government set up an ‘Innovation Foundation’ to encourage R&D in New Brunswick. As far as I can tell they have placed some money in universities but almost none in IT companies. I would leverage that fund to attract IT companies to the province.

    Then I think we have to get a whole lot better at selling the province as a good place for business. Alberta, the richest province in Canada, has over 40 people located outside Canada promoting that province for business investment. New Brunswick has none. Nada. Zero.

    Literacy and post-secondary education are longer term challenges. Literacy rates are low for a variety of complex reasons but I am sure that economic realities have played a part. New Brunswick’s industrial base is the least dependant on education of any in Canada (save Newfoundland) – meaning that folks dropping out of school can still find work in fish plants, warehouses, etc. (yes, in 2006). If we bring our economy into the 21st century, the job market will slowly force higher rates of literacy and post-secondary education.

    I would point out one quick thing on post-secondary education. The last time I checked New Brunswick had an above average rate of university students as a percentage of the population (much higher, for example, than British Columbia) but much lower rates of university grads in the workforce. This is related to my former point and to the fact that a high percentage of our grads go out of province right after graduation.

    As to encouraging more startups, I hate to sound like a broken record but we need a strong economy to stimulate more entrepreneurship. A strong economy creates more ‘freed up’ capital for investment in startups. It also creates the conditions for spinout start ups. The vast majority of IT start ups in Canada were founded by people that left other IT firms. If we don’t have IT firms, ergo, we won’t have people leaving them to start new firms.

  5. Anonymous says:

    Good answers. I would add another one. Take 1 billion, that’s right, one BILLION of the funds NB has invested in New York Investment houses, none of which is invested in New Brunswick, and use it to approach a few of these corporations in gaming, animation, software development, etc., and subsidize the hell out of them. Tax breaks, renovations, whatever. Pick the GOOD companies and make their life as easy as possible provided they will sign a piece of paper that grants X number of jobs for X number of years, at a guaranteed pay rate. Part of the deal would be to locate them in the most underfunded parts of the province, namely northern New Brunswick (at least first)

    That’s just one suggestion, obviously it doesn’t tackle the huge infrastructure problems, but it’s a start. Hell, why have all that money invested in Alberta, India and French stocks when it could be building up New Brunswick.

  6. Anonymous says:

    Thank you for clarifying and explaining you position. I look forward to reading future postings. Keep up the good work, NBers need to become more vocal.