Living in the twilight zone

Have you ever stood in a room full of people (literally or figuratively) where everyone else seems to know exactly what is going on and you have no clue?

This is how I feel with this new Benefits Blueprint unveilled yesterday as a tool to manage the boom/bust cycle of large capital projects. It says that Saint John (with some spill over to the rest of the province) will see $19 billion in new capital investments (mostly energy) over the next ten years and something like $44 billion in spending, 33,000 jobs, and $14.2 billion in tax revenue over 10 years.

The Benefits Blueprint is supposed to be the plan to manage this and ensure there is no boom and bust.

Most, if not all the coverage I have read on this, doesn’t mention the ‘bust’ part.

If you look at the report published yesterday (actually the summary, I can’t get my hands on the full report), there will be a spike in jobs up to 33,000 direct, indirect and induced by 2012 but by 2015 that will have dropped down to 4,000 (2,000 direct and 2000 indirect and induced).

If that happens, it will make the Saint John shipyard closure look like a convenience store closure.

All the blueprint calls for is massive investments to manage the ‘boom’ and nothing to manage the ‘bust’.

Am I wrong about this? Please explain it to me.

Take the potash expansion. Almost $2 billion to expand it and then something like 50 new jobs – total. The same with the LNG plant. The refinery and Lepreau II will each have a few hundred, high paying jobs but…..

The government says we need 100,000 new high paying jobs by 2026. This whole energy hub – by its own forecasts – will be 2,000 + 2,000.

So, until someone explains what I am missing here, I will put forward my own recommendations to manage the ‘boom’ and the ‘bust’ from adding 33,000 jobs and then dropping down to 4,000. Something, by the way, I have never seen in Canada. There have been massive growth stories (Fort McMurray) but they keep growing. They don’t just drop 29,000 jobs. This is more like a gold rush and we all know what happens to gold rush towns once the gold is gone.

Manage the ‘boom’.

-Temporary housing – like in oil Alberta – barracks. Building thousands of new apartments and family units will just screw up the long term housing market in SJ.

-Bus people in from other parts of southern NB

-Encourage work to be done elsewhere if at all possible

-Delay governmented funded projects if warranted

-Do not build up health and other infrastructure based on the 33k but on the 4k remaining.

Managing the ‘bust’

-Saint John needs to keep focused on its other key economic sectors as well. Its nascent IT sector, its 4,000 person call centre/back office sector, etc. If these industries decline (as a result or not of the energy boom), it will bring the whole area down.

-We need to rethink the energy hub in the context of not just generation but of using that energy to spur development here. Manufacturing, forestry, data centres, biofuels, etc. all require large amounts of energy. If, province wide, we added 20,000 good paying jobs because of cheap energy from the energy hub, that would be far more important than just the 4,000.

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0 Responses to Living in the twilight zone

  1. Anonymous says:

    I share your anxiety, David. For me this all boils down to one thing. Irving self enrichment. Anytime I see a picture in an IRVING newspaper of the IRVING manager of business development fraternising with the premier of the province I can see where the next ten years of my taxes will be going. Its funny, isnt it, that this report was complied for us by an IRVING employed consultancy firm with two thirds of it paid for by some of MY taxes and all to enrich and directly benefit the IRVINGS.
    Sorry if this sounds like a familiar rant but it really pees me off when I see this stuff going on like we are supposed to pat Irving on the back as though they are doing us a favor. They arent. As you say, the job numbers are a lie and the exit strategy for Saint John leaves it looking like a ghost town with no saving graces or anything to cling on to for the future. Irving of course will be long gone without a look back at what they have done – as if they ever have.
    The ironic part of this is that it seems like they require $1.4 billion of my taxes upfront to make this happen.
    Is it time to leave NB to the Irvings completely? IS it time to save ourselves by getting out now? Or is it wiser to hang in there and ride the ‘boom’ by doing exactly what Irving is doing while making plans to take whatever we can get before we move out of NB for good?

