Does the federal election matter?

From the perspective of economic development? A colleague of mine sent me an email suggesting that it doesn’t matter one way or the other who wins the federal election. He further suggested that the Feds role in economic development in New Brunswick was marginal – at best.

It’s hard to argue with him at least up until a point. Almost all of the big federal programs to fund and leverage private sector business investment are barely active in New Brunswick. Go down the list: Sustainable Technologies fund, biofuels fund, Technology Partnerships Canada, the Auto deal with Ontario, etc. Even the national trade gateways strategy (billions) will only lead to more roads paved in New Brunswick.

Then there is the issue of research and development. The feds spend dead last in New Brunswick per capita on R&D – by a wide margin when compared to most provinces.

There is ACOA but some have questioned its direct impact on ED in New Brunswick.

There are no more joint initiatives (that I know of) between the feds/prov directly leading to leveraging private sector business investment.

But maybe the point is that we need MPs that will try and change this? Maybe we need MPs to put the national government to the test and try and figure out why NB is the least supported province in Canada for ED funding (I don’t have a numeric figure here but I am sure of this).

If I was advicing any prospective candidate (even Green or NDP) I would ask them to take this theme to Ottawa. To push hard on these issues. If somewhere down the road, we actually see Stephen Harper or Stephane Dion in New Brunswick announcing funding for a $1 billion private sector manufacturing plant or software development studio we would have achieved success.

I know that a contingent of you cringe when I talk about this – the gravy train. You want businesses to stand on their own. You want some mythical place that doesn’t exist. Alberta served up some of the most aggressive and costly tax/royalty breaks to stimulate oilsands development. In addition, Alberta has taken advantage of the biofuels gravy from the Feds and its among the biggest users of the agricultural subsidies. I know, I know. Farmers can’t control the weather. They can’t control world grain prices and they are faced with other country subsidies.

(I guess the New Brunswick manufacturer has control over the price of the Canadian dollar, isn’t facing billions in incentive program competition and directly controls trade policy but that’s another blog isn’t it?)

Anyway, I can’t believe that even the most militant member of the CTF would oppose NB getting at least its share of the federal gravy train. Sure, they can adamantly oppose gravy but shouldn’t they feel aggrieved that NB doesn’t get its share? Or maybe the fact that NB is cut out is considered progress.

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0 Responses to Does the federal election matter?

  1. mikel says:

    On ED I think this blog has pretty much proven the case that its irrelevant which party wins. There COULD be an argument that with more centralized power-like a majority government, there is more ability for a PM to deviate from 'normal politics' (meaning in a minority government 'fringe' elements will be ignored for those that can help bring in a majority government).

    However, the liberal majority of the nineties-and, well, the entire history of New Brunswick pretty much proves that that wouldn't be the case. You can't prove the future based on the past, but you can often predict it pretty accurately.

    But again it comes down to where that R&D is to go. I still haven't seen a list of research organizations in NB that have been shafted. Why you'd think the feds would suddenly say "hey, there isn't enough R&D in New Brunswick-let's set up some organizations and companies and set up there". You can't blame the feds if there is simply no place asking for federal money and not getting it.

    And to be fair, first, ARE there any Green candidates in New Brunswick? And certainly Yvon Godin talks ED in Ottawa, and has gotten some results, although keep in mind, the NDP is tailored to WORKERS, NOT employers. So the argument that "we need to throw bigger money at corporations so that they will hire some more people" isn't exactly how the NDP operates (except the environmental file).

    I'd suggest something else-that people start asking federal candidates what THEY individually are doing to help set up technology or other R&D vehicles for investment. And I don't mean 'the party', I mean individually. One main problem is that candidates always stress what their party has done, and perhaps their infrastructure works, but seldom their ED. You have a column in the paper now so its time to stop pointing at other people to 'ask the tough questions'. Start emailing or phoning candidates and ASK them what they are doing on the ED file, perhaps a 'report card' type of thing.

    There is less and less difference between the two main parties, so it's not just the ED file that matters. The main issue is the blog below-whether its a minority or majority government. The fact that the majority of canadians didn't want to see an election and that the majority of canadians are quite happy with a minority government is proof enough of how canadians feel about proportional representation without the filters.

  2. nbt says:

    You raise a great point, David. And the most recent Strategic Counsel poll proves that voters believe that not only does their vote matter in this election, they believe there are very distinct choices.

