I feel a fish story coming on

Give a man a fish and he will eat for a day.  Teach a man to fish and he will eat every day. 

The following is taken from a summary of the Federal budget:

Federal support for provinces and territories is at an all-time high, and it will continue to grow. For New Brunswick, this totals $2.7 billion in 2010-11, an increase of $591 million since 2005-06. This long-term, growing support helps ensure that New Brunswick has the resources required to provide essential public services, and contributes to shared national objectives, including health care, post-secondary education and other key components of Canada’s social safety net.

Actually the Feds are being gracious.  If they took into account the net EI payments to New Brunswickers (the net above premiums collected) and other transfers to individuals the amount would be likely well in excess of $3 billion in 2010-11 but I’ll let their spin doctors figure that out themselves.

When I read this my first thought was how much of that $591 million increase since 2005-06 went towards investments in building a strong economic foundation in New Brunswick?   The run on sentence below the amount is a clear indication.  Very little.  This funding, we are told, is for public services, national objectives, health care, education and the social safety net. 

Couldn’t they have slipped in a single word about ‘economy’?

Of course this is a non-partisan issue. The Liberals under Martin and later Cretien doled out hundreds of millions in new money to help NB pay the bills (hiring thousands of new health care workers) but very little for investments that would have helped build that strong economic foundation I am talking about.

I am tempted here to launch into a discussion about Ontario and the federal panic when the economy of that province started to teeter a little.  It was all about the economy in Ontario.  In New Brunswick, it’s about the social safety net.

I also don’t want to go into a line by line analysis but we know that ACOA spending on economic development is down.  We know that federal spending on R&D in New Brunswick is the lowest in the country.  We know that federal agencies such as Invest in Canada barely mention New Brunswick.  Most of the big federal funding programs that are meant to catalyze economic development all but by-pass New Brunswick.  There are a few.  The NRC is doing some interesting things.

Why raise it now? 

The reality is that Minister Flaherty has hinted that federal cuts are a comin’ and NB Finance Minister Greg Byrne has been quoted in the press as being concerned about this.  He should be.  New Brunswick gets 41% of its annual budget from the Feds – more than all other provinces in Canada except little old PEI which gets 43% (and we are closing that gap).  Obviously if the feds start choppin’ (and some say they have already started with the AIF) it will disporportionately impact New Brunswick.

Wouldn’t it have been interesting if we had used that fish story in New Brunswick circa 1997 when the federal gravy started to flow again?   What if the Feds and the Province had said we have a golden opportunity here to plow a pile of that federal revenue surplus into economic development so that when the next big recession hits (say around 2009), New Brunswick will have dropped its need for federal transfers down to 30% or 25% of its budgetary needs.

Because the problem with the Feds using their funds just to jack up public spending is that when they start pulling back, the expenses are still there.  We still have to pay for the doctors. 

I don’t know why this doesn’t seem to make sense.  Maybe I’m the loon here but one large Microsoft software development studio will generate the taxes to pay for 100 doctors year after year after year.  That new Daewoo wind turbine facility in Nova Scotia or the new Samsung deal in Ontario is far more beneficial to the provincial economies in the long run than short term cash for expenses (by the way NS got the Daewoo facility for far less than what Ontario had to pay for Samsung – I guess having that old TrentonWorks infrastructure was the deal maker).

I’ll end with my old argument (it may not be overly robust but it’s all I have).  It seems like it is far easier for the Feds to give money to cover the costs of government services than it is to help support economic development.   My hunch is that if they give NB $100 million for the ‘social safety net’ Ontario won’t even notice but if they give $100 million to attract a KIA plant to Saint John – every think tank from Cornwall to Kenora would be crying bloody blue murder.

That’s a hunch.  I don’t know if it is true or not but it is a working hypothesis.  If you were to do an analysis of the top 500 investment attraction projects with at least a few million in federal funding in Canada over the past 15 years (auto plants, aerospace, software, etc.) I would bet there would hardly be a single one in New Brunswick.  I would be curious.  If there are any federal spinners out there it would be nice for you to share this list with us.  Of the billions and billions given out through TPC, auto, sustainable technologies, etc. to attract or expand multinational investment in Canada, how much was given to multinational companies to invest in New Brunswick?

In the end, New Brunswick has a pile of things going against it – no oil, no gas, dwindling natural resources, federal interest in only propping up the social safety net, lack of belief among NB leaders that we can really achieve economic development, etc. 

How to break through?  Who knows.  We keep talking about it here to no avail.  Maybe elsewhere in the dimly lit halls of power in Ottawa someone is getting through but I wouldn’t count on it. 

