Another Duncan Commission

Someone commented on my post this week recommending a “McKenna Plan” saying that was the Francis McGuire plan. Nope.

I am talking about a Fed/Prov initiative with joint responsibility. Maybe even some kind of commission that would recommend significant changes.

The Feds hold the vast majority of discretionary spending dollars in this country. If you look at what spending is essentially fixed – health care, education, the government bureacracy, debt servicing, it makes up something like 90% of provincial spending each year. In other words, it would take deep cuts and structural changes to make any large scale new funding initiatives. For the Province of New Brunwick to initiate a five year $3 billion plan to do something would be almost impossible.

The feds on the other hand have less than 60% of their spending is fixed. The rest is short term programs and transfers that change with political whim.

Therefore, if we were talking about something large scale, we would almost require the Feds to be in on it.

But I think the Feds, like many provincial government types, think that the Maritimes is heading towards more decline and beyond the bare minimum doesn’t see itself involved in any major new regional development effort. Many of them (at least the politicians as quoted in the press) would rather put federal dollars towards increasing the migration from the poor Maritimes to the areas that need workers such as Fort McMurray. The idea of putting more federal dollars against trying to fix the structural problems won’t get much support.

But that doesn’t stop me putting it out there.

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0 Responses to Another Duncan Commission

  1. richard says:

    I'm afraid that, given the current ideological outlook of the feds, a commission would simply be an opportunity to gut equalization.

    Yes, a few dollars would be thrown at 'infrastructure' in order to create some construction jobs, and perhaps they will send down Preston to give us a stern talking to and maybe spank a few bums (Pressie is a closet bum-spanker, I'm sure). Otherwise, nothing of value would be done during the equalization phase-out. The Atlantic Gateway BS is going to be the vehicle that provide rationale for spending the infrastructure dollars. Once that's done , the skilled trades will be 'disincentivized' from remaining here.

    The provincial governments in the Maritimes are divided against one another, as are the cities. Everyone is scrambling for the crumbs. There are still opportunities, however; as I've said before, NB needs an R&D strategy based on value-added-products from its natural resources. I would suggest that Graham put together a realistic case for R&D enhancement of our universities aimed at this, then go to Harper for the money. He could even try to tie into the Atlantic Gateway, or marry it with energy developments, if he wants.

    I'd rather see a few approaches like this than a 'grand plan' from a commission.

  2. Anonymous says:

    When I lived in NB, I used to say this to everyone who I thought it mattered: if I were working for the federal government, I would NOT spend a cent in NB if the province didn’t change its way of doing things. Putting money in a province where rural politics determines where investments are made is a waste of resources. Just look at the productivity indicators and you will get an idea of where the bang for the buck is higher for the Canadian taxpayer.

    And before anybody gets upset: every Canadian wants NB (and Atlantic Canada for that matter) doing well. The better NB (and Atlantic Canada) does, the less money gets transferred from the pockets of taxpayers from jurisdictions that are doing well.

  3. David Campbell says:

    It’s a “jumbled mass of preconceived ideas” (I stole that but am embarrassed to say where).

    If Iraq had Canada’s national policy around natural resource revenue sharing, there would be civil war.

    I think depending on where we sit in the country, we can serve up grievances and show how the federal government is biased towards one area or the other (yes, including Alberta).

    I just don’t think that is very instructive or helpful. We should work within what we can agree on. We can agree, one would think, that the Maritime Provinces has chronically underperformed in the Canadian economy since Confederation. If we started from that point (prima facie), and agreed that changing that as an objective, we might get somewhere.

    But the long standing policy of using the Maritimes as a labour market incubator for fast growing regions of Canada will not lead to any resolution. In 50 years from now, we will be having a slightly different but essentially the same discussion. In my own experience, 20 years goes by fast. Ask Hal Fredericks he will tell you 50 years goes by fast in this business of regional development. As Donald Savoie, who has studied regional development for 200 years in New Brunswick. He will tell you it goes by pretty fast.

    Serious change will require national will – but the leadership must come from New Brunswick.

  4. Anonymous says:

    Absolutely correct. Ottawa is not going turn around our fortunes simply because we are crying. If we could develop a solid strategy and have effective leadership to sell and implement it, we could ask Otttawa for the necessary help to implement it.(BTW, money would be only one component of it; be keep in mind other provinces got help with tax policy, trade policy, education etc so it is far more than money)

    In stead we seem to (politely) take delight in Federal funding announcements for new highways, community halls, and convention centers. This is all well and good, but will do little to turn around an economy that has underperformed for decades.

  5. Anonymous says:

    Mmmm… I see that I touched a nerve…

    “I just don’t think that is very instructive or helpful.” I really hope that my comment was instructive and helpful. My intention was to help the readers of this blog ‘see’ things from the perspective of the federal government and ‘have’ provinces. I stand firm by my opinion that Atlantic Canada needs to change the way it does things before it can hope to get any break from the feds and richer provinces.

