Opposition needs to come up with new ideas

I’m a big believer in the importance of a strong opposition in the Legislature to provide oversight and keep the governing power on its toes.  I had hoped that once the NB Tories elected their new leader, we would see some new and innovative economic development ideas percolating up from the Opposition.  Or, at least, the Opposition grabbing some of the major themes in the media and adopting them as policy ideas.

Whether anyone likes it or not, there are a pile of economic development policy options swirling around out there (some good and some not so good) that the Tories could easily adopt.  For example, the idea of migrating BNB to more of an NSBI or Investissement Quebec model with a CEO and a private sector board.  Or how about the idea of the tax credit program for the animation/new media sector.  Other policy options that have been discussed include: industrial electricity rate incentive schemes to attract large industry such as data centres, increasing the investment tax credit program to stimulate new investment in productivity improving technologies and equipment, etc.

But the Tories revert back to the same old, tired model they used under former Premier Lord.  The so-called “made in New Brunswick” solution to economic development.  From Bruce Fitch’s commentary in the TJ this morning:

The Canadian Federation of Independent Business’s 2009 budget recommendations point out that lowering the small business tax rate and increasing the small business threshold are the best ways to stimulate the economy.

Fitch should know that 97% of these ‘small businesses’ (of which I am one) generate their revenue exclusively in New Brunswick.   In other words, their markets are local.  They are hair dressers, janitorial companies, construction workers, electricians, consultants, etc. etc. etc.  The Tories cut their taxes to the bone when they were in power and according to the Fraser Institute New Brunswick went on to have one of the worst SME growth rates in North America.  These 97% of SMEs need a growing market, not a small cut in taxes, to growth their own businesses.

That’s why it is surprising that the Tories don’t just adopt in principle – as red meat – a lot of these ideas floating around out there.  Reverting back to the same old ideas gives us no real opposition thinking in the area of economic development which, I think, has a negative impact on the province’s potential economic growth.

And, by the way, not to beat a dead horse but cutting small business taxes to the bone is far more beneficial to the province’s high income earners than cutting the personal income tax rate.   When former Premier Lord cut the small business tax, several thousand unincorporated self-employed persons migrated to being incorporated self-employed persons to take advantage of this lower rate.  Doctors, lawyers, many construction workers, dentists, etc. are all ‘small businesses’ because you pay less tax as a corporation than you would as an individual.

So when you read Mr. Fitch talking about the deep tax cut for the ‘richest’ New Brunswickers, tell him to look in the mirror.   I don’t mind a debate about tax rates but I dislike people that try to mislead New Brunswickers about the issues.  I haven’t done a full analysis but my suspicion is that cutting a small business tax (and increasing the threshold) is likely more beneficial for most high income earners than a cut in personal income taxes.   Of course, cutting the personal income tax rate is beneficial to those that cannot incorporate such as senior civil servants, middle and senior managers in big companies, etc.

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23 Responses to Opposition needs to come up with new ideas

  1. richard says:

    Calling for tax cuts is easy, coming up with a real strategy for growth is harder. The hard copy media in NB has been full of ‘independent’ commentary calling for tax cuts; there has been precious little commentary asking for anything else when it comes to ED. To date, CFIB and AIMS have owned this conversation. You won’t get much buy-in from the Opposition or anyone else unless a way is found to change the conversation.

  2. Rob says:

    We have both parties in the legislature crowing for tax cuts. At the same time, we have articles in the newspaper about school libraries closing due to lack of government revenue. Given the benefits of a literate workforce, shouldn’t someone in the political class be taking up that battle?

  3. Scott Mackay says:

    I think spending has a lot to do with it. Small business people are on the hook for the corporate welfare programs being handed out to government friendly firms. So not only are the tax policies hurting small business, the environment of picking winners and losers is effecting the bottom line of many startups as well.

