It’s The Economy, Stupid

I was driving over to Riverview on Saturday when I saw a motorcade of about 6-7 official looking vehicles and we were made to pull over. I figured Harper was in town for that 500 bucks a head fundraiser for the Lord Re-election campaign. As he has banned this federally, I guess that frees him up to do them for his provincial buddies.

Anyway, Harper also made a funding announcement on Saturday:

Prime Minister Stephen Harper, joined by Premier Binns on behalf of the four Atlantic Premiers, today announced a new five-year, $10 million Canada/Atlantic Provinces Agreement on International Business Development (IBDA) in Charlottetown.

Since 1994, 32 per cent of companies that participated in an IBDA-sponsored trade activity for the first time have since begun exporting internationally; 42 per cent of companies reported an increase in the volume of their exports; and 29 per cent started exporting to new markets as a result of IBDA activity. A total of 179 projects have been approved and more than 1,500 companies have participated in them. (source: IBDA survey)

This is an old Cretien trick. Announce a ‘new’ funding program that is actually just an extention of a program that has been in place for over a decade. Cretien was even smarter. He would take money from one pocket, transfer it to another pocket and announce a bold new funding program.

Anyway, enough of that. Another statistic they use always makes me chuckle. They say (and I have heard this multiple places):

Every $1 million in exports sustains 8-10 jobs in Atlantic Canada. Economic expansion in Atlantic Canada is tied to improved trade performance, particularly among small and medium-sized enterprises (SMEs).

This metric is particularly hilarious in the context of New Brunswick’s exports growth since the Irving Refinery expanded. Exports are up $4 billion (just ask Captain Kirk) meaning that by this measurement, there are 36,000 new jobs in New Brunswick just from export industries.

The government and others serving up this type of statistic should couch it in the context of the type of export. Oil, gas, potash, wood pulp, etc. would not have such a multiplier in place - I dare say. Salmon flies, handcrafted cabinets, etc. might have a higher one.

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Wow,

This freaks me out. I was responding to Scott’s post about the Canadian Council of Chief Executives and making a particularly cranky point and then I went to save the post and guess what the Word Verification letters were? Check it out yourself:

Of the billions of potential letter combinations used by Google for user verification, I get M-C-K-E-N-A?

It’s a lucky thing I don’t believe in Ghosts, spirits, etc., huh?

Sheesh. I got the spirit of McKenna reading my blog.

Nah.

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Working my way through Savoie’s book: Visiting Grandchildren: Economic Development in the Maritimes. Usually, I would have read that thing over a weekend, but things have been fast and furious in this corner of cyberspace over the past few weeks. Anyway…

I always loved the term ‘balkanization‘ - the definition but more importantly the derivation of the word itself.

Balkanization is a geopolitical term originally used to describe the process of fragmentation or division of a region into smaller regions that are often hostile or non-cooperative with each other. The term has arisen from the conflicts in the 20th‐century Balkans.

Imagine that. A region so hostile and polarized that actually gets a Webster’s dictionary word developed - balkanization.

With that as a backdrop, consider this quote from Savoie’s book:

[the opponents to NAFTA] …argued that Canada exported too much of its natural resources as raw materials to the US and that free trade would make matters worse. Some observers feared the ‘Maritimization’ of the Ontario economy, arguing that US interests would purchase Canadian firms, including financial institutions, and move the head offices and plants from Toronto to New York or Chicago, much as Ontario firms had to done to firms from the Maritime provinces….

Don’t forget that is not a historical policy - consider BCE and Aliant. D’Aquino explain that you heartless SOB.

But I digress.

The Maritimization of the Ontario economy. I like the sound of that. It’s more, ……definitional, than the recent quote by Ontario’s intergovernmental affairs minister regarding the fiscal imbalance “we are not going to sit back and allow Ontario to become a have-not province”. It would have been more compact for her, in this day of nanosecond sound bites, to say “we are not going to sit back and allow for the Maritimization of Ontario”.