    Just to give an example, how do we think people from other jurisdictions feel about ‘No Sunday Shopping’ in the Maritimes? Or about the amount of people quitting jobs to receive EI?

    “We can agree, one would think, that the Maritime Provinces has chronically underperformed in the Canadian economy since Confederation.” I think that is not the right starting point. What Atlantic Canadians need to do is stop blaming the federal government and ask themselves WHY the region has been an underperformer since Confederation. Is it because the world has changed since then but the region has not changed accordingly?

    “The long standing policy of using the Maritimes as a labour market incubator for fast growing regions of Canada will not lead to any resolution.” Well, unfortunately that has been the region’s value proposition for quite a while. The question is, how do we change that?

    “Serious change will require national will – but the leadership must come from New Brunswick.”. I couldn’t agree more. But the issue here is what kind of leadership we are talking about. If it is only about leading the talk, without a serious commitment to make changes in the way things are done, we are going to continue talking about it for the next 50 years – just like you said.

    One last comment: I love New Brunswick and, above all, New Brunswickers. It’s a beautiful province and NBers are truly wonderful people. But if the family has a brother who just doesn’t want to change his lifestyle and you have to keep bailing him out, there is a moment when you might just give up on him – regardless of how much you love him. And I am afraid that’s what may have happened. So the question is: what will it take to convince the family that NB is willing to stand up? To just say that it wants to stop being bailed out by the family will not do it. Unfortunately.

  6. Anonymous says:

    Oh, and before I am misinterpreted, by “changing Atlantic Canada’s lifestyle” I mean to stop being so proud of rural life and 19th-century economic activities.

    When I read in the TJ that the Liberal candidate for the seat vacated by Keith Ashfield is saying that “Monday’s byelection in the provincial riding of New Maryland-Sunbury West is all about elevating rural concerns”, I get a chill in the spine.

    Does anybody still wonder why NB is struggling to get back on its feet?

  7. Anonymous says:

    Suggested reading: Visiting Grandchildren by Donald Savoie.

    It explains how Ottawa exploited Atlantic Canada’s wealth and made policies to facilitate it being tanasferred to middle Canada.

    That helps explain how we got here but the energy needs to focus on restoring the wealth we had pre confederation.

  8. richard says:

    “..”Monday’s byelection in the provincial riding of New Maryland-Sunbury West is all about elevating rural concerns”,..”

    That might not mean anything at all. You could find exactly the same quote (except for the name of the riding) coming from Albertan politicians. Indeed, rural ‘concerns’ are often election issues there.

    You are correct that NB needs a real strategy, but you are wrong that there is anything inherent in the attitudes of NBers, since those attitudes are very similar to those in the rest of the country. I’ve lived in every region of this country and ‘attitudes’ are damn near the same in all of them. The difference is that other regions have opportunity (via oil or large population base) while NB has much less opportunity.

    NB might be struggling, but that has zero to do with ‘attitude’. It all has to do with opportunity or the lack thereof. Oil created opportunity in Alberta and Sask; the people living there did not create that opportunity by having a ‘can-do’ attitude. They simply reaped the rewards of being in the right place at the right time. The same is true of most ON business men and women who prosper simply because they have been living in a region with a large and growing self-sustaining population.

    NB needs some sensible growth strategies; what NB does not need to nonsense about attitudes.

  9. Anonymous says:

    Economic growth in the Maritimes will drop to a snail’s pace next year, while a sharp drop in oil production will cause Newfoundland and Labrador’s economy to shrink in 2009, an independent think-tank warned Monday.

    The Atlantic Provinces Economic Council’s annual outlook for the four provinces said the regional economy is “slowing rapidly” amid a global financial crisis.

    NB needs to demand new dual transfer and health payments immediately in order to maintain the lifestyle, mode de vie, that we, nous, are used to.

  10. nbt says:

    The Feds hold the vast majority of discretionary spending dollars in this country. If you look at what spending is essentially fixed – health care, education, the government bureacracy, debt servicing, it makes up something like 90% of provincial spending each year.

    Part of the problem was overcoming the Chretien/Martin years which downloaded the debt on the provinces. Equalization is up from that era, however, there is a philosopgy in Ottawa that believes the role of a central government is to stay out of the way, not infringe on provincial jurisdiction.

    Anyway, I see that the feds need to pump more of our tax dollars (both equalization and corporate welfare) into another have-not province, so I wouldn’t count on any additional aid to a non-vote rich province like ours.

  11. nbt says:

    Oh, and another thing, things definitely don’t look any brighter for Canada’s center of the universe either after Tuesday as a President Obama would savage what’s left of Ontario’s auto industry as his administration would surely impose protectionist measures against Canada, Mexico, Asia.