  4. mikel says:

    Nice try Scott, money going to Atlantic Yarns doesn’t affect the local hairdresser-she’s not going to get a grant anyway. And by lowering the tax rate, obviously she is not paying much into ‘corporate welfare’ anyway. And its ludicrous to talk about picking winners and losers in today’s environment, we are just talking about ‘survivors’. Atlantic Yarns wasn’t any functionally different than numerous grant schemes for rural areas which often saw more government money going to companies than salaries. The hope of course was that other industries would spring up around them, but that’s a tough decision. In the Caissie case its a situation of a financial bailout, not much different than thousands of worse ones going on right now.

    But again, this is simply political representation. However, unless the Telegraph is dictating David’s words, there is no reason why HE can’t get these other ideas into the media-he’s PART of the media. And again, there are simply no other groups around pushing for other ideas. There is a reason why its all AIMS and CFIB and the Taxpayer Federation, because they are organized. That’s not the ONLY reason, of course, the media is owned by corporations and they are fully behind the low tax train.

    But like any other idea, there needs to be a group championing it. IF nobody is, then like I’ve said, it would be silly for politicians to champion an idea that hardly anybody cares about-why would they? Because some guys at a blog think its the right thing to do?

    Keep in mind also that nowadays there are a LOT more small businesspeople than mentioned above. Virtually anybody who drives for IRving is actually a small businessman on contract. Go into a dentist office, usually the technicians are all contract workers nowadays.

  5. Scott Mackay says:

    Nice try Scott, money going to Atlantic Yarns doesn’t affect the local hairdresser-she’s not going to get a grant anyway.

    Exactly, so why should she pay taxes so that the government can take any profits she receives and allocate them to other private organizations; organizations — as you mentioned in Atlantic Yarns — that are no longer viable on a open global market.

    As for David, he’s smart mikel, as he realizes that you can only rock the boat so much in a small society/province clinging (with an iron grip) to the status quo. He has done us all a great service by raising awareness on here and in the TJ.

  6. Scott Mackay says:

    That should read “part of her profits” as the government isn’t quite the Sheriff of Nottingham just yet. lol

  7. Rob says:

    “you can only rock the boat so much…”

    Just ask the young (former) intern reporter at the Telegraph-Journal :p

    http://tinyurl.com/qw32jz

  8. mikel says:

    The ‘why’ is quite simple, because that money going to that company is helping hairdressers (or whatever) in THAT town or region. A hairdresser in fredericton is already getting help-most of the clientele are on the public payroll. In other words, its called basic fairness, and that’s WHY there isn’t a huge hue and cry about such things except from a very small (but vocal) minority.

    Like I said IF the northern regions had all the advantages of the southern cities, then there wouldn’t be a need for ‘propping up’ such industry players. But as the current climate shows, NO company functions without government largesse. Some of these corporations have had YEARS of virtually no tax and yet STILL have managed to go bankrupt or need bailouts.

    As for a hairdressers profits, those are pretty miniscule, there aren’t many millionaires in that sector-so when divided up, the numbers, like the current tax savings, are tiny. But the damage they are doing to public infrastructure is HUGE. When all those former Yarn employees start collecting EI, their purchasing power plummets, when they hit welfare its non existent and the whole society suffers and pays MORE than they would with the subsidy. Again, those are the ‘external costs’ that economists typically ignore when doing cost benefit.

    As for Mr. Campbell, nobody is debating his contribution, at the same time nobody is stopping him from writing THIS as an article. THere is no knowing how far you can rock the boat til you take on some water. Currently, the Irving media takes EVERY opportunity to bash the conservatives, which makes me think there ARE more ideas there than they let on. So this article is hardly ‘rocking the boat’, we’re talking about a newspaper that puts Graham’s picture on the front page at every opportunity. If anything, this is simply ‘sailing with the tide’.

  9. Anonymous says:

    Tunney: “…perhaps somebody from the university’s board of governors?”

    UNB? President’s executive assistant? Former assistant to MP Andy Scott?

  10. I have written in the newspaper about my thinking that across the board tax cuts are not nearly as stimulative as targeted tax cuts. I have had more evidence this week that medium and larger businesses in the province would much prefer investment tax credits to broader tax cuts. The small businesses do prefer the across the board tax cuts.

