The ninth discussion

My column today is a variation on the series of ‘discussions’ that the Globe & Mail is having they say will help us redefine who we are as a nation.  I realize I am studying a particular wedge of the Canadian economic situation but I still think it should be elevated to the status of a national dialogue:

The regional demographic mix in Canada is diverging. The population of Atlantic Canada is comparatively old, white and declining. The population of the rest of Canada – particularly the large urban centres – is younger, multicultural and growing rapidly.

From at least the early 1990s there has been a relatively large group of thinkers advocating that the solution to the Atlantic Canada ‘problem’ was out-migration.   The idea was simple.  There are lots of jobs out West and Maritimers are a good fit.  The classic win-win.  Atlantic Canada gets lower unemployment and the West gets good workers.

The problem with this theory (one report commissioned by HRDC at the time suggested the Feds pay people to move) is that it didn’t give any thought to what it would leave behind in Atlantic Canada. It didn’t realize that the cost of public services doesn’t scale one-to-one with population changes.  A community or region needs a certain base of people to have a high school, or a hospital, or a decent highway, or a decent airport, or whatever. 

It didn’t take into consideration that it would leave primarily older people in Atlantic Canada.  It didn’t factor in that as Canada as a whole becomes a multicultural place (four million new immigrants since the early 1990s), Atlantic Canad would be this alcove of older, white people.

In other words, we have created a bigger problem than we had before.  At least in the early 1990s you could claim there was a ready workforce here for industries such as manufacturing, back offices and IT.   Now, you really can’t.   We could have counted on ‘growing our way’ out of the last recessions but it will be much harder now because the economic fundamentals – led by the lack of workforce – are not there.

I said back then, and I say now, that we should have focused on developing public policy tools could we use to reinvigorate the economy in Atlantic Canada – not focus on depopulation.  And lest you jump to the corporate welfare card, that part of the pie is low on my list of concerns.  Direct incentives are only a small piece of the value proposition for investing in a place like Moncton or Truro or Summerside.

I’m not greedy.  The population of Canada grew by more than six million in the past 20 years.  I’d settle for around 3% of that growth for New Brunswick.  That seems reasonable.  Do the math.  That’s 180,000 people.  Even the aggressive Self-Sufficiency plan was only calling for 100,000 new people 20 years. 

If in 1990, the government had said we want our 180,000 by 2010 and if it developed a successful industry clustering strategy that led to new companies establishing here and national/international firms investing here, New Brunswick would have been a far different – and I believe better – place. 

We would have been more multicultural (just like the rest of Canada).  We would have reduced our reliance on federal transfers.  We would have breathed new life into the entrepreneurial culture.  Instead of just a small handful of growing communities, growth would have been more widespread.

Ambition matters.  Did McKenna have ambition for the province?  Did Lord?  Did Graham?  Does Alward?  I suspect they think they did (do) but ambition is more than slogans and one line zingers.  It’s about setting a clear vision and working towards it.

This entry was posted in Uncategorized. Bookmark the permalink.

8 Responses to The ninth discussion

  1. Scott says:

    “From at least the early 1990s there has been a relatively large group of thinkers advocating that the solution to the Atlantic Canada ‘problem’ was out-migration. The idea was simple. There are lots of jobs out West and Maritimers are a good fit. The classic win-win. Atlantic Canada gets lower unemployment and the West gets good workers.”

    That’s partly correct, David. I think what some argue is that decades of intervening upon, or better yet, interrupting the natural regional economic adjustment has led our province into a dire position where we are overly dependent upon government transfers for our economic well-being.

    Take Saskatchewan as an example. Nobody would argue that for decades the agricultural industry is what drove that province economically. As global reorganization happened in the 90s, a readjustment process began to take place where larger operations were remaining competitive while smaller self-employed, and less productive ones, could not compete. Couple that readjustment process with the government’s decision to not grant struggling farmers UI benefits in their off-season and we saw massive capitalization in agriculture to the emptying out of countless hamlets and small towns. Outmigration was set into hyperspeed (sp?). Anyway, to make a long story short I think when you look back, Sakatchewan was lucky that the feds didn’t interrupt the process through a policy of UI benefits for the unproductive. And let’s be frank, if they had of offered it, there’s no reason to believe that they wouldn’t have taken it much like the fishermen in our province. But they didn’t. Readjustment took place. People reorganized and relocated. And now Saskatcewan is better for it as they are still not dependent on transfers (and can move forward).

    I even see that some are moving back to Calgary for not only a better life, but a better career.

  2. Scott says:

    Should have read “back from Calgary.” freudian slip perhaps. lol

  3. I agree. New Brunswick’s economic strategy ought at least in part to be based on driving immigration and increasing diversity in the province.

