It's The Economy, Stupid

Well, it looks like New Brunswick’s chances at having a home grown Prime Minister have taken a dive once again. It wasn’t that long ago that some were speculating (i.e. Don Desserud) that we could have a McKenna vs. Lord show down in federal politics. But with Frank departing and Lord out of the picture, I don’t expect to see a PM from New Brunswick any time soon.

I appreciate Frank’s decision. It must be a tough life – politics that is but I would like to think that he would have been a friend of NB at the national stage. I’d like to think that, although in a different way, he would have continued to promote economic development in New Brunswick and in Atl. Canada generally.

Well, maybe Lord will end up in the big chair after all. Maybe Harper will falter. Maybe the Libs will win in two years. Maybe Lord will run. Maybe he will win the party leadership. Maybe he will win the PMship.

That’s a lot of maybes.

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I have written on several ocassions about the government’s convenient use of the energy sector to brag about New Brunswick’s exports. They claim to have the highest increase in exports in Canada. Prosperity abounds!

They forget to mention that without the new Irving Refinery we have among the worst export performance in Canada and our trusty mainstream media cheerfully neglects to mention this as well.

So, for the benefit of the few hundred that ocassionally read this blog, here’s a few interesting tidbits.

According to the New Brunswick government’s own publications, New Brunswick exports $3.4 billion in energy products each year – this is mostly the Irving refinery. This represents a whopping 45% of the entire exports of the province. Now, the interesting thing is that we import $2.9 billion in energy products per year – about 60% of our total imports. Again, the vast majority of this is the oil brought into the refinery to be processed and shipped out.

So what we have is something like have the import/export level in the entire province being fuelled (no pun intended) by a few hundred workers in Saint John.

If you back out energy, New Brunswick would have an absolutely woeful export performance.

Food for thought, folks.

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Here’s a letter to the editor that was published in the Telegraph-Journal last weekend:

N.B. is becoming a francophone state

The “Patent Acadien” is working: divide and conquer. Slowly but surely, New Brunswick is being subverted into a francophone state. Enforced bilingualism has English-speaking New Brunswickers learning French, in vain hope of sharing in “equal opportunity.”

The result was inevitable: French is the dominant language of government in Fredericton, and French is the dominant language of business in Moncton.

Any person who attempts to preserve English heritage is branded a bigot. Any person who promotes French heritage is hailed as a “patriote.” Anyone who does not believe this had better wake up and smell the ‘poutines.’

Some guy from Sackville.

Now, I have a couple of points to make here:

1. Some unilingual English speaking people in Moncton have trouble finding a job – particularly in industries where it is beneficial to speak French too (i.e. customer service). This is not vitriol, it is not bigotry, it is simply a fact.

2. The writer of this editorial (and the 10-12 the TJ publishes a year – just because..) should not confuse the labour market requirement for 35% of Monctonians to speak French with attempts to turn NB into a Francophone state. If that is the wish of Acadians, they had better get crackin’. From 1991 to 2001, the population of mother tongue French in New Brunswick dropped by 2%. Just to reiterate – that’s dropped by 2% while the mother tongue English population increased by 1%.

The reality is that the Acadian population is suffering from the same economic malaise as the Anglo population – and Acadians, though reluctant to leave, are leaving the province to find better opportunity elsewhere.

So the comment I have for the TJ and everyone else that thinks ‘NB is becoming a Francophone state’ is that New Brunswick is becoming a ‘no-aphone’ state. When the Census comes out next year, you can bet your last poutine that the population of both anglos and francos will have declined again.

Oh, and one more thing about this dastardly attempt to Francocize New Brunswick. From 1991 to 2001, there were 24,475 Anglophones living in New Brunswick that moved in from other parts of Canada and there were only 7,060 Francophones.

So to sum up. The Francohpone population is declining. The Anglophone population is slightly increasing. Almost 25,000 Anglophones moved to New Brunswick from 1991 to 2001 (presumably some for a job) while only 7,000 Francophones moved to New Brunswick.

So to the guy from the wonderful town of Sackville, don’t fret. No one’s going to force you to eat poutine any time soon.

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I didn’t see the print copy of the T&T yesterday, but the online version is a bit depressing if you are a New Brunswicker interested in the economic development of our province.

Here’s the top three stories from the online version of the T&T:

Times & Transcript
January 28, 2006
Michelin proceeds with $92M expansion of N.S. tire plant
More offshore oil exploration planned for N.S.
‘Activist investor’ prepares for $100M shopping spree
Halifax businessman wants to use money to rebuild companies hurt by cost-cuttingWith $100 million tucked away, George Armoyan plans to take his holding company Clarke Inc. (TSX:CKI) on a buying spree, with East Coast mogul John Risley ready to join in.