    On the broader issue, if the ‘opposition’ in the sense of ideas and inspiration for a government is not coming from the opposition then maybe it will have to come from the media and other third party sources. I still think, however; that the NB Tories should be out there with their own credible ideas on BNB, regional development, R&D, northern New Brunswick, etc. rather than just more of the same platitudes. When political opposition becomes as neutered as it is these days (in terms of ideas and alternative views), I don’t think it is good for democracy or economic development.

  11. Anonymous says:

    On the broader issue, if the ‘opposition’ in the sense of ideas and inspiration for a government is not coming from the opposition then maybe it will have to come from the media and other third party sources. I still think, however; that the NB Tories should be out there with their own credible ideas on BNB, regional development, R&D, northern New Brunswick, etc. rather than just more of the same platitudes. When political opposition becomes as neutered as it is these days (in terms of ideas and alternative views), I don’t think it is good for democracy or economic development.

    We only have two parties that can (and have) governed this province. Therefore the debate has been considerably narrow over the years. I guess the only way I see this type of discourse changing in NB is if you empower (or give rise) to more alternate political voices. I think if we had a PR system in place, not only would we give voters an opportunity to vote for a third or fourth party whose message agrees with their views, having them in the legislature would change the debate, in that, traditional parties would be forced to react or deal with an issue that usually gets swept under the rug.

    Plus, the traditional parties would not be able to cherry pick as easily to the right (if you are Liberal) and to the left (if you are Tory) without being called on it by those that stand up for such things. Just look at how the federal Liberals have lurched left on the EI issue, only to be called on their hypocrisy by the NDP (who has been [legitimately] fighting for these changes for quite sometime.

  12. Anonymous says:

    The reason I used the EI debate as an example, is not because parliament uses MMP or STV (obviously it does not), it is because a minority parliament resembles somewhat the give and take of a legislature, chamber or house that uses proportional representation. I guess what I’m saying is the debate would be much broader if the NDP and Greens were a part of it.

    Although, that would probably hurt the Liberals more then the Tories as those parties would obviously pluck more votes from them on the left. So I can see why they killed the democratic reform bill as soon as they entered office.

  13. mikel says:

    Again, they aren’t ‘neutered’, they are simply playing to their base. Tax cuts are a ‘conservative’ idea, so its no surprise they aren’t abandoning it, the problem is that the Liberals were previously not ‘fiscally conservative’. So yes, alternate views need to come from ‘third party sources’, but its not the media’s job to do that, and they rarely do. If there are no third party sources, then guess what, you’ve just run out of players to contribute those ideas. Again, David gets these ideas ‘out there’, but I’m certainly not convinced it is ‘new’ information. Take a look at the latest CBC report-New Brunswickers pay far higher prices for propane than PEI or Newfoundland, even though its exported to PEI FROM New Brunswick.

    The comments are equally split on venom aimed at Irving for charging them more, and at the NB government for doing such a poor job at regulation-and showing just how much influence Irving has. Go read the comments from Jack Keir and you’ll see just how laissez faire these guys are. And the public is FAR from liking it, but again, there need to be political alternatives.

  14. Scott Mackay says:

    mikel is right, it should not be up to the media or special interest to drive the agenda, it should be up to those that represent us (and our issues). Why do you think people got so excited about the prospects of an MLA or MP, like Tanker Malley and Bill Casey, representing their views independently? I’ll tell you why, because debate gets (and has been) stifled and MLAs/MPs muzzled in a system that doesn’t accept true debate (especially when it is counter to their own party ideology like in the Casey case).

    Which brings me to the point of “why do so many citizens shy away from the idea of proportional representation as it is a good way to have more voices debating an issue that many concern them?” Especially if they liked how Casey and Malley stood up for them, like any true politician should (confidence vote or not).