  4. mikel says:

    I posted this at the article as well. Growth in NB cities almost matches southern ontario cities. The makeup of the population-youth, working age, is also almost identical. The problem is not ‘province wide’ but restricted to the north and to rural areas-much as that is a problem in most of Canada.
    As for Scott’s point, its ridiculous to think that NB is ‘worse off’ than Saskatchewan because some fishermen got some EI. Saskatchewan farmers are WELL protected by the wheat board, something that can’t be said of NB farmers.
    If anything Saskatchewan benefits even more from government largesse. To return to David’s oft mentioned point, Saskatchewan doesn’t get federal transfers, but virtually the entire federal department of agriculture research department is located in Saskatoon and Regina. The dept of ag is almost literally run by chemical companies now, and Monsanto and Pioneer pay for that service by investing heavily in the area as well.
    That’s not the whole scenario, Saskatchewan was also smart enough to create a crown corp in Sask potash, and so at one time those profits were going to the province. They are also smart enough to have public insurance, which keeps Sask money IN Saskatchewan, as opposed to having it sent to ontario. And their oil refinery is a co-operative, so there hasn’t been the aggressive moves we see from Irving to extract the maximum amount of concessions.
    That evidence simply doesn’t hold up.

  5. richard says:

    “And now Saskatcewan is better for it as they are still not dependent on transfers (and can move forward).”

    But, mainly, they have benefited from oil and other resource revenues that more than replaced ag revenues. I don’t think that migration affected that one way or the other. Without resource revenues,Sask would still be receiving large fed transfers. Its those revenues that are more likely the cause of Sask’s current economic condition, not a re-adjustment following ag revenue decline. Are you suggesting that oil prices jumped because Sask needed the help? No, don’t think so.

    Perhaps EI benefits (which are federal not provincial) or lack therof enouraged out-migration, but was there proportionately more out-migration in Sask than in the Maritimes? On other words, is your position based on ideology or data analysis?

  6. Scott says:

    On other words, is your position based on ideology or data analysis?

    Probably a little bit of both Richard. I don’t have the numbers in my hand, but I do have the experience of meeting with hundreds of western farmers that marched to Ottawa in 2000-01 to protest the Chretien government and their stories (many very sad indeed) seemed to mirror the fact that many self-employed farmers had (and are still having) a rough go of it due to the fact that global economic conditions (and sometimes drought) have led them to bankruptcy and to welfare. Some have since moved on as I have mentioned, but many still struggle with their daily existence. I guess the point I was attempting to make here was that granting EI/UI to self-employed fishermen in NB but not to self-employed farmers in Saskatchewan increased (or retained folks) in the former and decreased the population of the latter. Likewise, you mentioned oil, the decision to keep the domestic energy price below world levels serves to increase the population of the non-energy producing provinces relative to the energy producing provinces. So it wasn’t always rosy on that front either. So policy matters. Transfer dependency may well mean that some provinces, like NB, will suffer losses of population over the short term. But regardless, what is more important here is a) whether the outgoing migrants that fled to strong, pro-growth regions are better off in the in their new, chosen location and b) whether the region will be more viable economically over the long term. If the answer is “yes’ to both, that to me is the end of the story.

  7. richard says:

    ” I guess the point I was attempting to make here was that granting EI/UI to self-employed fishermen in NB but not to self-employed farmers in Saskatchewan increased (or retained folks) in the former and decreased the population of the latter.”

    Did it? Sorry, but I don’t see the cause and effect there.

    I think the point (a point you are glossing over) is that oil and other resource revenue is why Sask is on the upswing; NB does not have significant oil revenues. NB’s situation is therefore much more difficult to manage – we cannot rely on resource royalities to produce an economic boom.

    There is absolutely no reason to believe that reducing transfer payments would result in better economic prospects here. Out-migration might increase but the fact remains that the resulting reduced population would still require services. The cost of those services would still be supported by the feds, one way or the other, resulting in increased subsidy per capita.

    ” If the answer is “yes’ to both, that to me is the end of the story.”

    It would be preferable to base economic and social policy on something other than wishful thinking. The idea that transfer reductions will result in economic growth is wishful thinking. Unfortunately, the real world differs from the wishful one in which libertarians and neoconservatives seem to reside.

  8. mikel says:

    “NB’s situation is therefore much more difficult to manage – we cannot rely on resource royalities to produce an economic boom.”

    Actually, thats NOT precisely true. It depends on how resources are MANAGED. If you give away your potash in exchange for the jobs, then obviously you aren’t going to get an economic boom’.

    According to Sask Potash, they stand to lose over a billion if this sale goes through. Not sure on that, but that’s a big piece of cash going into the Saskatchewan government, meanwhile in NB, the contribution of potash royalties are VERY negligible.

    Over at CBC is the story about how NB exports will increase by 25%-highest in the country. Hurray! But wait, it turns out virtually ALL of that is because the LNG terminal is in business. And since the gas isn’t FROM NB, then all it will get is some tolls.

    As for natural gas, in a story about the McCully gas field, it states that this producer of 13 billion cubic feet of gas per year will supply the government with $6 million dollars. That amounts to a royalty of .05%. The lowest I can find anywhere in Canada is 2.5%. So again, like with forestry being handed over to a few multinationals, if you give away all your resources, you certainly aren’t going to generate a ‘boom’ from them.

    And like I said, that part is VERY different in Saskatchewan. As for Saskatchewan, let’s point out that it was late nineties when the crows rate subsidy was abolished-but there was no similar rail subsidy for farmers in the maritimes. Farmers in NB faced not only the same problems as farmers in Saskatchewan, but also had to deal with McCains buying up all the land. So don’t confuse farmers with fishermen.

Comments are closed.