Alward’s economic dilemma

Someone asked me why I am not attacking the Alward government’s job creation record over its first year in office.    If you have been reading the blog, you probably know the answer but just in case here is the thumbnail sketch.

I was wary of Bernard Lord’s approach to economic development from the 1999 election campaign where he criticized McKenna’s call centres and called for a ‘made in New Brunswick’ solution.  The reality is that Premier Lord took office in the middle of the longest period of sustained economic and population growth in Canadian history.  Public spending was just starting to ramp up again in a big way and those pesky call centres were continuing to create hundreds of new jobs per year (more call centre jobs were created under Lord than McKenna).  In my view, 1999 was a golden opportunity to get serious about economic development and, in my view, Premier Lord did very little.  He cut small business taxes and took credit for several thousand call centre jobs.  He launched initiatives such as eNB and the R&D initiative (we were to reach the top four in Canada for R&D among the provinces – we are still last) but didn’t put any real effort into them.

Premier Graham made a number of positive overtures early on in his term but in 2007 was hit by the Great Recession and he implemented a big fiscal stimulus program which distorted the private sector economic development picture.  All that increased public sector made it look like NB was holding its own.  In the end, there were no new initiatives of note or efforts leading to increased private sector investment in any sector.  They were counting on the energy hub but that didn’t work out.  A few other large capital projects – Lepreau refurb, potash, LNG also propped up construction employment.

So that brings us to Premier Alward who landed in office with continued softness in the U.S. market, projects such as potash and Lepreau winding up, the high value of the Canadian dollar, a contracting call centre industry and the need to take the foot off the public spending spree that had marked the previous two budgets.  It doesn’t take a rocket scientist to see these factors would lead to trouble in the labour market.

So, if anything, I feel for the Premier and his team these days.  However, the clock is ticking and we will need to see what the plan is to foster economic development moving forward.  Don’t forget it was in the middle of the fiscal troubles of the early 1990s that the call centre initiative emerged.

We are going to need that again.  Maybe it will be shale gas, maybe cloud computing, maybe something else – likely a combination of sectors but we need to craft the value proposition and position the province for investment.

For me the policy moves over the next few months are more important to me than the employment numbers.

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7 Responses to Alward’s economic dilemma

  1. Paul says:

    Your view of recent history is somewhat biased, in my humble opinion.

    I agree that Lord was not as agressive as McKenna, and his youth and inexperience is too blame. The same could be said for Graham, although he was way more fiscally irresponsible than Lord. In fact, Graham’s government ramped up spending so much in the two budgets before the recession (which was more in 2008, than 2007) that when the recession hit he had to make a bad situation worse.

    We needed to pick smarter and more experienced leaders for our political parties, instead of puppets of the back room boys, which is really the problem with economic development. Too much power broking, not enough real door knocking, which is what leads to job creation.

    It’s actually kind of funny watching the Liberals trying to twist themselves in knots trying to be an opposition, since they essentially stand for and do (did) roughly the same things.

    I think Alward is old enough, with enough experience that he knows there are no simple policy decisions which will change the tide in economic development given the demographic and fiscal challenges facing New Brunswick.

    The job creation numbers spewed by politicians make up the job creation record, and I am old enough to know that those don’t mean much if anything.

    I look forward to Alward’s policy changes and I hope it downsizes and or closes most of the economic development agencies in the province.

  2. richard says:

    I think it is clear that Alward lacks the vision that the province needs to reverse its downward spiral. His ministers seem to be a rather dull bunch as well. They do not have the stomach or the ideas that would allow for some very tough decisions. For a few months, I believe they were hopeful that Harper would bail them out of the Lepreau mess; that seems less likely now and that re-election brag may be gone for good.

    The current admin strikes me very much as a caretaker govt, elected following a populist revolt and with no interest in suffering the same fate. By doing next-to-nothing, they may be hoping that, come election time, they will still be seen as the best of a bad bunch. It is sad that a province with so many problems should be settling for such mediocrity.

  3. Paul says:

    I will say if people want political change, they need to be politically engaged. It’s easy to complain and say the politicians are weak willed and populist, but that means more people need to get involved in politics.

    I hear lots of people say on this blog that they wished more people understood economic development. Then we need some of you folks involved in the political process to help make that happen. if all you do is sit on the sidelines and complain about politicians, you will get exactly the government you deserve.