    Let’s hope he sticks to his Liberal guns and breaks his word on that one.

  12. mikel says:

    Interesting comments, but first of all, trade is not up to the discretion of the president, the constitution assigns international trade to Congress. What they will do is anybody’s guess.

    Attitudes do matter, but not as much as the anonymous commentor above suggests, but not as little as Richard suggests. Saskatchewan was an early ‘social democrat’ kind of place. As we discussed before, public auto insurance lets individual’s premiums be invested by the provincial government-thats billions, whereas in NB there is hundreds of millions (perhaps more) that leaves the province for good.

    For oil, that’s true but not true. Saskatchewan has oil, but NB has a refinery. In fact it is cheaper to buy it on the open market than to get it out of the ground in Saskatchewan. However, Saskatchewan’s oil refinery is run by a Co-op, NOT a billionaire family intend on controlling entire industries.

    I’ll point it out again that in California an oil company is suing a municipality because they feel they are ‘paying too much’, that ‘too much’ is $30 million a year in ONLY municipal property taxes. Again, in New Brunswick the Irvings pay a grand total of $4 million, 2 of which goes to the province, 2 to the city. And they ALSO sued, claiming their ‘storage’ was really manufacturing, which pays NO property tax whatsoever.

    In Saskatchewan the oil Co-op may not be a commune, but they are certainly less likely to be as mercenary as Irving. And people are far less likely to tirade against public investment there, since they do benefit. We of course don’t know what taxes Irving actually pays, but we do know that NB gets 3% of its provincial budget from corporations, while Saskatchewan is the highest, at 15%. And thats certainly not just oil. The Wheat board had its beginnings there, and say what you want, it is designed to protect farmers, and there certainly isn’t a ‘potato board’ to protect NB farmers, which are now the most corporatized, and have the fewest jobs per population of anywhere in Canada.

    So those are very real differences, even look at the NB government’s avoidance of banning talking on cellphones, something every other province in the atlantic has done.

    It’s true that this doesn’t have to do with ‘attitudes’, except insofar as attitudes are important in setting legislation. NB is quite notorious for its legislation being NOT in the public interest, THAT is the chief difference. And again, the ‘rural’ stuff is just silly, there is almost NO rural investment in NB, like the federal sphere, rural areas like the north get ‘handouts’ while the cities get ‘investment’. But out west there is significant action-when the Premier said they were going to look at the royalty scheme, hundreds of oil workers turned out. In NB, when you have a disenfranchised population with somebody like Irving owning the press then its a FAR different political sphere than elsewhere in the country. That affects attitudes somewhat, but we really don’t know how much-certainly at least attitudes are different enough that unlike most other provinces there is no real NDP presence.

  13. Anonymous says:

    Mikel, I agree with ALMOST everything you said, except with part of your last paragraph (re: investment versus handouts).

    In my opinion, that is the case precisely because unfortunately for NB the value proposition of the rural areas is low in the modern economic scenario. In fact, the low urbanization levels of NB hurt the province in many ways. The list is long, but I will mention just two because I don’t have much time tonight: (1) it puts NB at a disadvantage when it comes to developing larger and more sophisticated local markets (an important prerequisite for innovation), and (2) it unnecessarily drains government resources that could be put for better use in the province (everybody wants access to all kinds of infrastructure and government services in the most remote regions of the province)

    Anonymous 8:38 PM: I would also suggest “A Geography of the Canadian Economy” by Iain Wallace. A hint: the economic geography of the world (and consequently the economic pull) moved away from Atlantic Canada at least a couple of times last century. First, when the car industry established in Detroit. And then further away when Asia started to catch up with the developed world in the 1970s. In order to understand

    “You are wrong that there is anything inherent in the attitudes of NBers, since those attitudes are very similar to those in the rest of the country” That is precisely why low productivity is one of Canada’s most pressing problems. Canada is consistently falling behind the U.S. in terms of productivity and our low urbanization levels is one of the key factors.
    “Oil created opportunity in Alberta and Sask; the people living there did not create that opportunity by having a ‘can-do’ attitude.” Suggested reading: “Against the Grain: An Irreverent View of Alberta” by Catherine Ford. You can get it for less than $10 at Chapters.

    I will stop here, but I hope that my comments have at least given some food for thought.

  14. mikel says:

    It has been resources that gives NB most of its money-those resources are almost ALL rural-from forestry to mines to prospecting.

    There’s a reason why Irvings largest pulp mill is smack in the middle of downtown Saint John-NOT in Juniper.

    Name ONE rural investment model ANYWHERE in NB. I doubt you’ll find one. There is the Caissie example where some ‘dubious’ loans were made to small companies, but thats hardly government investment.

