Helps or hurts?

I can see both sides of releasing the CENB report suggesting that the provincial government spends more money on the south than the north in this province.

But as someone who has staunchly fought for a new, serious and credible economic development strategy for the north, I feel this is a mistake.

First, the debate between the North and Fredericton looks an awful lot like the debate between Fredericton and Ottawa.  We know Ottawa spends far more – even per capita – on R&D in Ontario but the Feds will tell Fredericton that New Brunswick gets far more Equalization, EI and other income propping up money.

Sound familiar?

Because it is exactly the same argument in New Brunswick. The average adult in Gloucester county receives 24.5% of his/her income from government transfers.  The average adult in Saint John county receives 16.3% of his/her income from government transfers.

What does that mean?  It means across Northern New Brunswick, each year the federal and provincial governments spend several hundred million more on income support in Northern NB than in Southern NB.  And, if you take into consideration the lower average income (hence lower taxes paid), the subsidy is exacerbated.

My point is not to pick on the North.  This is exactly the same argument that Ontario would use against New Brunswick.

In both cases it is irrelevant.  In fact, both the CENB report and my analyis auger for a more serious economic development effort in the North.  All the CENB and all the wizard economists need to do is look across Canada and they will see that government investment in physical infrastructure tends to lag economic activity.  They don’t build roads, schools, hospitals based on potential demand in the future (most times).  They wait until the need is there and then they invest. 

Government investment in R&D and specific industry growth efforts (like auto in Ontario, aero in Quebec and new media in British Columbia) tends to lead economic activity.

So the CENB, as I have argued, should spend less time arguing for more lagging government investment (roads, schools, hospitals) and more time arguing for leading government investment (i.e. sector development investment). 

Now I admit there is overlap here.  Government spending itself is an economic driver but the argument put forward by the CENB will be easily countered – as I have shown above – by the huge amount of income support in the North.  By any measure, government spends more in Northern NB across all spending areas – than in the south -with the isolated exception of Fredericton where the ‘head office’ of government is located.

I have spent several years slowly trying to convince stakeholders in the south that economic development in the North is a good thing for the province.  Every coffee, multiple columns, hallway conversations, blogs – but in the end it’s all about goodwill.  The population base in Ontario means that on a purely political level – the feds need to do very little in New Brunswick in terms of economic development.  The same holds true within New Brunswick.  If stakeholders in the North push too hard and the power base in the south pushes back – they will lose – and New Brunswick will lose.

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9 Responses to Helps or hurts?

  1. Samonymous says:

    I think the North definitely needs to be included. And even though a government plan is important, I think it’s important that political leaders, parties and members take the time to engage that region and the public in general. At the moment, the way the big two parties are structured, they are build to ignore the grassroots all across this province. It can’t continue to be a made in Freddy solution while people outside the beltway remain weak and disengaged. It’s may sound trivial to some, but I can tell you that you don’t have much if party meetings and convention continue without high participation, energy and debate. They are the vehicles to better discussion and better public policy. Without that we have nothing.

  2. mikel says:

    I’m confused, are you seriously saying an economic study that outlines an important fact about NB economics should NOT be discussed?? Virtually the entire blog just shows how important it is, it certainly doesn’t show it shouldn’t be published, but maybe I’m misreading that.

    Those points have been made before, and as I’ve said, when you go to the federal level and complain (as NS and NFLD were doing) that a disenfranchised economy should have MORE investment where possible, it is the utmost hypocrisy to be actually worse at the provincial level.

    I WAS surprised though that the ratio was so close- one to 1.11. That’s actually not a HUGE disparity, but those numbers should be reversed. Pointing again at the province, Graham moved the department of Energy to St. John to head the ‘Energy Hub’ initiative and then tried to sell the main component of that! So if it can move a department under THOSE conditions, certainly it can do so under these far more urgent and sensible conditions.

    I do agree with the above about grassroots-at a certain level ‘you get what you pay for’. That goes along with Richard as well, until there is better discussion and more activity, ‘get used to it’. At the facebook group at least it is starting to dawn on people, and their success at saving NBPower transmission lines has a lot of people there thinking about the ‘high participation, energy and debate’. Whether that energy will be constructive or destructive remains to be seen-so far its been both.

  3. I am saying that if an issue exacerbates a long standing problem why bring it up? And I am saying that if you say the ratio is 1:11 and somebody says if you throw in the government transfers to individuals the ratio gets flipped to 2:1 in favour of the North your argument has lost and you have risked the goodwill that has been growing in recent months. I don’t like the focus on money anyway. I think you start with a plan of what you want to do and see up in the North and then work backward to see what kind of money and resources you need. The problem with the North has been that too many people have boiled it down to just money.