    This is not someone else’s government we are talking about, it’s ours.

  4. mikel says:

    I’ve said the same thing as Paul for awhile, but the same advice goes to Paul. Each person has to ask themself “what have I done to change the political process in NB?” David at least has this blog. It’s not a big thing, but its something. However, like Charles leblanc’s blog, it becomes very obvious what things have impact. A blog can make small changes, but not big ones.

    Canada is FULL of armchair complainers, and at a certain point, you DO get the ‘government you deserve’. But a lot of people DON”T. Say what you want about protest, but when 40 people line a highway to stop trucks, THAT is dedication. Charles had a picture of a guy who lay down on a road while a giant cement block hung over ten feet over his head. Charles goes down to Public Safety and yells through a bullhorn about ‘KGB tactics’. THAT is dedication.

    That’s whats most disconcerting about this blog, because most of the people criticizing here in general AGREE with most government policies. So even just a LITTLE more engagement would likely produce results. So to Paul I’d say, its very true what you say, but how are YOU engaged? Again, I’d offer any volunteer time to set up a website if guys here would set up a lobby group. It’s worth pointing out that a new blogger “Purple Violet Press” has set up simply to fight the fracking industry (for now). Not only do they have a blog, but they’ve sent out letters in order to meet with various government officials (who of course ignore them, but at least they try-and publish what they’ve tried).

  5. richard says:

    “that means more people need to get involved in politics.”

    Hmm, perhaps the opposite is true – perhaps there are too many people engaged in ‘politics’. Everyone has an opinion and thanks to social media opinions can be readily formed. Often social media see to it that those opinions are formed and, once formed, will hardly ever change (at least, until it no longer matters politically). Opinion seems to be, e.g., set against hydro-fracking; expert opinion and data are no longer relevant.

    If you are interested in good public policy, then democracy has its limits. Getting things right is the point. Getting more engagment when so many people are no longer interested in looking at data before they form opinions is a waste of time, IMHO. That’s why we need some leaders with vision.

    “Then we need some of you folks involved in the political process to help make that happen”

    Operating a blog is part of the political process, just as are other social media. There are only a handful of people with useful knowledge about economic development; they are greatly outnumbered by those who have uninformed opinions on this subject, yet consider their expertise to be equal. Is that the result of more ‘engagement’? I think you are barking up the wrong tree.

  6. Paul says:

    All I can say, Mikel, is I am a very active and vocal about what I think will improve the political process. Was active in it, and continue to look for ways to improve. I participate in may public debates and meetings and do my bit, which gives me lots of insight.

    I also am older than most of the people here I expect, and have watched the wheels spinning for a long time. Democracy is messy business, but everyone need to be involved.

  7. mikel says:

    There is no lack of people who feel that as long as people who agree with them call the shots then everything will be fine. But even David, who is clearly a professional, has offered virtually no concrete policy solutions to NB’s economic problems. Saying ‘get more foreign investment’ is like saying ‘get a fairy godmother’.

    So its clear the ‘only real smart people should make decisions’ line is pretty dried up. Anybody that thinks Alward knows more about hydrofracking than, say, Mark Darcy, is simply crazy. Whether – and how- to pursue the natural gas industry is a POLITICAL decision, not an economic one. That is blatantly obvious in the simple fact that no gas has yet been found-there IS no ‘economic issue’-yet.

    The problem is bigger than economics, like I said, say EVERY NBer created an iphone app that earned them even just $30,000 a year. That’s economic development. And it took no theories, no bureaucracy, no debate (to make it more realistic, you can substitute any given population for an export in virtually ANY industry, so long as its money is brought in from elsewhere).

    But in the case of an iphone app, it obviously requires that every person knows HOW to create and sell such a thing-that’s the modern day fisherman parable. And its ALL about education. Its not about direct subsidies, although people need to be able to live while they develop a project. But thats getting more people involved. In Richards scenario, well, I have a very good example of exactly such a case-in the old Testament the Egyptian Pharoah’s idea of ED was to build pyramids. He called the shots and enslaved the hebrews. Now, who here wants to argue that no jew at the time had any idea of how to help develop an economy, and that it should be ‘left to the guy who knows better’.

    Again, I’m a big proponent of getting information out there, I do it all the time. I bitch about fracking here, then go to other sites and argue the opposite. People need the facts, but people have the basic right to make the decisions that affect them. Even if YOU think they are wrong.

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