The IMF yesterday warned about Canada’s economic growth trajectory and suggested the federal government may have to get back into the stimulus business. Why? Because economic growth will drop from 1.8% to 1.5%.
When Canada’s economy grows by 1.5% its a worrying trend.
When New Brunswick’s economy grows by 0.2% – aww, that’s just New Brunswick. What’d you expect?
Canada is a collection of provincial economies each with their own contours, challenges and opportunities. When a little province like NB has a problem – no one notices – but if it hits enough provinces – boom, you get weak national growth and the IMF getting its underwear in a knot.
In a macabre kind of way it was fun to watch the Feds in response to the Ontario economy tanking a few years ago. There was billions for the auto bailout. An ACOA style regional development agency was set up for southern Ontario. The government fell over itself to be seen trying to fix the Ontario economy.
The Ontario economy has outperformed NB by a wide margin since the recession – GDP growth and employment growth – but it hasn’t been to the level required to boost national GDP growth – so the mandarins fret.
This is the main reason why I would prefer the feds to have a ‘side deals’ view of relationships with provincial governments. I’m not talking about separate deals on Equalization or health transfers – those should be negotiated by the whole gang.
But when it comes to the priorities of the provinces – each one has distinct challenges and opportunities. The feds and the province should figure out how to leverage each level of governments’ strengths to achieve a shared set of objectives.
New Brunswick needs a more intelligent approach to immigration. It needs to think long and hard about seasonal industries and the implications of EI reform. It needs at least its share of national FDI. It needs to encourage more investment capital – particularly into its high growth potential SMEs. New Brunswick has a serious literacy challenge.
There are a host of issues – some are specific to NB and others are regional and even national in scope – and it requires an intelligent, long term partnership between the feds and the province.