It could catch on internationally. When talking about intractible in-region disputes, we could talk of its ‘balkanization’. When talking about a first world, regional economy regressing while the national economy booms, we could say its ‘Maritimization’.

Catchy, n’est pas?

Moving right along….

I am officially half way through the book - I haven’t even got to Savoie’s prescriptions yet. But I can make a few observations:

1) John Manley can kiss my Baptist (deleted on good taste grounds). He deliberately blocked any attempts to move federal jobs out of Ottawa. He nurtured a multi-billion dollar incentive program to grow industries in Ottawa, Toronto and Montreal while ignoring Atl. Canada. He was most likely the biggest detractor to regional development throughout the 1990s. Well, Manley, your dream has come true. Atlantic Canada is now losing population at never before levels. In your lifetime, John, you will be happy to witness the dissolution of Atl. Canada as we know it - and you will be able to pat yourself on the back.

2) When it comes to Federal government support for regional development there is an inverse correlation between need and economic development support and a direct correlation between need and subsidization. Let me explain.

The amount spent by the Federal government to support regional development in 2006 is, by my loose calculation, about 20% of what it was in the 1970s as a percentage of the national budget (this includes R&D spending). This despite the fact that all four Atl. provinces were growing their populations. Now, when three of the four provinces are losing population and provincial government budgets are growing exponentially to pay for health care, dollars to support regional development down 80%. That’s the inverse correlation.

At the same time, in New Brunswick, Equalization is up $700 million (not cumulative the actual amount) since Lord came to power and total Federal gov transfers are up by well over $1.2 billion. That’s the direct correlation.

That’s the welfare mentality folks. Any funds that could be directed to make things better are cut 80% and funds that are used only to make up for economic shortfalls are up massively.

This is just another case that girds my new philosophy of “with our without you”. If we continue to wait for a White Knight from Ottawa, we will end up waiting forever. We have waited 140 years. The White Knight is not coming, folks. We need to get on with it. We need to take the lead. If the Feds want ‘in’, that’s fine but we must move ahead anyway.

I know you will throw the Ireland/European Union thing in my face. But I will respond that New Brunswick would have better luck with the EU than with Ottawa. And I am friggin’ serious about this. When the EU decided to spend billions to bring up Ireland to the EU average for GDP per capita, income, etc. (EU measures), they still had Portugal. Cripes. France has 25% unemployment in its rural areas and the subsidies continued to flow to Ireland. Imagine the same thing in Ontario. You can’t. I can’t. End of story.

Last point this AM and I will leave you in peace. I was talking to someone last week that was trying to get the NB Dept. of Health and Wellness to consider supporting a health care research project on the grounds that the NB government spends over $2 billion/year on health - a massive amount - and that the department would be wise to consider how it can best spend its funds to support the development of the economy. A senior health official apparently said “we are not into wealth creation” go talk to Business New Brunswick that’s their business.

That, my friends, is the heart of the matter.

Every department that spends money should look at it through the lense of economic development. How can we leverage our spending to achieve our primary objective but also support the province’s economic development strategies.

Economic development is not just about BNB. It’s about every government department. It’s about the local communities. It’s about you and me.

You know that quote from the Da Vinci Code movie trailer? “We have been watching history, we are in history now?”

Well folks, we are in ‘Maritimization’ now. And if we want a Wikipedia definition to emerge, we just need to keep on this path for one more generation.

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Industry Canada’s Invest in Canada web site tracks FDI investments into Canada by province. Before you click on the link, a few caveats. One, this database is far from complete. I know of a few projects that aren’t in for NB alone. Also, there are a few ‘retail’ investments that have no business being in there in my opinion.

But you will note a few things.

1) Look at how many of the 46 NB investments are either projects that were brought in under McKenna/Theriault and expanded under Lord. 80% of the non-retail projects.

2) Note how many call centres are on this list - and it doesn’t include domestic (Canada-based) call centres. I have nothing against CCs but show me the new sectors that Lord et. al. have nurtured in the past seven years. Nada.