Back in the late 1990s Kevin Lynch came to Moncton.  I think he was the federal DM of Industry at that point.  I remember it as if it was yesterday.  About 30 of us were huddled in a cramped boardroom to hear what he had to say.  I was shocked when he didn’t dole out the usuable pablum about how the feds are such big supporters of NB.  He basically told the people in that room to stop whining and go out and fix the economy.  Stop coming to Ottawa with your hat in hand.  I swear he said this – not verbatim but pretty close.

Done for now.  It’s Friday night and my wife has a foreign movie for us to watch.

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7 Responses to I feel a fish story coming on

  1. mikel says:

    Good post, that SHOULD be one of your articles, actually, to be blunt, you could shorten your blogs to ‘just the facts’ and anywhere you want to add the opinion part, just print this blog, it pretty much says it all.

    The ‘confusing’ part is that while it tends to ‘blame’ Ottawa, at the end it comes out talking about fixing the problem locally. This is confusing because of that weird Canadian preoccupation with the ‘division of labour’ in politics. When something goes wrong-blame the feds. When the feds get blamed-blame the province.

    One of the problems is the media angle that Richard always brings up. Federal representatives (in NB) are virtually NEVER discussed in media. It’s always a problem in NB because they are usually a mix of all three parties, but still, if there were SOME lobby and focus on getting them to DO something, perhaps there would be action.

    But to be fair to the feds, virtually anytime you see provincial funding going to a company, you can bet the feds are in there too-you just don’t hear about it. Irvings wallboard factory was built with 50 million (that we know of) of the feds money. We know that Ganong gets federal funding semi regularly, we know that Fatkat got federal money.

    So don’t make the mistake of putting the cart before the horse. Pick any of those research industries getting funding and ask who is doing similar work in New Brunswick. The answer is probably very few. So if the feds have no place to invest money, well, there’s your problem. And every time they DO, say, for example, that one time federal communities grant which PEI put toward upgrading a research facility in Summerside, the province put the money on a highway.

    To dumb it down, say there was one guy who doled out federal money, and there was one guy from each province who had to come and say “I need X dollars for X”. At a certain point the guy would say “why the hell should I pay for your damn highways, don’t you have ANYTHING else going on?” THAT would be perfectly justified, and I don’t think the argument of “well, no we don’t, but YOU could start up some stuff and then invest in it”. The answer, of course, is that that is not how things work. Maybe they SHOULD, in that case the argument should be pointed directly at the federal representatives in the province.

    So in either case, the bucks stops in Fredericton, but it also stops closer to home, with the communities and even the people. At some point the fisherman has to say “hey, wouldn’t it make more sense for you to TEACH me to fish?” Rather than keep coming back for the meal.

    Keep in mind also you can’t have your cake and eat it too, you’ve posted lots of blogs on how there is good profit and should be more investment in those natural resources that here you are claim are dwindling. Just recently there was a blog post about that, though I can’t remember details-but it was basically a defense of resource investment, which DOES get federal funding, and a couple of defensive posts sprang up when I dared to mention that perhaps NB should join the developed world and invest in research in some of the NEW areas.

    On that front, its so bad that a recent Irving front page was dedicated to agricultural research that had produced multi coloured potato chips! Something thats been part of the market at least here in ontario for close to a decade, yet people were commenting claiming ‘look at all the great research being done here’!

  2. pat hanratty says:

    Just a comment about dwindling natural resources, and no oil no gas.
    Properly managed, I believe our forests represent a great renewable natural resource! We have oodles of potash, and many valuable minerals.

    As far as no oil or gas, come on! We may not have a lot of oil, but we have a huge amount of natural gas between Sussex and Moncton, and more recently discovered in the North.

    Our problem, all along, has been how do we leverage the sale of these commodities to promote growth and prosperity within New Brunswick.

  3. mikel says:

    For natural resources that’s exactly the case (above). The problem has been ‘giving it away’ rather than using it to build value added products. Don’t you think its strange that high end flooring stores are stocked with laminate flooring from europe- a place not exactly known for wood abundance?

    There is SOME of that going on, particularly with Irving and Kent Homes, but that’s still a small amount. While I can find boards at Home Deport from Irving, I’m yet to find ANY finished products. Meanwhile, walk into an IKEA store and there is tons of furniture made in Sweden. The whole ‘community forestry’ model is another issue, but its worth noting for just how little the province’s potash is given away. All in exchange for jobs-they even cut the royalties, and now many of those jobs have been lost because of the recession.

    Mining has unfortunately already been stripped bare for dirt cheap, so dirt cheap that the Fraser Institute ranked NB the most ‘business friendly’ jurisdiction in the hemisphere-and that includes places like Columbia where the government will provide military to ‘take out’ any protests.

