Looking for a little Savoie-faire?

Donald Savoie’s new book is being written about alot considering I can’t get it at the local Chapters. However, I ordered it online and should have it in a week or so.

Here’s the TJ’s take on it:

Maritime ‘glory days’ within reach, says professor
NB Telegraph-Journal
March 25, 2006
Donald Savoie says economy could make great gains if Harper Tories embrace radical changes
By Rob Linke

Transfer thousands of civil servants, including senior policy-makers, out of Ottawa-Hull to the Maritimes – and pay them less than they’d earn in Ottawa.

Fold the economic development agencies of New Brunswick, Nova Scotia and Prince Edward Island into one.

Tighten eligibility for employment insurance even if it means “closing some villages” as people leave unsustainable rural areas.

While Liberal governments have been more supportive of transfer payments over the years, Mr. Savoie’s book says transfers aren’t the answer to the region’s lagging economic performance. Rather, they amount to “guilt money sent to us while they get on with what they think is the real policy of supporting wealth creation in Ontario and Quebec.

“When you create 42 Crown corporations, and every single one of them is totally earmarked for Ontario and Quebec, well, I’d give up on transfer payments if we could get national policies to create wealth in Atlantic Canada as easily as it does in Ontario and Quebec.

“There are more federal civil servants in Ottawa-Hull than residents in either Moncton or Saint John, and their numbers are growing in the capital while declining in the regions.

Mr. Savoie also argues that market forces hold more promise for the region than either transfer payments or an activist federal government. He sees great opportunity in reduced trade barriers and in forging greater links with New England.

He approvingly quotes the like-minded Frank McKenna, who said, “If you piddle around with taxes one or two points, just keep your money because it won’t make a difference. If you are going to be a bear on this, be a grizzly. You have to go after the people around the world who will pay attention to this kind of incentive.”

I’ll have more to say about Donald’s book after I read it. I am uncomfortable relying on a TJ jounalist to make up my mind. But I will say that I have said, and will continue to say, that he and McKenna are 100% right about cutting taxes. These little piddly (great word) tax cuts that the Lord government put in place did nothing but reduce the government’s revenue by a few million dollars. It made for great PR but I see ziltch in the data to suggest there were any new investments or job creation as a result.

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0 Responses to Looking for a little Savoie-faire?

  1. scott says:

    I think that both of Savoie’s books (this one and Pulling Against Gravity) should be mandatory reading for both grade 11 and grade 12 students in New Brunswick. As well, his all important topics should be widely debated in the public school arena. Just my opinion.

    But to be honest, they probably will only reach the shelves of a few interested politicos and economist across the province and nation.

  2. Anonymous says:

    Part of that is just common sense and what maritimers have been griping about for decades-too much centralization in Ottawa and Ontario, too little elsewhere.

    The problem with books and advice like that is that the government is quick to say ‘well, we’ll do SOME of the recommendations, we’ll keep even MORE of the EI surplus and keep people from collecting it’.

    Unless I”m mistaken ACOA is called the ‘atlantic canada’ opportunities agency for a reason, as in it already IS centralized.

    The rest is ‘good advice’, but again, stuff every maritimer grows up with. As far as ‘market forces’ being the answer, that of course depends what you mean.

    In Maine the economy is held together because the federal government has a massive shipbuilding program. So the ‘aid’ isn’t just handouts, it’s money for doing something.

    In NB, well, we know all about the importance of shipbuilding to the feds. Maine gets ten times as much federal support as New Brunswick, but of course their feds have more money, of course most of it is deficit spending.

    NAFTA has been in place since the late eighties, and NB escaped the softwood embargo. So we’ve essentially HAD almost twenty years where ‘market forces’ have had plenty of opportunities and the simple question is: how much has it helped?

    As for taxes, keep in mind that we’re already at the point where provincial revenues get only five percent of funds from corporate tax. So the question is, are we prepared to get ZERO from corporations.

    If the feds match it, of course they’d have to do it across the board, which once again leaves the province no better off.

    So governments are essentially in the position where they have to run around telling companies ‘not only do you not have to pay taxes, but we’ll GIVE you all kinds of stuff. Then, like most companies, even if they LOSE money the government will have to bankroll them, or else lose the initial investment AND the jobs.

    So I’ll say it again. Why not simply use the resources AVAILABLE to ‘prop up’ the work force NOW? I know ‘small businesses’ are particularly derided here, but really, they provide FAR more jobs than Irving or McCain-and far more cost effectively. At least they don’t need quarter billion dollar corporate welfare (well, they DO need it, they just don’t get it)

  3. scott says:

    Transfer thousands of civil servants, including senior policy-makers, out of Ottawa-Hull to the Maritimes – and pay them less than they’d earn in Ottawa.

    A good point, but a flawed economic philosophy.

    Two things here:

    1) We have relied for far too long on government in this province. It is time to let investments and the market decide our fate…not the politicians.

    2) Keeping wages low is not the answer. Raising the minimum wage and getting people to value work again is the key to turning things around.

  4. Anonymous says:

    Why bother even debating it. First, there’s nothing New Brunswick can do about it. Second, the feds certainly aren’t going to do it. In a place like New Brunswick I think you’ve got to be crazy to say “No, we don’t want any more money or jobs from the feds”.