    But look at the cities, they are all ‘booming’. Moncton’s industrial park has more investment than ALL the north. Research and development is EXCLUSIVELY tied to urban areas, even when the research is done in a rural area. Irving almost exclusively sets up in southern urban areas, look at their diaper plant.

    Next you can look at Molson, also in Moncton, Moosehead was bribed to set up in St. John and use enormous amounts of the city water for essentially nothing. Irving got 50 million to close their shipyard, and to open a wallboard factory-also in St. John.

    In rural NB there is almost nothing, maybe a few call centres. Nackawic is sort of an exception that proves a rule. They are close enough to Fredericton that it was making the papers. At the time, Bathurst was losing mines, and Lord basically told them that “thats the market-we can’t do anything about that”. It was Bathurst’s nickel resources that essentially kept the province afloat last year. Add the refinery and we’ve pretty much got a closed case. In Fredericton, there is so much development that the woodlot is being developed.

    Population is a different matter. People seem to have the opinion that as long as enough people are crushed together you can have a viable economy. That’s debateable. Its true there isn’t a big market in NB, but that doesn’t mean anything to companies that primarily export. A tiny country can have resources and a creative population and be just fine. Hell, look at Qatar.

    But the rural divide goes even further. McAdam for years has been lobbying its community forest program, but can’t get the province to even listen, and getting an irving monopoly media to get the story out so that other municipalities can join in the lobby effort is out of the question-Jim Irving flatly said it was a ‘bad idea’.

    So rural areas are actually being prohibited from benefitting from their own resources. The mines around Bathurst are only a ‘provincial benefit’ because there happens to be a provincial government. If ANYBODY can lay a justifiable claim to benefit from those resources (besides first nations), its those who actually LIVE there.

    As for rural living, keep in mind that almost nobody WORKS rurally, they work in urban areas, and NB has lots of them. City borders are also not as rigid as other places. Since amalgamation Hamilton has become huge and most of that land is actually rural, same with Sudbury which has a small population (relatively) yet is now the ‘largest’ urban city in North America.

    But to parrot NBT, just because you set up a ‘fake economy’ with people desperate for work, doesn’t mean its a functional economy. David is right about the prospects of Miramichi. Just because a Wal Mart opened up doesn’t mean people leaving or commuting to Alberta is a desired economic development model.

    I live in an urban area which has all those ‘sophisticated developments’ mentioned above. That means nothing. All it means is that i can go to the Perimeter Institute and hear lectures. Big deal. You can go online and listen to most of them. There are more restaurants to choose from, but so what? Thats a marginal benefit that is blacked out by the fact that severe smog kills thousands each year, and while the local development continues to build over the moraine where we get our water, our taxes continue to rise to pay for more questionable ‘urban’ developments that politicians continuously invest in to show they are doing something.

    Virtually any of the cultural amenities are available anywhere, in fact in the nineties, between the Codco troop and the Cape Bretoners, it was rural maritimers essentially providing ALL the culture to english canada. That doesn’t take a ‘mass’ of people, that’s faulty marketing that has people believing that. In marketing 101 we are taught that 3% of the population targeted with X advertising will respond. Thats ludicrous, more restaurants go out of business here in Waterloo than ever do in Fredericton, even ones passed by thousands of people every day.

  15. Anonymous says:

    Mikel, that’s exactly why people in other jurisdictions have lost hope. It comes back to the attitude issue. As long as we take defensive positions and refuse to analyze OBJECTIVELY the merits and economic value proposition of rural life, the change that David is talking about will not happen.

    We need to set the right benchmarks. You say that the cities in NB are ‘booming’ but you fail to say that it is only in comparison to the rural areas. What you need to look at is the opportunity cost of the ‘handouts’ to rural areas. My point is (and I have said it at least once in this post) that the money that goes to the rural areas to duplicate, triplicate, etc. government services and infrastructure would have far more impact for the provincial economy if it were invested in more productive areas (i.e. the cities). And the same line of thought applies to the kind of economic activities that receive government support. The money that goes to bailout operations that don’t make any economic sense (but make a lot of political sense) would be better used in the development of more productive industries. And when you consider the development of more productive industries you have to evaluate – again – the value proposition of the rural areas. I get your point about Irving. But put yourself in the place of the CEO of a large company that is considering to open a subsidiary in North America. Would the advantages of setting a plant in, say, Bathurst, outweight the challenges? I can assure that the major obstacle that you would meet is to find qualified managers who would be willing to live there. Even Saint John and Fredericton are having huge challenges finding qualified health care professionals!

    And you completely missed my point about sophistication of demand.

    My suggested solution: you can start by consolidating local governments and electoral zones in a way that strengthens the cities. For as long as we have 3/4 of the Legislative Assembly occupied by representatives of the rural areas, both politics and investments in NB are going to continue to be based on pork barrel policies and other interests. But who wants to do that?