    I have to agree, since it is obvious that the Harper Tories want to move the country ahead much differently [economically] then the Dion Liberals.

    However, (as mikel knows very well in his dealings with MMP and PR) I’ll believe it when I see voter turnout, which most likely will be barely over 50 per cent. Although, that still doesn’t mean there aren’t stark differences in policy amongst the two possible governing parties.

    But to be honest, after that whole spiel, I’m still not sure what that means for ED agents like yourself who make a living off of the government? You raise an interesting question.

  3. mikel says:

    Polls can't actually 'prove' anything. Last federal election saw an INCREASE in voter turnout.

    The election comes down to 'men against women', but women tend to not be as organized, which has helped the conservatives. However, this means little about economic development in New Brunswick. Dion wants to change the economy with his carbon tax, and has signalled that this means more emphasis on R&D on alternative energy, but again, there are few places in NB for any money to go. I did find one company that only does contracts on alternative energy projects in NB, but one company hardly makes an industry.

    Federal money follows provincial initiatives, when there are no initiatives, there is no place for that money to go. According to a liberal website, Harper has cut spending at regional ED organizations by 39 million. And that could go much further. As for the effect this has on the economy it has a CLEAR effect-just go to any government website that lists government loans to companies. WHen that money is cut, those jobs are lost. It may not be as huge as a pulp mill closing, but it means whether there is ANY companies besides Irving ones existing as medium or small sized ones.

    As we've seen, that doesn't mean 'less money to corporate welfare', it simply means fewer government organizations so that the PM can pick and choose more easily.

    I never saw the poll above, only the early september one, but I seriously doubt that "voters believe their votes matter". That may be true in the 25 hotly contested ridings, but in all the others its a foregone conclusion (it's true many people may simply not even be aware of how votes are counted and may not KNOW that their riding has a candidate who routinely wins by tens of thousands of votes).
    Not only that, there is the question as to whether voters vote the way they actually want. If you are 'reform' then you HAVE to vote Harper, even though the guy is now pretty much the opposite of everything the Reform party stood for.

    If you are 'left' then like the US, you are going to simply vote against Harper, not necessarily for who shares your vision of canada. A few of those BC ridings may have some NDP smatterings of support, but even that simply means a voter may be giving more support to a Harper majority.

    Neither party has paid any attention to the problems in resource economies. Even under the liberal plan NB comes out down the middle with major reliance on hydro and nuclear, and increasing reliance on natural gas.

    We had a debate at another blog awhile ago about how the carbon tax will affect NBers. A big chunk of NBers are still heating with oil-and if they STICK with oil then they better hope they have the income tax level to get that money back. That may make it more likely that natural gas becomes available, but if its not, those people need to look seriously at their efficiency levels. Provincially it may mean some attention will be paid to Coleson Cove, but again, Irving has a company that gets the waste product for its synthetic wallboard, so they certainly aren't going to talk about that in their papers.

    For ED that COULD mean opportunities for alternative energy sources IF somebody gets organized. It's too bad NB never got on the efficiency train years ago-that helped Maine get the manufacturing of two european high efficiency wood stove manufacturers.

    But the carbon tax means 'change' and NB has an above average aged population, and that rarely means supporting trying something new.

  4. Gawain says:

    The belief that political parties matter rests largely on the spurious argument that governments matter. In the larger equation, government is a small, secondary or even tertiary factor behind many others.

    Mikel correctly points out that there are no R&D organizations in NB that have been shortchanged. Digging deeper into that logic, who should the feds be supporting exactly? And your constant refrain, David, that the feds should be piling cash into the province as a measure of "fairness" is nonsense. Frankly, if the business cases really were here, there would be investors here.

    There are other reasons why NB does not receive federal monies, and why there is underinvestment generally, and why there in little research, and why companies who reach a critical mass sell out rather than aggressively grow (Neil and Gunter, Whitehill, Spielo, et. al.).

    The uncomfortable fact is that the success stories in NB primarily are Irving and McCain. However, even those large firms (by NB standards) are privately — and family — owned, and one suspects that even they should have expanded further or should have been more dominant by now. Smaller firms are inordinately satisfied to operate within the 750K NB market, take too few chances, are very slow to integrate themselves into the larger regional or global supply chain, possess inexperienced salespeople, have second-class management skills (financial controls, planning, organization, leadership), tend to network among their known circles, and believe the KIRA hype about "best", "fastest growing", etc.