    Hell, the province is dirt poor, take any money people will throw at you. Federal jobs are federal jobs, why SHOULDN”T the department of atlantic fisheries be located in the maritimes? What in heavens name is the ‘private sector’ going to do with the department of fisheries? They were given free reign on the grand banks and look how long the cod lasted there! Of course Ottawa didn’t care much more, at least those who live close by are interested in maintaining a living.

    Bathurst just got propped up a little with a revenue canada office. Again, a few good jobs with federal paycheques. The workers will get good training, in fact government training is the BEST training out there since private companies snap up those workers to figure out how to speak the same jargon as government. Again, there’s no market there.

    Investments and markets HAVE been ‘deciding fate’. What, exactly, does that even mean? There are markets all over the place. Companies can invest anywhere they want to, nobody is stopping them.

  5. David Campbell says:

    Scott, good point but wages should be calibrated to cost of living. It makes no sense for Federal employees to make what amounts to a wage premium by being located in Atlantic Canada. That alone is a huge disincentive for the powers that be to look at putting government jobs down here.

  6. David Campbell says:

    Anonymous said:

    I know ‘small businesses’ are particularly derided here, but really, they provide FAR more jobs than Irving or McCain-and far more cost effectively.

    Small businesses are not ‘derided’ here. I work for a small business. I love small business. I think that there are great advantages to small business over large business. But I think we need to know where the small business fits in the economic development food chain. 96% of small businesses (under 25 employees) do all their business either in their local trade area or province. Therefore, the success of their business relies is large part on the health of the local economy. If the local economy is weak (i.e. New Brunswick) the small business sector ergo will not grow. Now, for the 4% that actually export products and services outside the province, that is a different matter.

    So, in my opinion, the balance of large (external) firm investments and local, small firm investments is way out of whack. We need more FDI which will lead to increased and more successful small businesses leveraging the growth of the economy.

    Remember basic economic theory. In a fast growing economy, entrepreneurs spring up to take advantage of little gaps that emerge as the result of the growth (i.e. a lack of good restaurants will create an opportunity). I have never seen an example where this worked the other way (i.e. more small restaurants set up shop and that led to a booming economy).

    So, I like ’em but I know where they fit in the food chain.

  7. Anonymous says:

    Come on man, do you actually think that ‘investing in medium sized businesses’ means RESTAURANTS! That would be CRAZY. Basic economic theory comes down to import/export ratios. If you bring in more money from outside, then your economy does better. Unless of course your government is as dumb as Canadas and readily allows that other problem-namely letting those who get a big chunk of that money to hide it offshore.

    Nobody in their right mind would say, ‘lets invest more money into restaurants, movie rental stores, hair salons, etc.

    From my perspective this is NOT even about money but education. As I’ve said before, a kid in a basement can churn out an animation, a class of kids can churn out a television show or film. A co-op of ten people can produce a video game in a year-of course all these things need SOME cash for marketing.

    There are millions of opportunities on the net, but we live in a province where over half the people can’t even read, let alone have net access, let alone have high speed access.

    Meeting the needs of entrepreneurs means educating people. Yet there is no place to do that. NB has a high dropout rate, so you’d think there’d be a corresponding growth (judged by your basic economic theory) in the availability of GED testing and education centres. THere’s none, in fact NB’s office is alone in not even having a web presence. They don’t even have an email. I guess the thinking is that dropouts can’t read, therefore aren’t on the internet-although there certainly isn’t a move on radio or TV either.

    However, keep in mind that New Brunswick cities are NOT that cheap. The cost of living is remarkably similar as growth in Ottawa is far outside its borders now. You can get a house for just 50 grand more than in Fredericton (depending where you want to live). Food is not much cheaper, in fact in many ontario cities food is cheaper there-even seafood. With power rate increases that makes NB really quite comparible. And heck, if it means more fed money here, YAY! As said, there’s no point even debating it because it is out of our hands.

    Keep in mind that McCains are INTERNATIONAL, so are Irving. So if you think about the number of companies owned by those two, combined with the resource sector, Ganong, Moosehead (also International), then its quite a good mix. Unfortunately, in those we’ve got partnerships that end up sucking money OUT of the government, rather than contributing in.

    Yet there are export availabilities all over the place. Heck, one of the most successful business models in New Brunswick, and the maritimes, is the Co-Op model- THATS what should be required reading in every school. A business model where the stress is on job creation and income sharing rather than ‘one guy gets rich and sees how much he can get away with’. You transfer that model with even a LITTLE government support and you’ll have a winner every time in just about every industry. Hell, maybe even the AUTO industry!

  8. scott says:

    “There are more federal civil servants in Ottawa-Hull than residents in either Moncton or Saint John, and their numbers are growing in the capital while declining in the regions.

    As Bill Clinton once said, “we need a bureaucracy that is leaner, meaner and more progressive.”

    I agree with him wholeheartedly. So as far as I’m concerned, we should not be boasting about how bloated the federal civil service has become.

    There is no doubt, we need to create progressive private-sector jobs and encourage R&D so that the public sector’s presence will decrease in both New Brunswick as well as nationally.

  9. Anonymous says:

    Why? Do you even KNOW what public servants do?