Local government and economic development

I just got a flier stuffed in my door from a prospective Councillor in my Ward. I won’t mention the person’s name because I don’t want to be personal. However, I was once again vividly reminded of how economic development just isn’t on the radar for so many politicians. They give it lip service (some of them) but this person didn’t even do that. A four page brochrure with a list of things he/she wants to get done and not one even touches on economic development with the possible exception of planning for the ‘effects of global warming’. A city councillor that doesn’t even mention anything related to economic development but he/she wants us to get prepared for global warming effects.

Look folks. Take my advice. If anyone comes to your door soliciting your vote, pin them down on what exactly they want to do in the area of economic development. Ask them what they believe the role of city hall is in this area. Ask them how much of the budget should be dedicated to it. Ask them what specific industries they would like to see fostered in the community.

If they can’t answer any of these questions with a semblance of cognition (still reeling from the assessment that this blog is written at a Grade 3 level), then find someone else.

This stuff is way to important. If councillors want to get ready for the effects of global warming, they should move to the north pole. I want city councillors that want to deal with the effects of living in the embers of a 1990s economic development policy.

This entry was posted in Uncategorized. Bookmark the permalink.

0 Responses to Local government and economic development

  1. mikel says:

    That’s true of any issue. It would be very interesting to see what a city councillor plans to implement for climate change. First, no single councillor can do ANYTHING, unless they are in the majority. Second, that usually amounts to little more than ‘putting low energy lights’ into city buildings.

    That’s partly because in Canada there is very little that municipal governments can do-or will do. So no matter what the issue, always ‘pin them down’ to EXACTLY what they are going to do. Partly because of the reality of municipal politics-just ask “and what will you do if the majority of councillors vote against you?” You usually get a mumble about “….will work with…to accomplish X”.

    And people wonder why municipal elections have such low turnout.

  2. Anonymous says:

    Hi David,
    I have a couple of issues I am hoping you can comment on.
    The first one is potash. There have been a lot of news lately about the performance of Potash Corp., I am assuming that their performance is tracking the increase in commodity prices. My question relates to the new mine they are establishing near Sussex; I understand will be one of the largest in the world. Is potash New Brunswick’s oil? A non-renewable resource that we need to maximize the benefits we derive from it wile it is still around? What do you know about the royalties to flow back to provincial accounts? Are the negotiated royalty rates tracking the commodity’s market price? My fear is that we are giving the stuff away for the sake of the capital investments and the few jobs that will be generated.

    The second issue is electricity and NB Power. I am having a hard time reconciling the projected profits at NB Power with the loss of many of their large industrial customers in the forest industry. The only thing I can think of is that they are selling excess electricity on the open market at a higher rate than large industry was paying. The other thing I can think of is that this is actually good timing for NB Power. Now that Lepreau is shut down for a couple of years, it was anticipated that we would need to buy more expensive power on the open market to make up the loss. The loss of large industrial customers has probably freed up enough generation capacity to offset Lepreau’s downtime.

    So this is not really a comment, and certainly not related to your post, but I would like to get your take on these questions. Maybe you could post the questions and see what others think.

  3. Anonymous says:

    PCS has very peculiar agreements with the provincial gov in Saskatchewan. The gov has a “golden share” where they get the majority of the profits after potash reaches a specified “set point”. I do not kow what that set point is or if they have reached it.

    Reviewing the PCS website it seems this new mine in NB will be an average size.

    Agreements have been signed for the 2008-2009 winter months with Hydro Quebec to make up Lepreau’s shortfall during NB’s winter electricity peak demand.

  4. mikel says:

    “New Brunswick Premier Shawn Graham said the company will get a three-year royalty holiday, meaning it won’t have to pay the province anything for the potash it mines and it will get a one-point reduction in the royalty rate for the next five years.

    Graham said the government will lose $30 million, but added that the province will end up collecting $330 million in royalties over the life of the mine.

    The project still requires regulatory approval, the firm said.

    Shares of Potash eased one per cent, dropping 88 cents to finish at $87.40 on the TSX.”

    Of course those royalties are highly speculative, as they are based on prices WAY in advance. Potash is different than oil, ironically it is a prime component of fertilizers, a ‘value added’ product which needs to be imported. As well, in brazil it is used as a soil stabilizer for newly burned jungles that are converted to bio fuels and cattle.

    Something people should keep in mind is that royalties represent a pretty small share of NB revenue, except timber, which is heavily subsidized. I’ve had a beef with that since the budget came out and the government proceeded to lump various commodities together (such as natural gas) so that it couldn’t be known just how much royalty comes from that specific resource. They may have changed that since last year, I havent’ checked.

    But indeed that is exactly the way with the NB government, whatever provides any jobs at all (well, RESOURCE jobs) usually gets considerable government help. You can also look at the Bennett example in Belledune, I haven’t heard whether they ever found a customer for their soil treatment plant but then I haven’t checked.

