It's The Economy, Stupid

My great great grandparents (all but one) were born, raised, lived and died in New Brunswick.

My great grandparents were born, raised, lived and died in New Brunswick.

My grandparents were born, raised, lived and died in New Brunswick.

My parents were born, raised, lived and retired in New Brunswick.

Two of my three siblings are gone and the third is leaving.

Where’s that leave my kids?

That’s why I have increasingly little patience for ’5 in 5′, prosperity plans, Tanker Malley and all the other garbage that is swirling around the metaphorical downtown.

I want someone, anyone, to realize we are in the midst of a dramatic economic shift in New Brunswick and no amount of government spending (even with more Equalization) will fix it.

We need to get our private sector economy back on track (if it ever was on track). When we look at the job numbers we have to start seeing growth in high paying non-public service jobs.

14 straight years of net out-migration.

My family tree looks a lot like many New Brunswickers.

Time for a change.

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New Flash! According to Al Hogan in todays T&T We Say:

Fairness matters in news coverage

Of course, Al is talking about the media’s unfair criticisms of Stephen Harper but to me if there was ever a case of the pot calling the kettle black or whatever that saying is this is it.

This is the same guy who will outright ignore stories of interest that are published elsewhere because they don’t fit with his ideological view of the world.

This is the same guy who will tell Premier Lord to ignore the petty voters of Saint John Harbour because their issues don’t matter.

This is the same guy who will hammer the City of Moncton at every turn – many times 2-3 times a week – and never criticize the provincial Tories.

The reality is, in my opinion, that Harper is trying to set a new tone and style that he and his staff must have determined will be more conducive to their agenda and he is willing to risk the wrath of the media to set this new tone. Utimately, I suspect there will be a compromise of some sort.

But for Al to tell the national media to ‘check its biases’ is a bit to cheeky for me.

Look in the mirror, Al. Although the kind of mirror I’m talking about is probably no where in sight.

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I admit to some mixed feelings regarding the debate over Equalization. On the one hand, more dough from Ottawa would be a good thing, right? Or would it lead to more dependency and a worsening of our economic standing in North America? Do we want to be increasingly dependent on Ottawa for our future? Has it worked so far? It seems there is a direct correlation between population decline and Equalization although I admit there are lots of exogenous variables at play.

But my confusion over this issue was only confounded on Friday when I read in the T&T:

“The rhetoric that is being ratcheted up by the western-based premiers is concerning at this point in time,” [Shawn] Graham said. “We have to clearly strike a position that shows New Brunswick is moving forward on the drive towards self-sufficiency.”

Now, Graham is talking about the cooperation between the Premier and himself regarding Equalization. Apparently, they are in agreement and are projecting a shared message to the other Provinces.

Now, let me explain my confusion.

I could see one arguing that NB needs more Equalization to provide public services.

I could see one arguing that the economic disparities in Canada are growing and Equalization should/could be used to provide some balance.

But I can’t see how anyone would say that Equalization is supporting of ‘moving forward on the drive towards self-sufficiency’. In fact, the crankier economist types might suggest that more Equalization is moving against self-sufficiency – in fact – by definition.

Now, maybe I could see if Premier Lord was ploughing much of this new Equalization into direct economic development, you might make the argument that more Equalization now will lead to less down the road. But there is no evidence of this. Economic development spending in NB is down. Dependency is up.

My friendly advice for the Leader of the Opposition – for what it’s worth.

If you are going to link Equalization and ‘self-sufficiency’ you had better draw us simple folks a straight line between the two. Because history and precedent would suggest there is a chasm there that can’t be overcome.

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I know a lot of people love to loathe the Irvings, a subject that I rarely wade into out of sheer lack of knowlege, but you have to admit Robert Irving’s handling of the Wildcat’s has been amazing. Never mind that the glitz and glamour he injected into the team raised the excitment level. Never mind the sanity around food prices during the game (a welcome change). Never mind that the Cats have been mostly successful since he took them over.

He friggin’ brought in Ted Nolan – a former NHL coach of the year. Now that was a coup if there ever was one.

Everywhere you go and every time I turn on the TV the comments are all positive and gushing about the quality and excellence of the WildCat’s organization.

Why do I mention this? I’ll tell you why. If I had a nickel for everytime someone in the economic development field grumbled about the lack of vision, talent, resources, money and just plain interest in economic development in New Brunswick, I’d be rich.

Imagine a ‘Ted Nolan’ strategy for the economic development of New Brunswick? Imagine a government willing to do whatever it took to be a winner. Imagine bringing in the ‘Ted Nolan’ of economic development – I don’t know from Ireland or Alabama or somewhere. Imagine building a team capable of winning the Memorial cup of economic development.