Now, I am sure that some of you will remind me that I also reported on these stories (two of three) recently in this blog.

But it’s a bit drepressing when the recent economic development stories in New Brunswick include: Business New Brunswick Minister Mesheau suggesting that the RIM project in Halifax was ‘too big’ for New Brunswick or how about the Minister’s comments last week that attracting 1,500 jobs to New Brunswick was going to be ‘very difficult’ or something to that effect.

Then our trusty local paper, the T&T, reams off story after story about economic development in Nova Scotia.

Just for balance, I expect Al Hogan to do another I Love Lord piece on the editorial page in the next few days.

Just for balance.

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Last month, I wrote about the move to shift power rate increases from residences to industrial users.

Now, I am reading about business leaders, industry associations and even unions decrying this move. One union rep said he ‘didn’t want to become an Albertan’ – a not so subtle reference to what would happen when the forestry industry collapses.

Ain’t economic development neat? Announce a $250 million bailout for the forestry sector in December and what will ultimately amount to $500 million or more in increased energy costs (over five years).

That’s the same logic that was used when they cut personal tax rates by a bit and then increased gas taxes such that the net for the average NBer was about nil.

Always the pragmatic, I continue to say: what’s next? Mismanagement at NB Power (or bad luck) has led to the fastest increases in power rates in Canada. Low industrial rates were held up by the McKenna government as a benefit for businesses to set up shop here. Now that’s gone. This will impact both existing business and our ability to attract more.

So, what’s next? Now we will have to turn our attention to industries that don’t need cheap power.

We face the real possibility of an even increased out-migration over the next 5-10 years unless we get serious about the economy. Don’t forget that we have had 14 straight years of out-migration already.

Maybe when the new PM gets over the flu, he’ll swoop down and save us

Not likely.

But before I go, I’ll give you the good news. Michelin just announced a $92 million expansion of its Waterville plant in Nova Scotia. Crossley Carpets justed finished a 150 person expansion at their Truro manufacturing plant. An article in Today’s Trucking this month is reporting that the Port of Halifax is poised for a major breakthrough.

But never fear. We have the Prosperity Plan which will bring riches for all.

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In recent days I have stated two key issues related to economic development: 1) Don’t rely on government jobs to drive growth (this in response to the fact that something like 40% of the net new jobs in New Brunswick are from health, education and public administration) and 2) the need to focus on a few key sectors.

Well, it would seem that the VP of Microsoft agrees with me. Check out what he said recently in Scotland:

Microsoft chief tells Scots: focus on games
The Scotsman
January 27, 2006

BOB McDowell, vice-president of software giant Microsoft, yesterday warned one of the Scottish Parliament’s most influential economic committees, to “make sure the public sector does not represent the majority of growth” in Scotland.

He added: “Critical mass grows business – group the successes in one place and focus on a few areas.”

Sounds pretty good to me.

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I just read a very interesting story in the Toronto Star (sorry requires a password so no link here). Here’s an excerpt:

South of the Canada-American border, there is serious talk about a “New Homestead Act” that would sell houses — or perhaps even farmland — at low prices to those willing to settle in, or around, small plains towns.

In Kansas, there are rural action co-operatives whose members don’t just complain about declining population, but actively seek out people who might be interested in moving there, then energetically write, email and call them.

Now, call me crazy but wouldn’t that be neat if folks in rural New Brunswick were actually calling folks on the phone and inviting them to move to rural NB. Wouldn’t it be neat if the government would provide incentives and get interested in attracting folks to rural NB.

But, I suspect that after 20 years of doing something innovative in Kansas, it might actually take hold here.

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I continue to be disturbed by the message coming out of the province when it comes to attracting business investment to New Brunswick.

A recent Telegraph-Journal article made the following statement:

In a letter to the editor published last month in the Telegraph-Journal, Mr. Mesheau argued the province was one of the top performers across the country – landing 44 foreign direct investment projects between 2000 and 2004. Nova Scotia lagged with 32 while P.E.I. and Newfoundland lured eight a piece.

“Actually,” the minister wrote, “statistics demonstrate that New Brunswick ranks 4th in the country just behind Ontario, Quebec and Alberta.”

The Atlantic Provinces Economic Council, though, argues differently – it says the province is in fact dead last in bringing in foreign investment over those four years. By measuring foreign investment against total investment dollars flowing into the province, it determined that foreign interests controlled only a five per cent share.