    Saskatchewan is a very interesting comparison for New Brunswick. The post above talks about how tied in they are with the government, which essentially makes the company a crown corporation-sort of. I haven’t had time but I was always interested in checking out comparisons with their oil refinery, which is owned by the government. That means that while the government doesn’t control it, it still gets considerable benefit, like that the profit stays in the province, and the company can be ‘controlled’ in a way that Irving cannot.

    Outside the province though the company operates like any other company. For example, again, watch ‘forbidden forest’ where UPM essentially said that what they can get away with in New Brunswick, the Norwegian government would never let them get away with.

    The feelings of BOTH of these companies are quite understandable, if not actually ‘ethical’. The feeling is that it is the job of the NB elected representatives to look out for New Brunswickers best interests- NOT theirs. And they have a point.

  5. David Campbell says:

    It’s my understanding that the royalties off the potash will be limited. I have to apologize as I haven’t studied this in detail. Some good comments.

    As for your energy comment, my opinion on this is straight forward. We need to look at ways to leverage energy into a consistent and good revenue stream for government. Think of Manitoba’s recent $800 million deal with Wisconsin. Sell it to the US and make a profit that is a revenue stream for government. My preferred option, however; is to look at ways to structure energy production and policy to the advantage of local manufacturers and high tech industries. If we could find a way to be among the lower cost producers of electricity, that would be an important competitive advantage and would also generate a revenue stream for government – in the form of corporate and personal income tax off the economic development.

  6. Anonymous says:

    From the PCS annual report, it appears that NB produces 10% of their annual production of potash. I consider 10% to not be an insignificant amount considering they are the largest produces in the world. Also, it has to be cheaper to ship the stuff to South America/India/Europe from Sussex than from Saskatoon. I wonder if this worked in to anyone’s calculations.
    I guess that is the issue with NB Power, is its role to stand on its own and maximize it profits by finding customers wherever it can, or does it hold back and provide subsidized power as an economic development tool for the province. I wonder if instead of using NB Power, incentives were used to enable large industrial customers to produce their own electricity from biomass/co-gen, whatever, this would allow NB power to be more aggressive in maximizing their profits, which in turn would pay for the incentives for LIC to produce their own energy.

  7. mikel says:

    There have always been incentives for companies to produce their own power, in fact the mines in Bathurst did exactly that, til the mines closed, and NB Power bought the power plants, essentially because nobody else could, and its not known what they paid for it (again, this stuff would be well known with a functioning media). Nobody is stopping companies from doing that, and the ‘incentive’ would have been that for decades companies knew what the power market was looking like and have increasingly been building their own power. For example, you can bet your *** that the new oil refinery will largely be run on natural gas. In fact I guarantee that any new technology that has been brought into an irving company in the last ten years has been aimed at using natural gas.

    Somebody here seems to know PCS quite well and I’d be interested to know how many operations they have. 10% is fairly high, and as usual the question was always ‘IF the potash is in the ground and the company owns its own dock, why exactly does it need ANY financial incentive when it already has the market based ones?”

    This is always the problem with backroom deals and where I agree with NBT. In the case of the natural gas terminal, if Irving said “we might go elsewhere” then the first thing the government should have been doing (from an ED point of view) would be to call up the companies that were having to have referenda all up and down the Maine coast and in Quebec (which all failed) to try to get LNG terminals. It also would have had the added benefit that the Passamaquoddy Bay would have been left alone.

    In fact, you can really see the length of IRving rule since the government is so keen on handouts, then it can be wondered why, with St. John being touted as an ‘energy city’, the company in Passamoquoddy wasn’t offered use of the city as well. The costs are FAR less and the regulatory hurdles are non existent compared to the US process and with this governments ‘aggressive corporate welfare’ the company could have had a MUCH easier time.

    That would have solved several problems, the companies don’t have the ‘nasty public’ to deal with, but at the very least from an ED point of view, it would have sparked a ‘bidding war’. Simply being WILLING to host a natural gas terminal is a HUGE plus, but once again ‘they’ managed to turn it into a loss for both the public and ED efforts.

    For energy, again,that’s a political problem. Building cheap energy locally or for export is a BIG decision, and one which YOU are not part of. The only way to change that is through political means, and hopefully before its too late. As I’ve said, they’ve already picked their direction with energy export and are running with it. You can go ask Charles Leblanc how difficult it is to change the government’s mind even on stupid small decisions let alone big ones.

    And history is something to be learned from. THe education minister has made policy which is VERY unpopular, and you’ve seen the protest. We’ll see whether that even has the moderate effect of having them ‘wait a year’. But that’s with considerable lobbying, with high profile liberals leaving the party, letters, protests, etc.

    To compare, when has energy policy even ranked an article in the paper? Has david ever even written one of his articles on it? So you can see the ‘likelihood’ of that focus changing.