Imagine… for a brief moment.

And then turn your thoughts back to the real world. Go Cats.

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I have been watching the Nova Scotia Liberals serve up their election promises over the past few days. I watch them particularly because the Tories are a known quantity and the NDP seem to be fairly clear in their position. Here’s what we know so far about the NS Liberal platform:

The Liberal plan offers no tuition freeze or rollback but instead offers a “completion bonus” after each year of study that can be put toward a student’s fees. That payment would be $600 in 2006-07, $700 in 2007-08, $800 in 2008-09 and $900 in 2009-10. It would go either directly to the student’s community college or university to cover any year-end debt or be given as a rebate to the student.

Nova Scotia’s Liberals are promising a tax credit for stay-at-home parents, and also committing to create 1,000 new day-care spaces over the next four years.

The Nova Scotia Liberals are planning to take more lower income Nova Scotians off the tax roles.

If you access the NS Libs web site, you see a full list of priorities. I can’t see anything about economic development. Anywhere.

If you search for the term ‘economic development’, you get individual MLA bios talking about economic development but no direct policy.

I am once again convinced that you have to get to these guys (the politicians) well before they ever get into politics. Because if they get in to politics without a good grasp on the concept of economic development, it seems that politically expedient actions take precedent over long term economic development.

The polls in Atlantic Canada consistently rank economic issues as between 4th and 7th on the list of priorities well behind, usually, health care, education, seniors and in some cases auto insurance, toll highways and other issues of the day.

So as a politician why bother? The Nova Scotia Liberals have obviously made a calculated decision that talking about economic development is a non-starter – so they don’t mention it – anywhere in their platform.

More often or not, the media will play on the public’s lack of knowledge about economic development to turn it against the politicians. Consider the recent closure of a call centre in Nova Scotia and of course there’s the ‘scandal’ of some Minister’s second cousin getting a government loan. Cripes, everybody in Nova Scotia is related to each other.

So, unless we can get these guys Mackenzie, Graham, Lord, Volpe, Dexter, MacDonald, well in advance we will lose them in the vacuum that is political life. They will spend their time in office putting out fires and following polls. Atlantic Canadian politicians – are in the worst period of depopulation in the region’s history and all we get is more talk about ‘investing in families’.

Well, newsflash gang, if you don’t start addressing the underlying economic challenges (and I don’t mean $100 million to save two rural paper mills), there won’t be any families left to ‘invest in’.

You want more university graduates to stay around the Maritimes? Bring in 10 more RIM projects. You want to keep those welders coming out of the NSCC that are sprinting to Alberta as fast as they can? Support the growth of the aerospace sector. You want more Phds to stay around the region? Attract and leverage private sector R&D into the region.

It might not be politically savvy. The media might eat you alive and pick apart every ‘bad’ deal while ignoring the 100 good deals.

But you will go down fighting for this region. Fighting to turn things around. Fighting for a future.

Because Bernard Lord’s future of a New Brunswick completely dependent on Equalization and Federal Transfers is not my vision for the future. A self sufficient New Brunswick contributing to Confederation is my vision. New Brunswick as a place people move to not from is my vision. A place where global investment takes a good hard look at New Brunswick rather than ignoring it.

And at the end of the day, who is the Maritime Premier that has the widest reputation and the best brand over the past 25 years?

I’ll give you a hint. He made economic development and that whole ‘pulling up by the bootstraps’ thing his central theme.

Maybe at the end of the day, the public is not as stupid as the media and pundits think. Maybe they would support a party that says ‘enough is enough’.

Maybe.

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David Ganong made a speech yesterday, it would seem arguing for more Equalization funding for New Brunswick but I thought his comments or the newspaper’s interpretation of them were confusing. Firstly, Ganong reportedly said:

“… the point is not for the [Equalization] money to directly kick-start the economies of poorer provinces.”

But he concludes that:

“New Brunswickers would rather be on the plus side of this (equalization) equation,” said Mr. Ganong, ” but we should not be ashamed or discouraged until this happens.”

Now, according to Mr. Ganong, Equalization is not ‘designed to kick-start economies’ but we should not be ‘ashamed or discouraged’ about taking more and more Equalization until this [NB on the plus side of Equalization] happens.”

This is confusing to me. We are needing ever increasing amounts of Equalization. However, that is not supposed to support economic development but we miraculous should hold out that some day soon we will be on the plus side of Equalization.

Sorry, Mr. Ganong. We will never be on the plus side of Equalization in your lifetime or mine unless we actually design these programs to support economic development. Your contention that these programs are not designed to kick-start economies may be right but that is a wrong-headed approach.

