Odds and ends

A few interesting stories this morning in the local media.

From the TJ, family incomes in New Brunswick increased at the second-worst pace in the country in the decade between 1998 and 2007. New Brunswick’s median income level was the lowest in the country. The $50,600 figure was slightly lower than the $50,900 median family income in Newfoundland and Labrador.

Business New Brunswick’s strategic plan calls for the creation of 4,000 jobs per year at $30,000 per year.  Me thinks we will need to raise our ambition and effort to increase wage rates.  I have discussed this at length in previous posts but it has to do with realigning the value proposition away from low wages to other business factors and it has a lot to do with seriously encouraging innovation and productivity improvements among our local firms (leading to lower unit cost of production and the ability to increase wages).

Bill Belliveau has an interesting piece in the T&T today.  He talks about the slip in the provincial Liberals in the polls and ties it to cost cutting measures which people do not like.  While he agrees that cost management matters he says:

Cost-cutting should be governed by the same criteria as investment. What are the things that are most important to the people of New Brunswick? What are the things that the people of New Brunswick can least do without? What are things that the Government of New Brunswick cannot cut if it wants to grow the economy of the province or if it wants the province to become self-sufficient?

The truth is that government spending in New Brunswick has been rising at a rate of almost three times higher than inflation for the past number of years (this year’s budget growth was in the hundreds of millions in a so-called recession).   We have forgotten what cutting spending a la the early 1990s looks like.  The doctor’s don’t want a wage freeze for two years?   During McKenna’s entire decade in office the public service had among the lowest wage increases in Canada.  Bernie made up for that during his time in office.  My point is not to pick on the civil service.  My point is that cutting government spending – no check that – keeping the increase in government spending down to the rate of inflation would be extremely hard.  Do you cut health care (check that do you keep health care spending growth at the rate of inflation)?  Do you cut education (check that do you keep education spending growth in check)?  Do you cut economic development, roads, justice/legal services?  The public service?  Transfers to municipalities?    Belliveau’s line about not cutting things that lead to economic growth is the most salient point.  Tax revenues must increase and increase significantly to more than offset spending growth (to get us moving towards self-sufficiency).

 

The Port of Belledune got a major cash injection this week.  I fully support this investment but it needs to be tied to serious efforts to generate more economic activity at the Port.  I think that sometimes we have a Kevin Costner-esque Field of Dreams approach to infrastructure investment.  We expand the port and then twiddle our thumbs and look at the clock waiting for the tidal wave of new investment.  I think we need to seriously invest in the marketing of that port in a niche capacity and build a much wider value proposition.

 

Finally, the monthly labour market report came out on Friday and again New Brunswick doesn’t look that bad – particularly compared to Ontario.  But the facts are the facts.  New Brunswick seriously underperformed the have provinces during the boom of the 1990s and most of the 2000s and there was less to lose.  We must resist the temptation to cruise during this recession.  I worked for the provincial economic development department in the early 1990s.  Many if not most of the best projects were initiated (first contact) in the latter stages of the early 1990s recession (Royal Bank, UPS, Xerox, Air Canada, Exxon/Mobil, etc.).  I hope that BNB is right now incubating the next round of serious business investment.

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5 Responses to Odds and ends

  1. > Belliveau’s line about not cutting things that lead to economic growth is the most salient point.

    The problem with this assertion, of course, is that it is not clear what leads to economic growth. Is it lower business taxes? Investments in education? Public health care? All of these contribute to economic growth, in different ways, at different rates, with varying sustainability.

  2. Samonymous says:

    During McKenna’s entire decade in office the public service had among the lowest wage increases in Canada. Bernie made up for that during his time in office. My point is not to pick on the civil service. My point is that cutting government spending – no check that – keeping the increase in government spending down to the rate of inflation would be extremely hard.

    Lowest public service wages, but when adjusted to inflation, government spending was almost dead even between McKenna’s government and Lord’s (actually Lord’s was a tiny bit lower at 6,063 in $-Millions). Although, health care spending post millennium far exceeded anything McKenna had to deal with (with out migration on the rise and a ballooning aging population to deal with).

    Off the subject, I see the Torstar is focusing its guns on New Brunswick and its supposed devotion to EI. I think our province was the only one mentioned in the Delacourt article as pro-election on the sunject of Emplyment Insurance:

    “The aversion to an EI election is shared across regions in Canada, the poll found, though 42 per cent of Atlantic Canadians said they thought the issue was important enough to send voters to the ballot boxes.” source: http://www.thestar.com/news/canada/article/646590

    I can’t find the Nanos numbers anywhere. Was Quebec or any other province close to NB’s favourability to an election over EI?

  3. Samonymous says:

    Sorry that wasn’t just our province, but all four Atlantic provinces. My apologies.

  4. Anonymous says:

    Spending is out of control while cuts are being made where it hurts.

    The spending involves very few economic development initiatives. Hockey rinks, convention centers, gyms, tourist traps all stuff that gets photots in the paper but will not create long term, meaningful jobs. As you have said before, I’ll put up with a few extra pot holes if I see companies like RIM advertizing jobs for New Brunswickers.

    And consider the legacy costs that have been established with departments and employees that did not exist before this government; for example Population Growth, Efficiency NB (30+!), Capital Commimmision and soon a wage equity office. Given a choice between doing without teacher’s assistants and doctors or having wage equity police, most tax payers would choose doctors and teachers. Not only do all these civil servants add huge costs, there will be a big expense in shedding them when a responsible government makes changes to spend within our means or at least include health care and education as priorities.

  5. Anonymous says:

    $12 an hour for about 2000 hours a year which is about $24,000 a year!!
    I guess you weren’t talking about the NBer’s who didn’t get the civil servant job.

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