    Speaking of confidence votes, it’s absurd that parliament could fall and Canadians be forced into another costly election because two parties (Libs and Tories) are unwilling to find common ground on an issue such as EI. There needs to be more of a push for a system that accepts more voice, more debate. That system is not FPTP it is proportional representation. Simple as that.

  15. richard says:

    “it should not be up to the media or special interest to drive the agenda, it should be up to those that represent us”

    And how can this be changed? It is not in the interest of the media or our current crop of politicians to change the electoral system – they are generally quite happy with things the way they are. Its easy to say “2-4-6-8, organize and smash the state” (in fact, I said that once or twice in my younger years). Its also easy to organize Facebook campaigns, etc, and give yourself the feeling of empowerment. Fact is , there have been many well-organized attempts to change the electoral system in several provinces: all have failed. NB will be the last place to change the electoral system – people here are more concerned about income security and potholes. If NB is going to ever gets the changes it needs, it won’t be because we get up our hind legs and demand it. It’ll be because someone pushes it down our throats.

  16. richard says:

    “Currently, the Irving media takes EVERY opportunity to bash the conservatives, which makes me think there ARE more ideas there than they let on”

    What ideas would those be? They must be well-hidden. The Cons are inept, but policy-wise they are indistinguishable from the Libs.

  17. Scott Mackay says:

    If NB is going to ever gets the changes it needs, it won’t be because we get up our hind legs and demand it. It’ll be because someone pushes it down our throats.

    Or if said agenda being pushed down our throats backfires. What I mean by that is we could end up with reform by accident, like what happened in New Zealand. The general consensus there was for old line parties to appear to be pushing the principles of electoral reform, when in reality, they were still in favour of the old [FPTP] system. How did this happen u ask? Well, like what happened in BC, Ont and PEI, they were hoping that the appearance of moving forward on reforms (and their ultimate failure in a referendum) would be enough to put the whole question to bed. In other words, the authors of the referendum questions assumed that support would be split for the various alternatives to the status quo (there were three on the ballot) that FPTP would win the day as a result.

    In the end, voter turnout was very low, and a high percentage of participating voters ended up voting in favour of change (to be exact, it was 85% of the 55% of voters). MMP won the day!!

    So yes, maybe some day the tables will be turned on the political establishment, until then, I’ll keep fighting in favour of a reform that will help make democracy more effective.

  18. mikel says:

    Well, this is an old debate here, and stating that ‘NB will be the last place…’ is the kind of attitude that guarantees it.

    Life spins on a dime, politicians know that full well, which is why there is such rigid control. We know, of course, that New Brunswick was PLANNING on at least having a referendum on Proportional Representation, it would have been held with the next election.

    Personally, I’m not squared on PR as a ‘saviour’, it is of course better than what currently exists. However, just the fact that New Brunswickers were going to have a referenda was incredible, and that’s where democracy really comes into play. Under Bernard Lord New Brunswickers were actually AHEAD of every province except BC on referenda on PR. That got squashed by that horrible electoral system that let the liberals win a two party race even though they had fewer votes.

    But again, anybody that thinks we live in a golden age at the end of history has read too much Fukiyama. The social struggles continue as they always have, sometimes successfully, sometimes not. The fact that New Brunswick doesn’t look like it did in the 1800’s (for the most part) is due to the contribution of Canada as a nation.

    Right now the political changes are NOT partisan. Just today there’s a story from CBC on youth organizing and protesting the graduated licensing changes. That aligns up with numerous protests, so the idea that facebook (where most of the young people meet) and other things are doomed to failure is bad memory. These things are just beginning. What is lacking is a political group to organize all the p****ed off New Brunswickers into a viable alternative. The NDP is an option, but Irving still has most voters petrified of them, and even though they are the only party that DOES offer ‘new ideas’, they are even derided here when those ideas don’t fit into THIS framework. The key to organization is how to hold together despite differences, anybody can work together with those who agree on everything.