I have written alot about this in recent months. It seems that the provincial government believes its own marketing schtick – and that is a sad state of affairs indeed.

It is vitally important to project a positive marketing image when promoting New Brunswick in global markets. But that is exactly the wrong thing to do when looking inward and looking at policy development.

If the province is doing such a good job at attracting jobs, why are we among the worst in Canada for attracting investment? Further, and even more disturbing, when you back out call centre jobs there is almost nothing left. Not to denegrate call centre jobs but that well will eventually run dry and there seems to be no strategy at all to attract any companies in any other sector.

Nova Scotia has moved beyond call centres and is attracting higher end IT companies like RIM, Versata and a financial services firm from Bermuda.

PEI has developed a very significant aerospace cluster.

New Brunswick has developed……

Minister Mesheau would be well advised to get beyond defending the government record and start looking at developing some successful new industry attraction strategies.

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Stephen Harper was coy on his ‘plans’ for Atlantic Canada other than a few specifics around the military and not trashing ACOA. He did mention on numerous ocassions that the federal government needs to help Atl. Can reach its ‘full potential’ whatever that may be.

Now once Harper is through instituting marshall law, rolling back ‘basic human rights’ to the ’1500s’ and bringing us into the US fold, he can take some time for Atl. Canada (don’t you love election time invective? but I digress).

Given he has a tenuous minority government, my suspicion is that Atl. Canada won’t even be on the radar – bigger fish to fry and all that rot.

But if it finds its way in, I hope they take five minutes to understand the role of capital to economic development. Five minutes to realize that the global investment flow has bypassed Atlantic Canada for the better part of the last 100 years. Five minutes to understand the underlying reasons for that (well, that might take 10) such as cutting off Atl. Canada from trade with the billions invested in the St. Lawrence Seaway or the slow erosion of financial decision making from Atl. Canada to Central Canada or the fact that the national government played a highly proactive role in the stimulation of an auto sector in Ontario, an aerospace sector in Quebec, an IT sector in Greater Ottawa, an agrifood sector in western Canada, a dense immigration in BC, etc. etc. etc. while you have to look long and hard to find any proactive sector development in Atl. Canada (with the exception of the seed money for the offshore sector in NL).

If they take this five minute look, they may conclude as I have that we need to grow up a few new industries to replace the ones that are dying. We need to grow up new industries to fund our ever expanding social programs. We need to grow up new industries to limit our vast reliance on the Equalization system.

We can’t let Atl. Canada slowly erode away while the citizens continue to expect more and more social spending. It is a recipe for collapse.

Welcome to Atl. Canada, PM Harper.

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Like most of my colleagues, I went into this election cycle a little curious. I never did buy the notion that the Conservative’s approach to regional development would involve sucking every talented resource out to Fort McMurray, consolidating three governments into one and saying “stand on your own two feet”. (although some of my more impatient colleagues actually agree with this model, but I digress)

At the same time, I have never bought into the notion that the Liberals have brought great prosperity to Atlantic Canada. In fact, I am not sure that even the Liberals believe this.

So, I looked closely for any hint of economic development strategy and have concluded the following:

The Liberals, if re-elected, will continue to do mostly the same in Atlantic Canada. ‘Innovation’, small businesses and ‘community building’. Paul Martin stumped through Atl. Canada basically telling us how good we have had it under the Libs.

The Conservatives have not said much about Atl. Canada and economic development. Harper won’t scrap ACOA. Harper is ‘committed to helping Atlantic Canada reach its potential’. Well, that’s easy to say during a campaign but don’t forget this region has been ‘declining’ relative to the rest of Canada since before Harper’s oft mentioned relatives settled in New Brunswick.

So having said all that, I would have liked to had heard one of the parties talk about a ‘revolution’ in Atl. Canada. An Irish-style transformation where Canada (like the EU in Europe) invests billions into infrastructure, industry development, etc. into this region over a 25 year time frame. Where if Microsoft sets up a 1,500 person facility in Halifax, the rest of Canada cheers not complains. Where if hundreds of US firms turn their gaze onto this region, the rest of Canada cheers not complains. This was exactly the case in Ireland. As that country boomed in the late 1990s, the EU kept the funds flowing (remember that Germany, France, et. al have economic challenges of their own).

Imagine that.

So, I won’t shed too many tears if the Libs lose today. There won’t be dire consequences (although I understand the Liberal strategy to scare voters as a tactic). The economy will limp along. And maybe, just maybe, a fresh set of eyes on this thing may end up being good for the region.

And if Harper slashes EI and pays people to move to Fort McMurray?

Ask me if/when he does it.

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