It's The Economy, Stupid

The Telegraph-Journal is much better at reporting economic data than the Times & Transcript. In fact, in my opinion, the T&T is very selective and only reports economic stories that are positive (there are a few exceptions).

But even in the case of the TJ, I find the reporters, in many cases, do not report the most basic element of the stories.

Consider a story earlier in the week on bankruptcies in New Brunswick. The TJ story reported that bankruptcies are down this month compared to last month; that for the year they are up strongly, that compared to Canada we are better in the past month but worse for the year. The story looked at growth rates in other provinces, etc. etc. etc.

But nowhere in the story was the basic piece of information that is critical to understanding bankruptcies or any other economic statistic – the number of bankruptcies in New Brunswick compared to the other provinces adjusted for population (i.e. per 10,000 people or some such thing). When you do this analysis, you see that NB’s bankruptcies in July were only slightly higher than the national average. Then you have a context in which to set the growth or decline on a monthly basis.

Bankruptcies per 10,000 persons (July 2005)
T.-N./Nfld. 41.2
N.-É./N.S. 34.7
I.P.-É./P.E.I. 20.3
N.-B./N.B. 21.6
Québec 22.8
Ontario 20.5
Manitoba 20.8
Saskatchewan 18.3
Alberta 19.6
C.-B./B.C. 16.4
Canada 21.1

Then I read Khalid Malik’s story, “Region shows steady growth”, and got the same feeling. Khalid discusses GDP growth, housing starts/growth, and a host of other stats but I still walked away from the article without context:

• What is our GDP per capita? Then tell me how it is changing up/down.
• What is the housing starts/building permit figures adjusted for population? Then tell me how it is changing up/down. For example, building permits in Newfoundland were up 63% but if the base number was crappy, the level of building permits might still be very low – but we would never know from reading this article.

Other recent examples of this voodoo economic reporting including:

*Talking about strong growth in housing starts, one story read, New Brunswick leads country in housing starts growth. They forgot to mention that the number of housing starts per capita was second worst in Canada.

*New Brunswick sees strong increase in employment rate. They forgot to mention we have the second worst employment rate in Canada.

*New Brunswick’s unemployment rate drops to lowest level since 1976. Yeah, but you forgot to mention that it is still the second worst in Canada.

Give us context, please so we can decide.

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Ever since I have lived in Moncton and before, there have been serious discussions about getting a direct flight from Moncton to some key hub in the United States. Local business people, residents and pontential investors in to the community all stated that getting here was a serious hassle. In fact, some companies that visited Moncton from the U.S. took all day just to get here.

Yesterday, the Greater Moncton International Airport announced that Continental Airlines would be offering a direct service from Moncton to Newark on the outskirts of New York City. Newark is a hub airport offering connections to dozens of U.S. and international connections.

Here’s a quote from the press release:

“New Brunswick is one of Canada’s fastest-growing U.S. tourism destinations with about 500,000 thousand visitors a year,” said Alex Heiter, manager, Scheduling and Planning, Continental Airlines. “By connecting Moncton to Continental’s hub in Newark, travelers from New Brunswick will have the most convenient connections to U.S., Europe, Asia, the Caribbean and Latin America.”

There are many reasons why this is excellent news. Here are a few:

1. It makes Moncton much more accessible for international businesses and tourists

2. It means more competition which means more competitive prices for travel outside Canada.

3. It means that visitors can get here (and we can travel out) with in most cases only one connection instead of two.

4. It means that we know have a highly viable option for international travel. Instead of flying west to Toronto, we can know fly south to Newark and connect to Mexico or Brazil.

5. It solidify’s the airport as a ‘hub’ for air traffic. For too long in this region there have been too many airports. New Brunswick still has more airports with scheduled air services than Ontario (on a per capita basis). Consolidating air travellers – even if they have to drive 2 hours – makes more sense in the long run. Flying from Miramichi to Toronto, then connecting to a U.S. hub and then flying on a regional plane to the final destination is much more time intensive than driving to Moncton, flying direct to Newark and connecting to the final destination. And it is cheaper too.