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I know that I pick on Al Hogan a lot but if you know me you know that I firmly believe that the media has a critical role to play if a place like New Brunswick is ever to turn itself around.

That’s why I am constantly amazed at the lack of objectivity and even rational thinking coming out of the Times & Transcript. This morning’s We Say is no exception. The Telegraph-Journal served up an editorial yesterday calling on Premier Lord to call an election. It rightly framed the current reality in the NB Legislature and suggested the best solution would be to call an election.

Now, if you have been following politics even marginally over the past few weeks, you will know that there have been some breathtakingly infantile moves. Tanker Malley’s blackmail and miraculous revival as Speaker and Santa Claus for his riding. Chisolm Pothier’s release of a private citizen’s personal information just to make a point. Bernard Lord taking Frank Branch up to Ottawa because he doesn’t trust the ‘pairing’ arrangement with Branch. Throw in a pile of shenanigans and you have the NB legislature these days.

Then you have Al:

We Say: It is time our elected representatives restored decorum to the legislature and started acting like adults again

Most NBers would agree with that.

The lack of decorum and sniping has reached the point it resembles spoiled children run amok more than adult discourse on public business. It is time for Liberal leader Shawn Graham to insist his MLAs begin acting their age.

Now, considering Tanker, Lord, Chisolm, (how about Captain Kirk’s ‘Tripod’?), et. al., even I wasn’t expecting this. I expected Al to sort of state generically that conditions need to improve or some such rot. But to boldy accuse the Liberals of being ’spoiled children’ and not ‘acting their age’ is nothing short of stunning.

The only thing that even comes close to this was Al Hogan’s We Say after the Saint John Harbour By-Election:

We Say: Saint John byelection not a vote on Lord’s leadershipThis byelection outcome says more about the riding than it does about the governing party.

The fact that Premier Bernard Lord represents a Moncton riding makes him an easy target for those who feel disenchanted and disenfranchised.By rejecting Lord’s promises of funding for harbour cleanup and a new downtown justice centre - and the guarantee of a cabinet post for Hooton - Saint John voters have decided to continue to complain, to take comfort in their rapidly expanding underdog status.

So be it; people in Moncton and Fredericton have long since moved past such ‘woe is us’ thinking and have embraced Lord’s attempts to build the economic base of their cities. Is it any wonder those two cities have continued to grow and attract investment while Saint John’s population and economic base shrinks?

Those people in the Conservative Party who might think the time is right to draw their knives for a leadership coup against Lord should also think again. The Tories came to power largely on the strength of their leader. Who else within the Tory caucus has the qualifications or stature to lead if Lord goes?

Shuffle your cabinet, if you like, Mr. Premier. But do not shed too many tears over Saint John Harbour. It just isn’t worth it.

I reiterate that this not even rational on any level editorial bias is not good for Moncton or New Brunswick. Again, it’s not so much Al’s little paranoid attacks on the Liberal party or even his systematic propping up of the Premier - almost like an extended press secretary.

It’s about not informing the residents of Moncton and New Brunswick about the serious challenges facing the province - just to prop up your ‘guy’. Who freakin’ cares about Bernard Lord? (except Al and Bernard, of course). These things go way deeper than the alter egos of Bernie and Al.

A newpaper editor should have the guts to put his/her personal, political leanings and even personal friendships aside and report on the realities facing New Brunswick. He/she should challenge the government to spend every waking hour trying to solve these challenges - that eventually could threaten the sovereignty and existence of the province itself.

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The CBC is reporting that Premier Bernard Lord’s press secretary Chisholm Pothier has resigned after distributing a letter to the media that included a New Brunswicker’s personal information including drunk driving record.

Now, I’m not going to beat a man when he’s down but frequent readers to this blog will know that I am no big fan. But it’s not really targeted at the man but the position.