  2. nbt says:

    I like the idea of busing ppl in. Maybe this will change the work patterns (and movement) of ppl in New Brunswick.

    In other words, encouraging more ppl to commute from weaker job markets, like say Bathurst or Miramichi, to urban centres, like Moncton or Saint John, is a good thing since the urban economy is on the rise.

    Plus, in the case of this project, it prevents a hit to the local housing market in Saint John upon completion.

  3. mikel says:

    Yes, its funny how that works. Interesting that they are already predicting the massive growth in jobs which will be attributed to the new oil refinery, all before the environmental impact assessment has even been STARTED. Hmmmm, there’s a bit of a clue. But of course just handing a massively polluting and known killer of people and workers a license to operate when no other place in North America will isn’t the same as a ‘subsidy’.

  4. nbt says:

    Oh btw, you know how I love Enterprise New Brunswick for continuing with the legacy of regional development by grabbing money from government whenever they can, not to mention, telling us poor suckers what is up. lol

    Though I’ll give ’em credit as Benefits Blueprint sounds jazzy, and in some crazy way, it almost sounds like it will work this time. Not!

  5. Anonymous says:

    An excellent post David.

    If this were a mega project headed by an out of province firm, we’d be attaching trailing benefit requirements to the projects. In other words, we’d ask the developer for a proposal that illustrates how the long term benefits/spin off to our community will be maximized. This is partially how the aerospace sector got going in Quebec (along with billions of federal dollars).

    For example, for the Lepreau project, the Province is keeping AECL honest by talking to French and US competitors. This encourages AECL to develop and use local suppliers, establish an engineering office and build capability that we can export for the next nuclear project.

    We should be doing the same for the refinery. The project leaders (Irving and BP) should be pitching us on what they will be doing to develop local suppliers, develop the workforce and develop long term trailing opportunities. BP has lots of projects around the world, let’s see some commitment to get NB suppliers involved beyond the refinery project. Otherwise, the short term gain may very not be worth the long term pain.

  6. richard says:

    “known killer of people “

    Well, if its a ‘known’ killer, what’s the issue? Air pollution is a known killer in southern ON, yet thousands move into that region every year. Obviously they think the risk of disease is relatively low and the opportunities for personal income growth are relatively high. Perhaps you know someone who has made this choice, huh?

    NB needs high paying jobs and I see no data to suggest that the threat to human health from these developments are particularly high; certainly not compared to working in a sawmill, or as a lumberjack. And that is especially the case if the energy produced can be used to attract industries in the data centre or IT sectors.

  7. mikel says:

    A lumberjack? Hello, welcome to the 21st century. If you can find the data on deaths of lumberjacks each year then I think you are stuck in a time warp.

    However, I wasn’t starting a debate, oil refineries clearly contribute to deaths by air pollution, there is no doubt about that. The point was simply that there is a reason why no place in North America has seen a new refinery built in over twenty years.

    The REASONS for that is quite obvious, and the point was that it is very clearly a subsidy, and you can add all the reasons that other posters have mentioned above. Letting a company, in fact PAYING a company to do something that no other government in their right mind would do is even more of a subsidy than some millions handed out to some small companies.

    As for the high paying jobs, we’ve had this discussion before. Nova Scotia has been landing THOUSANDS of high paying jobs, none of which involve toxic polluting chemicals. They are all research and backoffice jobs in financial services.

    And as the labour market tightens, workers get more power. And if you think any knowledge industry worker in their right mind would want to work in a city with TWO refineries and a pulp mill, then that’s wishful thinking.

    So in the end its far more likely to COST jobs, opportunities and industries. It quite literally becomes a ‘zone of sacrifice’ where the only people who would work there are those who have to, or those who make those decisions above where they may ‘think’ that polluting industries aren’t doing them any damage, but its ‘worth it’ to make a living.

    It’s fine to think that way, but the only reason people move to southern ontario is because of JOBS. Simple as that. People would be just as happy if there were a functioning public transit system so that people WEREN”T dying from the air pollution.