6. Finally, it’s a key feather in the economic development cap of the community. Many communities have had to buy in airlines with guarantees of passengers (i.e. Delta in Fredericton) but as I understand it, no ‘ticket trust’ or any other guarantees were offered to Continental. They are here for the business case, period.

Now, I think the time is right for the airport to dust off another old idea. That being the establishment of a shuttle bus service that would run from Northeastern NB to the airport and possibly from central Nova Scotia. I am not suggesting a loss leader but someone should take a look and see if there would be a serious business case to set this service up. One of the unknown attributes of the Pearson Airport in Toronto is that it services a local market in the GTA that spans 2-3 hour radius around the airport. Passengers from Waterloo, Kitchener, Oshawa, Hamilton, etc. are brought in on cheap shuttle buses that pick them up at their door. It may seem odd that these cities with populations greater than Moncton have no airport to speak of but the truth is that the more consolidation of air traffic you can achieve the better outcomes for the whole region (in terms of competition, flight choices, destinations, etc.).

Congratulations to the airport for landing this strategic and vital service. Congratulations to Enterprise Greater Moncton for the support role it played.

Watch out, folks. Right under our noses, Greater Moncton is growing up. 15-20 years ago this was a community reeling from the closure of the CN Shops – which at its peak employed some 25% of the non-services workers in all of Moncton.

You’ve come a long way, baby.

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Couple of points on the Times & Transcript ‘We Say’ segment about immigration:

1. I fully agree we need more immigration. No debate. Kudos to Enterprise Greater Moncton for leading on this file.

2. The T&T states “We should also be looking to refugee communities and among those who have little but are seeking a better life. These are the type of immigrants that built Canada and they are people who not only need what Moncton and Canada can offer, but who have every incentive to work tremendously hard to succeed. History shows a positive record and one often of innovation among such immigrants. “

What the T&T fails to state (as usual they leave out the meat of the thing) is that Canada was booming with opportunity when those refugees came. There were jobs here in mines, the forestry, fishing, farming, etc. Hard work doesn’t matter much when there are no jobs. That’s why I fully agree with EGM primarily targeting skilled immigrants and investor immigrants. If we flood the community with refugees and no jobs, we are setting ourselves up for economic and social problems. Now, if the province starts to see real economic growth (a la Arizona, Alberta, Nevada, etc.) then we will need a flood of worker level immigrants and we can dust off the T&T’s simplistic We Say. But until then, EGM keep your focus.

3. Al Hogan throws in the trite line at the end of the We Say- “Our city already has a solid multicultural base.” This comment is just plain silly. We have a ‘bi-cultural’ base – not a multicultural one.

According to the Census, 98% of Greater Monctonians are ‘White’ and only 98.8% of us have either English or French as our Mother Tongue.

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Those of you dedicated readers (yes, Mom, that’ s you) will recall my frustration with all this talk about ‘R&D’ in New Brunswick.

You will recall that the Prosperity Plan calls for New Brunswick to be third in Canada among the provinces for R&D spending as a percentage of GDP. You will also recall how absurd this objective was, in my opinion, because we are last right now and it would require an additional $100 million per year in R&D spending to reach the level of Nova Scotia – the province that is currently in third place (according to Statistics Canada).

So, you can imagine when I read the article in the Telegraph-Journal on Saturday trumpeting all the government’s efforts in this area, I had to sigh.

The Premier starts with the usual bold and incisive commentary “New Brunswick must increase its research capacity or risk losing ground to emerging powers in China and India.”

Wow, sounds right!

Then the article goes on to promote the activity of the New Brunswick Innovation Foundation. Since its formation in November 2002 the foundation has invested approximately $8 million in 117 research projects at New Brunswick post-secondary institutions.

$8 million over three years – that’s $2.7 million per year.

And we need an additional $100 million per year to meet the government’s target.