    The Atlantica Party and Green Party are options as well. But people are missing out here on the most basic option-the conservatives aren’t pushing new ideas because they don’t NEED to. In a two party system they know their day will eventually come, and they get paid either way. So how many have actually PRESENTED a new idea to David Alward or the conservative party? I’d guess nobody. So again, political change is going on all around us, the ideas here are not being pushed simply because nobody is pushing them (writing about them is not the same thing).

  19. Rob says:

    A fellow who is running for the PC nomination in Fredericton-Lincoln, Craig Leonard, turned his involvement in the EFI debacle into a run for political office. He was heavily involved with the PC policy process this past spring. As many people become disillusioned w/ the political process, I think a few people will become disillusioned enough to actually get involved.

    As for the NDP, I’m surprised there isn’t a movement of left-leaning Liberals in NB moving in that direction. We don’t hear much from Roger Duguay here in Fredericton, maybe he’s placing his bets on a few seats in Yvon Godin country.

    As far as proportional representation goes, nbpolitico did an analysis of the last provincial election, assuming the electoral model proposed by the Commission on Legislative Democracy. The final result would have been 29 PC, 27 Lib, 0 NDP. I can’t imagine we’d have much better results or policy from a legislature with this composition.

  20. mikel says:

    That’s pretty bad analysis, the NDP got 5% of the vote, so by definition would have 5% of the seats. With the tories and liberals so close then by definition it would have created a minority government. And thats with an NDP with so few votes. Of course that leads into paranoia about PR, because the canadian media always touts the ‘power’ that such a group holds, almost claiming that by definition the NDP would be holding power-which is ludicrous. Of course it depends which PR model is used, but this is according to the model NB was looking at.

    There is very little in the way of ‘left leaning liberals’ or in fact ANY political movement of political players in NB. They are essentially in a party and vote according to the party, there is almost NO deviation that I’ve ever seen from elected officials.

    People ARE involved, but that doesn’t come from disillusionment but mostly anger. However, its another step into the political arena, and the parties don’t exactly welcome that. What would be NICE is to have a more active media. It would be interesting to stand up in front of that group of students whose signs read “I can vote, but I can’t drive after 12″ and ask “Ok, you CAN vote, but DO you vote? Are you in a political party? Did you make a presentation to the committee while this legislation was being debated? Or are you just reacting now?”

    That usually provokes some thought at least, and again its just a quick step towards thinking “maybe we should start being proactive instead of reactive” There are the obvious problems though that when thinking those things you can’t avoid the reality that even when people HAVE been proactive, they get screwed over anyway.

  21. Rob says:

    “That’s pretty bad analysis, the NDP got 5% of the vote, so by definition would have 5% of the seats.”

    That’s not how the NB MMP system was setup. In a pure PR system, that statement would be true, and the NDP would have 2 or 3 seats. Once mixed member proportional is thrown into the mix, and half the seats are “FPTP” seats, the NDP falls into the goose-egg category.

    Talk to nbpolitico about it, they’re much more versed in the intricacies of what was proposed. However, to call it “bad analysis” because it doesn’t match your definition of what PR should look like is poor cricket.

  22. Scott Mackay says:

    It is a bad analysis Rob, because you’re only looking at it through the lens of one election (so you do not see the future benefits to democracy). Even if they [NDP] or any other party outside the two established parties were to show well, it means they now have hope under the new system. And if they hopeful, so are those who identify with their policies and principles. So instead of going into a general election thinking that my vote doesn’t really count because they (my guy or gal in the party of my choice) will never get elected, they will willfully cast their vote knowing that it will have an impact on “list” candidates. So instead of disengaging a vast majority of the population that gets fed up (disenchanted) with the traditional parties touting the “same ol’, same ol’ rhetoric), they are empowered by the fact they can make a difference (and ultimately their voice will be heard).

    Under the old system, voter turnout has been horrendous mostly because of the very fact I just explained. So not only do you have parties gaining ‘false majorities’ under a FPTP system, you have them obtaining such a system with barely over half the electorate showing up to the polls. Hardly representative.

  23. Scott Mackay says:

    last paragraph: system=majority/power over citizens

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