Time to stir the pot a bit

It’s funny how things go.

In the mid 1990s, the Dept. of Economic Dev. & Tourism brought in an economic development guru (I can’t remember his name) and he made a very good presentation on how governments can support effective and long term economic development.

During the Q&A, someone asked him about tourism.

He said bluntly – don’t focus on it. Let tourism associations and tourism operators that directly benefit from it do their own marketing and development work.

The person who posed the question said something about how important tourism was to New Brunswick.

He said “my point exactly”.

He said “name me a single tourism-dominated economy that is a strong economy”.

His comments didn’t matter. The Liberal government of the day made tourism a major priority. The Lord government did as well – or at least claimed as much. And now the Graham government has staked its claim announcing yesterday another 100 million for tourism development.

The T&T article today states:

Tourism in New Brunswick is a $1.2-billion industry, creating 33,000 jobs. It’s also seen as the sector with the most growth potential.

Why do we like tourism?

It’s low wage. Mostly seasonal work. It’s not particularly technology intensive. It’s not particularly Green (tourists mostly drive in their cars). If you did a dispassionate analysis of tourism, you would likely not support it but there is something about ‘tourism’ that gets people going.

Maybe they like the concept of people coming here to visit. Maybe it helps prop up our insecurities about our little province. Hey, if people want to visit here it must be a great place, right?

Maybe – more importantly – people think it is a better sector for regional development. Rural areas lend themselves to tourism. It’s natural, right?

But think this through for a minute.

Jeannot Volpe puffed out his chest after his last budget and proudly claimed that no New Brunswicker making under $15,000 per year will pay provincial income tax.

Now, we invest in an industry with an average annual wage of just about that. And a seasonal industry as well.

In the late 1990s, governments said they would stop funding ‘seasonal’ jobs because of the province’s dependence on them. So much for that.

I think there is a place for tourism and a role for government. It’s a great industry for students in the summer (though we have less and less of those these days). And I also like the idea of showcasing our province for foreigners.

Probably the best benefit from investing in tourism infrastructure is that we get to use it as well!

But the provincial goal is self-sufficiency. Which means raising massively more own-source tax revenue.

Tell me how more tourism jobs does that?

Even more worryingly (I blogged on this before), the folks in Miramichi have acknowledged that there will be less forestry jobs in the future and so they want to make up the shortfall with tourism jobs.

On average, tourism jobs pay less than half the wages as forestry industry jobs.

Tell me how this feeds self-sufficiency?

It’s a bit like being back in Lord’s bizzaro world. Cut economic funding, cut small biz taxes and cross your fingers.

Now we invest in politically-popular ribbon-cutting-oriented every-local-politician-loves-it tourism but I haven’t seen any new money to attract high wage, capital-investment intensive industries.

It’s ultimately about trade offs. $100 million for tourism could have been used to help built a video game/animation cluster in Miramichi. Or a language translation/localization industry in the Acadian Peninsula. Or high value added forestry products in Campbellton. Or a natural gas park in Sussex or a large scale data centre in St. Stephen. All of those sectors would have contributed significant new tax dollars to the coffers of the provincial government.

I am sure that at least half the people reading this post are pretty cranky right now.

Have at it.

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0 Responses to Time to stir the pot a bit

  1. Anonymous says:

    Very serious money to be directing at pure political causes.

    Another example is the $70M put into the yarn factory in Altholville. These are huge commitments for NB and we need to have dramatic sustainable results.

    We have to think bigger. Ontario commits $70M or $100M and gets a auto manufacturing plant with high paying jobs and loads of spin off. Similarly, Quebec gets train manufacturing plants or aerospace manufacturers. We commit this kind of money and employ seasonal workers and flow the money out of province on advertizing.

    Taxpayers have to start demanding more strategic, less political spending commitments.

  2. Paulin says:

    Right on the money! But they will dilute this money by giving it to everyone. They should have put it in a megaproject. Something between Fredericton and Moncton or between Bathurst and Edmunston.

    They are fantastic lake in New-Brunswick. We should advertise our roots as fishermen, farmer and hunter. A super great park where city folk could learn where their food come from.

    Tourism should be our marketing departement. Montreal was put on the map because of the Expo (tourism event). We could advertise our province by saying we have a good way of life with a modern twist.

    But we need to improve our internet backbone. Helping city to have wi-fi hotspot would help a lot to give a modern look.

    A modern transportation system – Bus and train. I do not think you can call yourself a city if you do not have a bus system.

    We could attract big city folk (CEO) to our tourism meeca and they might invest in NB. I know it’s a long shot but i’m an optimist :).

  3. ddamours says:

    I agree that there are some better ways that the money could have been spent. The fact that the money will be spread out all over the province not only dilutes its effect it also makes it very difficult to measure the results.

    Tourism does have its place however. As you mention, foreigners being exposed to NB and the fact that we get to use tourism facilities. Beyond that, we expose tourists to NB products. For example, when somebody travels here from Ontario, they might get exposed to Pumphouse beer. When they return home, they are more likely to pick up a case of Pumphouse at the beer store back in Ontario.

    In addition to that, if there are enough minimum wage jobs, then the market for labour becomes tighter and employers will have to start competing for jobs (even if they are seasonal). This pushes the floor up for everybody at the low end of the pay scale. Now I admit that this does little to increase income tax, other taxes such as HST and other consumption taxes will increase. Considering that HST and gas tax combined equal the amount brought in by income tax, this is nothing to sneeze at (although I’ll admit that tourism would only prop this up a very tiny amount).

    In addition to being able to enjoy tourist facilities, tourism helps us support other amenities that are used by individuals and businesses. Increased numbers of restaurants and hotels partially supported by tourism increase our attrativeness to both business and propective citizens.

    I would argue that Las Vegas which is most definitely built on tourism (although I suspect that it has diversified quite a bit) and to a lesser extent the state of Florida, are economies that are doing quite well.