And the $2.7 million per year is considered ‘a good start’.

Sigh.

The federal government gives out hundreds of millions per year in research grants to Canada’s universities.

Maybe we should scrap the NBIF and use the $2.7M to hire some sales guys to better tap this pool of money.

And while I am on the subject of the NBIF, they have something like seven staff members. Seven staff to shell out $2.7M worth of money? It would cost almost a million just to run that office. So spending $1M to give out $2.7M? Something’s funny here.

Maybe the Times & Transcript will run an investigative report on the NBIF.

Maybe not. Chuckle.

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This blog is picking up on a theme that I started a few blogs ago about the state of Confederation. Firstly, I disclaim all over the place, my knowledge of Canadian history – it is not that good and I know that many of my generation are also lacking in a rigourous understanding of Canadian history.

However, having said that, I do know a little bit about economic development. And I am very curious about Ralph Klein’s comments in the National Post this weekend. The headline reads “Klein adamant Alberta won’t share $7-billion surplus”. Klein is quoted as saying “The rest of Canada didn’t offer to share with us in our bad times”.

Now, if King Ralph, would poke his nose out of the (oil) sand for a minute, he would realize that Canada is one of the only countries in the world not to have system of equitable distribution of natural resource revenues. Even Iraq’s new constitution guarantees equality of natural resource revenue distribution throughout the country.

So, without wading into this debate in any great detail, I would say that Canada’s unique and somewhat bizarre natural resource revenue policies are an overt benefit to Alberta – one not given to a discrete province in most countries around the world.

When these revenues made Alberta rich, most Canadians said “good for them”. Now that these revenues are becoming egregious – to the point of eclipsing the Federal Government itself, maybe we should revive ‘ol Trudeau. And if Alberta decides to leave, so be it. Quebec wants out. Newfoundland wants out. BC has rumbled in this direction. Even Cape Breton is evaluating its place in Confederation.

Maybe we need to have a candid discourse about this country. If we are, as Cretien and Martin assert over and over again, the best country in the world with the highest standard of living, the best quality of life, the ‘just society’, then why does everyone want out? Having a de facto policy that leads to this great economic disparity in Canada – to the point of concerning Ontario – is a recipe for ultimate disintegration.

You know my position, I say Alberta can keep their billions – I hope they choke on in. I think New Brunswick should drive economic development the old fashion way – like Ireland – and attract global companies to manufacture, develop and service global markets from little ‘ol NB.

Then when Alberta’s oil rev runs out and New Brunswick has a strong and diversified economy, they can come running to us with their hand out.

Then Premier Bernard Lord IX can be quoted in the Moncton Times and Transcript as saying “Alberta didn’t offer to share with us in our bad times”.

Sheesh, sorry, I just drifted off into Neverland. Back to EI, Equalization, out-migration and the raw and real state of the union in New Brunswick and Canada.

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Although you won’t read about it in the local media, the issue of port congestion is becoming a real problem for the North American transportation network. The rapid rise of Asian imports in to western Canadian and U.S. ports has led to so much congestion that ships are waiting several weeks in some cases to unload their cargo.

So the Canadian government has responded by investing millions into a port in the hinterland of British Columbia as an alternative to Vancouver. Mexico is getting in on the act and investing tens of millions into one of its ports to be the alternative entry point for these goods.

However, because of this trend and others such as the larger cargo ships coming on the market, it may start to make good sense to ship Asian goods through the Suez Canal to eastern North American ports.

The Port of Halifax should jump all over this trend. In the past 15 years, cities that have dynamic and successful ports in North America have grew, on average, at twice the rate of the average North American city. Ports are a catalyst for growth.

And, except for a bottleneck right at the port in Halifax, our roads are the envy of North America for their lack of congestion – basically right down to the I-495 around Boston.

A new study out just last week called the situation critical. It’s time for government (Nova Scotia and Federal) to realize the strategic nature of the Port of Halifax to the Maritime Provinces economy and if they see the wisdom of investing millions into a Northern BC port with limited highway infrastructure, they should also see the wisdom in increasing port traffic in Halifax with excellent highway infrastructure.

