Is road building the best way to create jobs?

Nova Scotia will invest $1.9 billion over the next three years in infrastructure, one of the largest such commitments in the province’s history. Funds will be channelled through the Building for Growth plan, the premier’s office announced. Investment and job-creation initiatives will be matched with strategic priorities, including energy conservation, roads, bridges, highways and schools. The $1.9-billion investment is estimated to create or maintain about 20,000 direct jobs.

In my opinion, governments need to avoid making spending decisions based on what will get the best political bang for the buck.  We saw that this week with the NB budget which was complimented by just about everyone far and wide – even national editorials were written praising the budget. 

After 20 years of looking at this stuff I think that government decisions that arouse more criticism than praise tend to be the ones that better sense longer term.  Tough decisions need to raise a hue and cry not universal praise.

Who is going to complain about Nova Scotia investing $1.9 billion into roads, bridges and schools?  Just about no one.   At the same time no one seems to care that Nova Scotia’s population growth has stalled.  Why do we need $1.9 billion in new investment when the number of people using this infrastructure is declining?

And we are told that this $1.9 billion will create or maintain 20,000 jobs over the next three years.

Alabama invested less than that to build an automobile manufacturing sector that created over 40,000 jobs for a generation.

But no op/ed or talking head would ever put that on the table.  It’s easy to spend government money on the usual stuff.  The stuff that governments ‘do’.  $2 billion for roads.  $1 billion a year for EI in New Brunswick.  New hospitals or schools.  You get the picture.  But somehow to invest in things that may lead to a sustainable economy – that is out of the comfort zone of most governments – particularly and ironically in New Brunswick and Nova Scotia.

If Ontario was facing population decline like New Brunswick (Ontario’s population is still growing strongly despite this current hiccup), it would be an international disaster.  You would see a mobilizing of government effort behind economic development like never before witnessed in human history.  You know it’s true.  The auto sector is hurting in Ontario and look at the massive response – billions in government money a $200 million/year new economic development agency for southern Ontario.  Imagine if there was a crisis that actually turned Ontario’s population growth into decline (like New Brunswick).  You would see an unprecedented response.

But in New Brunswick and Nova Scotia you get shrugged shoulders and a Premier blaming “demographics”.

I’m not against governments building roads and bridges – that’s a key role for government.  But in the current context if I was advising government I would be recommending far more investment in economic development – both in the infrastructure that powers economic development and the process of attracting and fostering new business investment.

Imagine Nova Scotia investing $1.9 billion in green energy infrastructure and then offering that energy at an industrial rate below the competition.  Sure, the public would be ‘investing’ now so that industry could get cheap electricity in the future but what makes that any different than any other kind of ‘investment’?

Imagine Nova Scotia investing $1.9 billion in R&D?

Imagine Nova Scotia investing $1.9 billion to make Halifax a leading financial services back office centre around the world?

20,000 construction jobs are more comfortable for government and will garner lots of media and politicial benefits.  But in the long run, what will it do to address the underlying structural economic problems?  Not much.

 

 

 

 

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3 Responses to Is road building the best way to create jobs?

  1. Bill says:

    I keep hearing something a friend said to me years ago. “Governments are never proactive. They’re always reactive.” In a situation like the current one, we’ve governments feeling they have to do something because people are demanding some kind of action. They react. But since there is little demand, or awareness, from the population for the kinds of initiatives you’re suggesting, the easiest and most soothing way to go is “infrastructure.” (I notice there’s no mention of technological infrastructure, like expanding broadband.) Roads, bridges and so on.

    How do we get the population out here to make noise about such development? I have no idea what the answer is but I think that as long as we are content with this kind of investment it will continue as it is, population will continue declining and the pattern won’t be broken. People need to become more aware of economic development and what has worked (or failed) elsewhere so they understand growth is possible and they start demanding it.

    I think one way would be a more vigorous, rigorous media, though that’s a pretty pie-in-the-sky notion given what passes for news here and the state of the news media in the world. But if we heard more stories/examples like the Alabama one you mentioned, as opposed to some stock numbers and profiles of successful local companies with two employees, maybe a sense for what can be done would grow. My sense is that, as with the New Brunswick budget reporting, we get one view and never get an opposing view – unless we know how to go online, use Twitter etc. to hunt it down.

    As long as the path of least resistance is “cut taxes” and “invest in infrastructure,” that’s what we will get because this is what appeases the population. (btw … I we need to worry about infrastructure but we need to balance it with economic development/job creation that looks a little farther ahead.)

  2. mikel says:

    This is a big issue, but again, the auto sector is no answer. Alabama is currently facing the same ‘crunch’ as the rest of the US. The problem has been that while there are tons of layoffs, without unions the most typical effort has been to simply cut employee’s hours.

    And its not a case of ‘investing’ in an auto sector. Alabama is currently facing the same budget cuts as most states (and provinces), despite the auto sector. And you have to include in your figure the site preparation the state did, as well as the employee training. In effect, what the state said was “not only will we give you gobs of cash, but we’ll basically finance all your costs” (plus, Alabama agreed to purchase 2500 of their most expensive vehicles). Now, if people want to believe that that’s ‘good investment’, that’s their business. But even if it WAS, there are only X auto sector positions. So its not like a province can say “OK, do we put 1.9 billion into road work or a new auto plant?”

    They COULD do that, in fact in New Brunswick it would be quite interesting, since the government has basically bypassed NAFTA and said “we’re going into the beer business” then there is simply no reason why it can’t say “we’re going into the solar cell production business” or the “electric car business”. Lots of people may say ‘but we’ll lose money’. That doesn’t matter, it is creating jobs plus a social good.

    What is important here isn’t even industrial investment, but PEOPLE investment. What about dirt cheap tuition so people can get trained for the ‘next’ economy? Here in ontario its no different, and it all comes down from the federal government, which sets the agenda. The university of waterloo has enacted a hiring freeze, while several big name scientific programs have seen their budgets cut. If you saw the corporation, you’ll remember that this ‘business contraction’ is exactly the WRONG thing to do to get out of a recession.

    Meanwhile, our ‘new conservative’ MP sent around his first PR brochure. While the feds are cutting CBC jobs and science jobs, they are ‘investing’ in no brain no future construction jobs of the kind mentioned above. They are investing millions to tear up and redo a road near us that is only about half a kilometre long, has no housing fronting on it, and has nothing wrong with it but a few potholes.

    However, this is NOT because it scores political points. It is because the alternative is to invest in PEOPLE. Why do that when you can give money to your crony construction friends and satisfy the trucking industry (which has a LOT of clout).

    Individuals are not so easily fooled, however, the government simply puts no alternatives on the table because it doesn’t NEED to.

  3. Anonymous says:

    The problem with your question is that you are confusing economic development with job creation.

    Most governments do this and it leads to flawed, or nonexistent, economic development strategy.

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