  4. Anonymous says:

    I know that my comment is going to fall in deaf ears but I will say it again anyway. I think that government investments (i.e. taxpayers´ money!) should go where there is more bang for the buck instead of trying to ressuscitate “economies” that don´t make any sense. I appreciate the humane side of the argument of providing support to communities that have lost their industries, but I am convinced that the focus of such support should be to phase out those communities and help the population move to where it makes more economic sense.

  5. mikel says:

    ‘Losing’ an argument is far better than not having the conversation at all. Particularly when it doesn’t quite boil down that way. First of all, this study is about the PROVINCE, and payments to individuals boils down to welfare and unemployment. Unemployment is FEDERAL and is paid for by workers, and given the population disparity, while a higher percentage of the population of,say, Campbellton, may get welfare, I doubt there is a higher NUMBER.

    And of course when you are talking about payments to ‘individuals’, well, IRVING is a private family business, they are a small group of individuals, but count up just how much money and resources they get, compared to the ‘individuals’ in the north, who get one of the lowest welfare rates in the country.

    That’s why the conversation is so important-partly because we don’t even know the numbers to the above. And of course EVERY issue has the potential to exacerbate problems-heck, you can’t talk about the fisheries without finding people saying that the problem is bilingualism!

    IF there is ‘goodwill’, I can’t see how stating the fact behind the reason for the goodwill would risk it. In fact, the whole point of this blog can called ‘contentious’ and ‘risks exacerbating’ certain problems. Its GOOD to exacerbate issues-then its more likely they will be paid attention to.

  6. Samonymous says:

    I don’t think our MLAs in either party think as a collective or outside the box (for the betterment of the province) as they are too busy trying to get elected with promises of dolling out cash. Just look at the candidate running for the Moncton North riding (formerly held by Mr. Murphy). We have employment, lack of investment, outmigration and many other serious issues on the burner in this province and this particular individual was boasting about the fact that the gravy would flow for a project to replace hardwood floors and stairs at the Aberdeen Cultural Centre. Pretty weak considering Monctonites have no idea of this person’s stance on issues as they are only on record criticizing stuff they never delt with themselves.

  7. “I know that my comment is going to fall in deaf ears but I will say it again anyway. I think that government investments (i.e. taxpayers´ money!) should go where there is more bang for the buck instead of trying to ressuscitate “economies” that don´t make any sense.”

    I can assure that your idea is not falling on deaf ears. There many in Ottawa that believe the ‘bang for the buck’ in Atlantic Canada is not here and the federal government should not be trying to resuscitate this economy. Many of the top think tanks have made similar arguments. I would say your view is the dominant one these days.

  8. Anonymous says:

    @David Campbell
    “I can assure that your idea is not falling on deaf ears. There many in Ottawa that believe the ‘bang for the buck’ in Atlantic Canada is not here and the federal government should not be trying to resuscitate this economy. Many of the top think tanks have made similar arguments. I would say your view is the dominant one these days.”

    >> That´s precisely my point and one of the reasons why I think that New Brunswick should do the same (because it just makes more economic sense). The deaf ears I was referring to were those of New Brunswick thinkers and decision-makers…

  9. mikel says:

    Actually, it IS the dominant thinking in New Brunswick. At the CBC you can see most of the comments are ‘let it die’, but then of course, its probably mostly southerners saying that. That’s why democracy means ‘local control’ of resources, because those in Fredericton OBVIOUSLY don’t give a rats ass about the north. Come on, be serious.

    If you live there its different, and again,thats why there’s the word ‘community’ in ‘community forestry’. The province is only worried about the happiness of lease holders, who want the cheapest they can get, then will (have) moved on. Like I’ve said before, up north you can be ARRESTED for tapping a crown maple tree, but go to google earth and have a look at how much clear cutting goes on. And again, watch “Forbidden forest” where you can see entire forests cut down and most of the trees simply left to rot.

    The impact of moving a government department would have MUCH more impact by moving it to Campbellton than to St. John. SJ has problems, but for years the business community has been raving about how wonderful everything is.

    The latest pronouncement out of Fredericton has been to beg Irving to revitalize the north, the province even says it will pay for much of it. While I can understand the criticism that says that shouldn’t happen because that’s not a ‘bang for the buck’, the reality is that government can spend its OWN money for more bang, but refuses to. Under Harris here in Ontario a new university was set up in Ottawa specifically to drive technology research into the arms of industry, many argued that that was wrong headed, but it WAS a government initiative. There is NO reason such a thing can’t be done in NB-except of course for the fact that that ‘mindset’ is very dominant in New Brunswick.

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