    For natural gas, I should point out that the gas is not yet completely verified. SOME of it is, but a lot of people seem to think that its a certainty that there is more gas there than off Sable Island. There is gas EVERYWHERE, as I’ve said, all those farms are just churning off natural gas that is wasted, and if you want to find gas, the first place I’d go is a peat bog-and there is LOTS of that in the northeast, unfortunately, one company has a monopoly on the peat (again sold for cheap instead of used, and again contributing to environmental destruction).

    It doesn’t take much to make an economy work, just look at the middle ages-and many communities in NB have no more people than many villages of the middle ages. Again, thats why the buck stops FIRST in NB-the province moves a department to St. John, yet ignores the north. Community forestry would easily provide full employment for most of the ‘villages’ even towns in the north, but the corporate model of forestry has been ‘in’ so long the government can’t get out from under their thumb. If the province wants more immigration, start a science/tech school in Miramichi or Campbellton, market the hell out of it in Asia, and don’t include any caps for foreign enrollment.

    So I agree, there are ALL kinds of ways to ‘promote growth and prosperity’. Unfortunately, you have a government whose ideas for doing that are selling off the only public assets that pay for themselves, moving departments around, and begging Irving to revitalize the north for them with promises of lots of subsidies. When you have THAT situation in Fredericton, its a tough sell to say “the federal government is screwing us over”.

  4. Anonymous says:

    What I am hearing is that Ottawa and the ‘have’ provinces should be sending more money (for equalization AND economic development) so I have to bring it up again: every dollar that Ottawa sends to New Brunswick for health care, education and the social safety net is a dollar that the Government of New Brunswick saves and that could be applied to economic development.
    I am sorry, but I will have to agree with Kevin Lynch (Atlantic Canada should stop whining and go out and fix the economy).

  5. Anonymous says:

    I was wondering about how the U.S. states that are closest to New Brunswick rank in terms of attractiveness for business and found this very interesting table: http://www.cnbc.com/id/25501959/

    One of the most striking observations is that Vermont, New Hampshire and Maine rank well in terms of education and quality of life (and relatively well in the “business friendliness” category), but the overall relative position of the three states is in the bottom 10 (out of 50). The major factors for the low ranking include: cost of business, workforce, transportation and access to capital. I would sum it up in one word: geography.

  6. richard says:

    “a couple of defensive posts sprang up when I dared to mention that perhaps NB should join the developed world and invest in research in some of the NEW areas. ”

    Perhaps you should find those posts and discover, once again, the huge difference between what you think was said and what was actually said.

    NBs natural resources in fact have a great deal of potential for high-tech industries that create high-paying jobs. There is very little direct federal research in NB aimed at developing those applications. Virtually all federal research in resources in NB is coordinated with existing stakeholders; very little is devoted to new applications.

    The feds have little incentive to change the way they deal with NB or the rest of Atlantic Canada. NB has never developed a rational evidence-based plan to move NB forward, nor have NBers demanded one. Instead govts have largely done what the people have wanted – focused on short-term job creation and job preservation.

  7. mikel says:

    What you just wrote is exactly my point and the point I was making in the earlier post. With two caveats-first, nobody doubts that resources CAN create high paying jobs (that depends on the employer and profit margin though). I pretty much emphasize that point when talking about laminate flooring from europe. Laminate flooring production is still relatively small scale in New Brunswick-partly funded by ACOA.

    Using that as an example, the PROBLEM is what Richard says-dealing with existing stakeholders-or FIVE stakeholders. Laminate flooring doesn’t require tons of research, or much research at all, I made my own laminate flooring. It simply means not caving in to the demands of five companies who have always made money by turning trees into pulp.

    That’s not true about federal research, money DOES go to the same stakeholders (businesses), but it OFTEN goes to develop new applications. Again, that’s not the problem.

    So, sure, you can get research money to find new ‘applications’ for wood, or you can look around at what is already OUT THERE, and create value added products instead of using it all for pulp, plywood, and 2X4’s. And then use the research money in areas where research is being done by the rest of the industrial world-bio-medical, pharmaceutical, electronic, space age, transportation, etc.

    I’m not letting the feds off the hook as much as the anonymous poster, but there is some validity to that point. I don’t know how much federal dollars went into it, but again, if you are completely happy that X amount went into automotive research in plant X in ontario, and X amount went into developing purple potato chips for the NB agricultural industry to ‘create new jobs’ in potato chip manufacture (even if it DID provide high paying jobs-which I doubt), then that’s where our ‘opinions’ part company.

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