    We're too slow, too inward looking, too happy with limited success.

  5. Vincerolly says:

    Right on, Gawain. I was also disappointed when Neil and Gunter and other NB rising stars relinquised their ownership to cash in just when they were at a point when they could have reached world class status.

    The NB Business Council wants to support headquarters in NB but what happens when too few want to compete at that level? Sabian strikes me as a firm willing to compete globally, but why do I fear that other top NB firms would leave the province for more favourable conditions elsewhere? Major Drilling? Although they are listed as a NB firm, they have only a small contingent of personnel here and do most of their real work outside Canada. Barrett? Ganong? Why would I not be surprised to read in a press release tomorrow that these firms and others (two more that are family owned BTW), opened "branch" operations outside NB?

    And what about the vaunted elearning sector? What have they done recently or even the last 5 years to warrant additional R&D or ED funding, apart from vaccuuming tax dollars for "marketing". After so much navel gazing, so little sales. So much for this cluster, even with UNB support.

    How about the animation "sector"? Apart from FatKat, who have done well walking the profitability tightrope, not a single firm has stepped up in support. Nova Scotia or even PEI are farther ahead in this sector. And you would have the FEDS pump money into the sector anyway? Who would receive it exactly??

  6. Anonymous says:

    You are too negative. Waht we need are more positive supportive people to bolster our companies. We dont need Negative Nellies spooking investors with talk about how we arent competitive. We are a small province with only 2% of the total population of Canada and that makes us more vulnerable to economic swings.

  7. mikel says:

    What investors? Investors don’t read blogs to decide where to invest. As mentioned before, when the Beausejour cancer research chair talked about his research they suddenly got tons of private investment.

    The reality is that NB seems to be not capitalist enough OR not communist enough. Family dominance of economies is an 18th century phenomenon. Irving and McCains ARE dominant-but unlike public corporations there is simply no PLACE for people to invest. And they have become so dominant that you ARE investing, by subsidies and handing over resources, but unlike with public companies, New Brunswickers don’t benefit from that ownership.

    As any true capitalist knows, government needs to be VERY active in regulating the market otherwise its well known that it will become centralized-that couldn’t be more obvious now.

    Like I said, its no coincidence that NB ranks last in economic factors AND government ones. There is very little legislation that helps companies actually grow-it helps big companies suck out resources, but it offers few avenues for growth, which is what EVERY company looks for.

    That’s a far cry from saying that ‘government is irrelevant’-far from it. We’ve seen Nova Scotia’s government VERY proactive, and Danny Williams stood up to oil companies to get a better deal for the province. But a politician is no stronger than the base of support. Guys blogging or criticizing from the sidelines simply don’t cut it when corporations have real lobbyists who show up at the Premiers office and state terms.

    That’s not being a ‘negative nelly’, NOBODY should stand up and blithely support ANYBODY for the bad reason that ‘it may scare investors’ (again, WHAT investors?)

    That has nothing to do with the federal government except to ask what the various candidates claim they will do about it. The fact that provinces can’t even get MP’s to stand together for their region or province because of party loyalties says it all.

    IF there is no place for the feds to invest, the candidates should be at the front lines setting up and funding places where investment is possible. Much of that goes through universities, but when’s the last time you’ve heard a provincial MP make ANY comment on post secondary education?

  8. richard says:

    ” why companies who reach a critical mass sell out rather than aggressively grow (Neil and Gunter, Whitehill, Spielo, et. al.).”

    Is there a quantitative difference between NB and, say, ON in that regard? I would say that this is a pan-Canadian problem, and that too few of our companies take the risk of going global when it is so much easier to sell to a European or US outfit when they come calling.

    Canadians are more risk averse than Americans, certainly. Furthermore, we are too unwilling to forget the past when judging the merits of a business proposal. Americans can fail again and again, but if they get back on their feet and come up with a winning business venture, all is forgiven. In Canada, failure means you will rarely get a break from bankers or investors again.

    Until we change the way we do things here, we will always be stuck with the low-grade jobs.

  9. Gawain says:

    Richard, your last point about “rarely getting a break from bankers or investors again” is a particularly important one that bears closer examination.