Press secretary’s now (at least the few I’m familiar with) are little more than attack dogs - protecting their masters with the the ferocity of a pit bull. They have become master craftsmen of spin and distortion leaving only the most seasoned and curious journalist able to unpack anything of substantative value for the general public.

Remember this famous quote on Lord’s national reputation:

Chisholm Pothier is quoted as saying “His government’s record of never before seen levels of social spending in health and education, combined with more people working, lower taxes, fewer people on welfare and balanced budgets makes him an attractive political figure. I can understand why there would be an interest.”

This is only six months ago. Wow. What a difference six months makes.

But I digress.

Back to the point. I believe that the next generation of press secretary should be a person that can talk openly and freely with the media (obviously respecting Cabinet secrecy). This person should be the one alerting the media to any challenges facing the province instead of spending every waking hour trying to figure out new ways to hide and spin anything that could even remotely threaten the Premier’s reputation.

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Remember this name well, CGI Group. This firm invested heavily in New Brunswick. Set up their ‘G-Lab’ research laboratory in Fredericton. Has considerable employment in Saint John. It is top notch IT company with 25,000 global employees.

A few weeks ago, somebody told me that their days in New Brunswick are numbered. I heard rumours of this again.

And they are starting to make sense. Why else would CGI bypass New Brunswick all together in their recent announcement of new jobs in PEI and Nova Scotia? Now they are hiring 500 more in the United States and ramping up India.

Nada in New Brunswick.

Will somebody please ask the government if they are making any effort to keep one of New Brunswick’s top employers here? Maybe a question on why they are expanding in PEI and NS but not here? Maybe a question on why they are expanding in the US but not here? Maybe a question on why they are expanding in India but not here?

This is exactly why Mike Macbride, former Director of Trade & Investment with the former NB Department of Economic Development and Tourism expressed his frustration with the current government’s approach to economic development this week in the Daily Gleaner and on the CBC morning show.

I received a transcript of his CBC appearance. Macbride starts out by meticulously listing what the economic benefits would have been if New Brunswick had attracted Research in Motion’s 1,200 jobs (you know, the jobs former BNB Minister Peter Mesheau didn’t want because the project was too ‘big’ for New Brunswick). Taxes, payroll, investment. All good stuff. Not a word about how this new investment would have led to more Equalization.

But I digress.

Macbride intones:

They [McKenna, et. al.] were proactive and passionate towards economic development and it was the number one priority because they believed that through job creation and wealth generation, that was the path to becoming a have province as opposed to a have not province. That was there philosophical outlet on economic development.

Geez, Mike. Get a blog why don’t ya?

He continues:

I think, first of all, the province has to believe that this is the way to self sufficiency, that
economic development and job creation is the way to go and the focus then has to shift. To me that should be probably the top one or two priorities. And it has to be, the leadership has to come from the top. Of course, the leadership can’t come from the middle or the bottom. It has to come from the top. But you have to believe that that is the way to go as opposed to looking for more moneys from Ottawa.

Obviously, we need the support from Ottawa while we are in the have-not position, but I think if we’re going to go forward, we’ve got to, we’ve got to take more initiative. We’ve got to understand what’s happening. And what – of course in New Brunswick, what you have to worry about is not just what’s happening in New Brunswick, but almost more importantly what is not happening and what is not happening.

I fear we are not getting the leads. We are not putting competitive packages together because we’re not aware of expansions and relocations and the business is so competitive that unless everybody’s pulling together from the top down, I think we’re just not going to, we’re going to continue not to get the kind of business that we’d really like to see in New Brunswick.

Now let me wrap this up for you.

Macbride believes that the province is not doing a good job of attracting new companies to the province.

I go one step further. I don’t think they are doing a good enough job of retaining and growing the firms we have here.

Consider CGI. If they leave or downsize in New Brunswick while expanding everywhere else - that will be a shame.

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Sorry to talk about the T&T twice in one day but it would seem my previous blog on the lack of T&T coverage of Northrop Frye was somewhat inaccurate. It seems that Al Hogan likes the festival after all judging by the coverage today.

