Simple math for economists is a little harder to grasp for us mere mortals. The TJ has a good story today on the need to bring the NB government a strong measure of fiscal discipline. I don’t disagree one bit with the premise of the story. We will have to reign in public spending which has been running at an average of six per cent per year growth for almost a decade. But there is one quote which I think is emblematic of New Brunswick’s reality:
Craig Brett, the Canada Research chair in Canadian public policy at Mount Allison University, said politicians and New Brunswickers will have to confront these serious challenges before the election this fall. “The government keeps saying that people in New Brunswick don’t want to have service cuts,” he said. “That leaves you with two options. You either keep running deficits or bring taxes back up. It’s only simple math.”
Dr. Brett, conveniently, leaves out the third option just – I presume – to keep his simple math simple. Newfoundland didn’t generate huge supluses and pay down its Equalization deficit by either running deficits or bringing taxes up. Alberta didn’t run up billions in surpluses by bringing up taxes or running deficits. Saskatchewan didn’t cut services, raise taxes or run deficits while running up among the fastest growth in public spending in the country.
I raise this because it’s too easy in New Brunswick to ignore economic development. Dr. Brett could have easily stated that New Brunswick’s private economy has struggled to generate the tax base the province needs to provide public services and that a focus on generating new economic activity would be a third option to the simple math.
But in New Brunswick it is simpler to ignore the economic dynamic. I know some of you will say I am being petty – that the economic option is a given/implied here.
But I don’t think so.
New Brunswick does need to reign in its spending and probably does need to find ways to be smarter in service delivery but the long term viability of New Brunswick as a province and as a place trying to have successful communities where people can enjoy a good quality of life will be tied more to its economic development than efforts to chip away at social programs or tweak tax rates up or down.