    Harvard’s Charles Sabel in his groundbreaking research on trust has highlighted how small towns (in his terms, that means fewer than 150,000 population) can possess an inherent competitive advantage in part because, within the restricted population, elites have the opportunity to develop extended professional/personal relationships over an extended period of time, often from high school, through university. But this competitive advantage is construed to risk-taking actors only, since knowing all elites within a restricted population also means that business failures are also widely known and quickly. If failures are less tolerated because of a risk-averse elite population, that failure can be a death sentence, at least in the short term.

    After living in New York for an extended period, I can say categorically that this simply is not the American experience. In New Brunswick, we too often treat failed business people as professional pariahs even as MORAL failures.

    It is particularly interesting to ponder the implications of this.

  10. David Campbell says:

    To shamelessly quote Obama, that stuff is above my pay grade. Morality, the value of failure, inbred risk aversion – all valid concepts in the context of chronic economic underperformance. I have always wondered the collective impact of chronic economic underperformance. My grandmother told her sons in the 1940s they would have leave NB to be successful. My mother shrugged her shoulders as three of her four kids left and I and left wondering about my kids. It is likely (statistically speaking) that two out of the three will leave for work. When will the cycle be broken? Who knows.

  11. richard says:

    "When will the cycle be broken?"

    1) When fossil-based fuels price themselves out of most markets; or
    2) When Peticodiac mud becomes a scarce, much-sought-after resource.

    Seriously, tho, several comments have referred to R&D spending. NB does have natural resources that are valued in global markets, but we continue to refuse to create value-added products from these resources. Instead, like a bereft, third-world nation, we take the crumbs. Well-designed R&D can start changing that, but its obvious that the public sector and not the private sector will have to lead the way; the private sector has shown almost zero interest in this.

    The real difference between NB and more prosperous regions is that they have opportunity for business (thru energy, population, climate, etc) and we do not. Back in the days of wooden ships and iron men, we had opportunity from the fishery, real free trade with New England, and transportation based on ocean shipping. Except for the pulp and paper industry and a few mines, there has been little here in the way of opportunity since then. Its my belief we need to use R&D to create opportunity.

    Gawain, I agree with you, but think this is a Canadian problem, not just an NB issue. Its exacerbated here to be sure, but that is largely a result of poor economic growth, resulting in an efflux of the ambitious from NB. I don't think our problems are culturally-rooted, they are opportunity-rooted.

  12. mikel says:

    The same opportunities exist in NB that exist anywhere. Some university flunk out can still take an idea and turn it into a Research in Motion.

    It is very true about Canada though, and I often tell ontarians when they talk about the economic situation and NAFTA that, hey, the maritimes went through it in the 1800’s and just look at it now!

    I’ve mentioned before that there hasn’t been a new manufacturer setting up here in Waterloo in the decade that I’ve been here. There have been two manufacturing closures at close to the level of NB pulp mills, and the latest news is that John Deere is closing its last manufacturing facility.

    Waterloo has benefitted because it has two universities here, which got lucky and generated Research in Motion. And of course Kitchener is one of the hubs where your insurance payments end up. But without RIM the city would be a far different place, you can just travel down to London to see what a war zone their downtown is-if you thought St. John was bad, downtown London would scare the hell out of you. And of course the only reason there is any wealth there at all is that the government builds its war machines there.

    And of course this is what the anti globalization people have been saying for two decades. Like they say, free trade is an interesting idea, maybe we should try it.

    But as for NB, again, the cancer research centre in Moncton got more than the amount of private investment than they were looking for, and I’ve had cancer researchers look at their research and its not anything to get excited about. If they can do that, there’s no reason other sectors can’t as well. We know there is 6 billion in pension funds that never see New Brunswick, and as an economics teacher used to say “there’s big money in Fredericton”.

  13. richard says:

    “The same opportunities exist in NB that exist anywhere”

    They most certainly do not. Oil revenue, fo rexample, in Alberta, Sask and Nfld creates jobs; that’s opportunity for anyone who wants to move there. Ontario has a massive population base that creates demand for services that do not exist in NB; ON has opportunity where NB does not.

    There is absolutely less opportunity in NB than almost anywhere’s else in the country.

    “downtown London would scare the hell out of you”

    I lived in London for over a decade; it has far more opportunity, more growth, than SJ. True, its ugly enough, but perhaps SJ’s fog just does a better job of hiding SJ’s rot.