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Imagine a negative economic story in the Times & Transcript. Then imagine a negative economic story in the Times & Transcript that doesn’t include a ‘we’re encouraged’ quote from the Premier or a Cabinet Minister. Imagine a negative economic story in the Times & Transcript that doesn’t do its best to put a positive spin on it. Of course you would have to eliminate Alec Bruce articles/commentary but…

So there we have it. In the T&T today:

N.B. economic growth slows down in 2005
Last year was the worst for the New Brunswick economy since the recession 15 years ago.
GDP growth just .5 per cent, second slowest in the country

And for good measure a quote from an economist actually telling the truth:

David Chaundy, senior economist with the Halifax-based Atlantic Provinces Economic Council said the weakness revealed in New Brunswick’s key industries is ominous.

“They are a big part of the economy and if they are going to be weak in the next three years then growth and therefore employment and incomes are going to be weaker,” he said.

“You can’t turn that around overnight but we do have to look at how we improve the competitive position of some of those firms that might still survive.”

That’s David Chaundy - not David Campbell - saying that.

And quoted in the Times & Transcript.

Either Al’s on vacation or…..

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I got my Budget 2006-2007 briefing in the mail today. As with the ‘Report Card’ and the ‘Prebudget briefing’ documents, I continue to be amazed that the government can spend what must amount to several hundred thousand dollars each time to prepare, print and mail these high impact pieces of propaganda.

I won’t dissect this to death. I already gave the budget a run through a few weeks ago. But I do have a few comments about this document:

1. After years of pounding the ‘Prosperity Plan’ into our heads at every possible term, now it doesn’t show up at all. Presto. No more PP. Why? Bernard Lord didn’t go the bathroom without reminding us that it would be part of the PP and now nada.

2. But we get the ‘5 in 5′ - which are as vague and unattainable as the PP but he has another 5 - no lets make it 3 to talk ‘5 in 5′ and then it’ll drop and we’ll get the ‘10 in 10′ plan. This stuff is bonkers - make no mistake. Highest increase in workers with post-secondary education? We’ll when you are second last in the country - I would think any increase would be helpful. During Lord’s first Prosperity Plan we actually lost ground - i.e. got dumber compared to the national average and we are expected to believe we will be fastest growing? Ditto to the other four.

3. Personal and corporate income tax savings of $1.1 billion since 1999. Thank goodness that was offset by over $2.5 billion in increased Equalization. How’s that for a CONSERVATIVE economic development strategy. Substitute real tax revenue with Equalization. Interesting, at least.

4. 50000 New Brunswickers removed from the income tax rolls. Am I missing something here? The government spends something like $17,000 per taxpayer each year and they are bragging that they have taken 50,000 off the rolls. Here’s a hint, Bernie. How about working on strategies to raise income levels so people will gladly pay their taxes. Albertans pay the highest income taxes in the country - and are glad to do so. Sheesh.

5. $17 million in personal income tax reductions. I detest these little symbolic gestures. That work’s out to about $3 bucks a month per average taxpayer. Nothing. But $17 million into a targeted economic development campaign could have considerable impact. Think about that when you are spending your 3 bucks.

6. More jobs. I don’t know how they let this one slip in. Their own spin chart shows that there have been only 19,000 net new jobs since 2000 (go read this chart, I am not lying). So, if you consider the 15,000 in new health care and other public jobs, well, you get the picture. Their own chart shows 20,000 net new jobs from 1996 to 1999. Opps.

7. New Brunswick - The ‘Smart Province’ - Yes they have a caption that says this. Despite having the worst literacy rates in Canada. The second lowest standardized test scores, the second lowest rate of post secondary educated persons. The most Internet illiterate society. BUT DONT WORRY - there’s another $1M for adult literacy. Probably about the same amount as the production and postage costs associated with these propaganda pieces.

8. And the capper, of course. Once again, no mention of our population decline. First sustained population decline since Confederation and the government could care less. Bienvenue to New Brunswick.

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