Or we can spend the money on EI.

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I remember how ‘proud’ Premier McKenna was when New Brunswick’s GDP per capita exceeded Nova Scotia’s for the first time in decades back in the mid 1990s. Of course, since than Nova Scotia has reclaimed that lead by growing faster than New Brunswick six of the last eight years.

An now, I read that Nova Scotia’s unemployment rate has dropped below the Canadian average for the first time in recent history.Year-over-year comparisons released by Statistics Canada yesterday, Sept. 9, show Nova Scotia’s August unemployment rate has gone down to a historic low of 6.9 per cent, compared to a 7.1 per cent average for Canada. Now, they are using the ‘unadjusted’ rate. Nova Scotia still has a higher rate using the seasonally adjusted data.

However, New Brunswick’s unemployment rate is 9.2% well above both Nova Scotia and Canada as a whole.

There are two interesting points here. One, six years ago in August 1999, the unadjusted unemployment rate in New Brunswick was 8.1% – lower than Nova Scotia’s 8.4%. The second, and equally interesting point, is that just a few months ago, the Premier was bragging in the legislature about the record ‘low’ unemployment rate.

Getting our butts whipped by Nova Scotia is not much to brag about, in my opinion.

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I just read that Premier Lord will be the honorary chair for the first ever Learn @ Work Week, a national celebration of workplace learning and performance excellence. The Canadian Society for Training and Development (CSTD) named Lord as the chair in recognition of “his government’s commitment to workplace learning as a cornerstone of economic development.” The article quotes Premier Lord as saying “Our government has made learning a priority, with our commitment to the Quality Learning Agenda and post-secondary education, and by working closely with organizations like LearnNB.”

Now if you know, please send me an email. Because I have seen the majority of online learning companies that develop workplace learning programs in New Brunswick go broke in the past six years. I have witnessed the head of eLearning strategy for New Brunswick, Rory McGreal, leave the province in disgust because of the lack of interest in online learning by the government. And, I have not seen the province attract one firm that develops workplace or eLearning programs to the province in six years.

So, please enlighten me as to what exactly the Premier’s commitment to workplace learning?

Maybe I have missed something.

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I have been trying to limit the bashing of the Times & Transcript in recent weeks but I had to chuckle on Saturday. The labour force survey was published on Friday and it revealed yet another drop in the number of employed persons in New Brunswick while employment rose across Canada.

However, the story in the T&T painted a highly rosy picture. I know the story was focused mainly on the urban areas in New Brunswick but still, come on, what’s the real issue here?

If you check back over the past three or four years, you will see that the T&T doesn’t run stories about the labour force survey when they perceive the numbers to look bad. Conversely, they run highly positive stories when the number are perceived to look good. Invariably, they will quote Samuel LeBreton who is always using words like strong growth, successful, impressive, etc. Now, Mr. LeBreton may be a left over from the McKenna school of nothing can go wrong, but please, he sees the national data. Just once, I would like Mr. LeBreton to say something like “Despite my constantly positive attitude, I would like to point out that New Brunswick’s employment growth in the past six years has been third lowest in Canada – significantly lower than both PEI and Nova Scotia”. He is, after all, an economist and should be unbiased.

However, I suspect that Al would not print it anyway.

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There is a significant historical connection between Moncton and New Orleans – or more precisely, Acadie.

I was in St. Malo, France last year and our Innkeeper told us that after WW2, the city rebuilt itself using the same stones and to the exact layout of the city before the bombs started falling.

The reconstruction of Europe and Japan after the war led to a significant economic expansion.

So, there’s hope for New Orleans.

The New Orleans motto is Laissez les bon temps rouler or Let the good times roll. I would propose that given the massive devastation in New Orleans that they should adopt Moncton’s motto – Resurgo – meaning ‘rise again’.

Resurgo, New Orleans.

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