The Feds should tell New Brunswick that any new Equalization should be directed at economic development measures.

In my opinion.

On a related note:

Klein issues warning on sharing the wealth
Premier threatens to pull province out of revenue-sharing deal with Ottawa
From Thursday’s Globe and Mail

Now, I know that Harper wants to win Quebec – badly but when Ontario and Alberta are pushing back on more lucrative Equalization – I can’t see how he can do it. Any massive infusion of Ontario and Alberta tax dollars to Quebec and by extension NB et. al. through Equalization will lead to a monumental push back.

Stay tuned.

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Beyond the inflammatory title, I actually love entrepreneurs – I work for one – and I think they are a key part of the future for New Brunswick.

But they are only a part.

We need to have a solid base of global capital and global corporations.

Rick Buckingham, president and CEO of Canadian 2 for 1 Pizza Inc., has been writing columns in the TJ about economic development. This week, he writes a rousing column entitled:

Preemptive transitional change – a case for a sustainable New Brunswick economy

Now, before you click on that link and savour the prose as much as the pizza, consider this. He makes no mention at all about attracting major corporations to the province. None.

Why would he? He’s an entrepreneur. He wants policies and efforts to support entrepreneurs.

He cites the case of Waterloo as a model for New Brunswick to follow. He lists off a dozen thinks we can copy from Waterloo: Be entrepreneurial, Innovate, Keep our smart people in New Brunswick, Build a ‘can do’ mentality, Create an environment that allows venture capital to flow into entrepreneurial ventures, and on and on. Nary a mention of attracting global corporations.

Nary.

Tee. Hee. Hee.

While there are some very impressive entrepreneurial start ups in Waterloo (unprecidented in Canada really), here’s a list of a few of the companies there that moved into Waterloo:

Google
Microsoft
Babcock and Wilcox
McAfee
NCR
Raytheon

Again, don’t get me wrong. Waterloo is one of the best examples of homegrown high tech industry but even there, foreign investment is all over the place – in the form of large corporations and in the form of investment into many of these firms.

I might choke on this but we might be better off listening to a few enlightened journalists rather than the business boys/gals.

Who can we trust to look at the world through a non-vested lense? Universities? Local entrepreneurs? Unions? How about our friend Crowley-Hayek? They all see the world through their own vector and that’s what you get.

But the universities want more money but can’t prove they are helping to gird up new industries and stop population decline.

Local entrepreneurs have their own perspective in mind.

Unions? Don’t talk to me about unions. They are the most democratic organization in the world. The majority of CUPE members are in Ottawa so CUPE fought tooth and nail against any efforts to move federal government jobs to Atlantic Canada.

The majority of CAW members are in southern Ontario. So don’t expect any union support -whatsoever – for using the auto sector for regional development. They forget that the unions were very supportive of similar strategies in Ireland.

And Crowley? Remember Alec Bruce’s pinata. ‘Nuff said.

Who can we trust to be unbiased?

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You know the old saying about misery loving company. Once in a while it is comforting to know that there are other areas that are just as mis-informed and backwards when it comes to economic development.

The local newspaper in Grant County, Indiana conducted a poll in which they asked readers:

“Do you think Grant County should actively recruit business from overseas, including footing the cost of sending public officials to meet public employees?”

The response:
29.8 percent answered “Yes.”
70.2 percent answered “No.”

The writer was quite upset and goes on to make the case – a la Alec Bruce – for attracting investment.

Now, to me the interesting issue is this. It seems the more depressed and challenged an economy is the more likely politicians and the public will be either ambivalent or outright hostile to economic development.

There are 88 counties in Indiana and Grant County has the worst population trend of them all – all 88. The population has declined by 5% since 1990 – that’s even worse than New Brunswick!

Yet 70% of the population don’t want taxpayers dollars spent trying to recruit industry to breathe new economic life in the to region.

Isn’t that backwards? Is the fact that New Brunswick is cutting economic development spending while the population declines counter-intuitive?

In the words of Bender from Breakfast Club (yes, I am that old), I think New Brunswick and Grant County, Indiana should get together and go bowling.

They have more in common than you might think.

But this does reinforce my basic premise that the general public has to be better educated as to the scope and scale of our economic challenges. I am sure if you did a similar poll here you would get the same results. When the public starts demanding action the politicians will have to take notice.

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Alec the Bruce is back at it doing a little whacking of his own. I don’t do a lot of linking to other blogs (I should do more) but this one is well worth the read.

Unfortunately, through decades of public sector pandering to short-term economic and political pressures in Atlantic Canada, the ‘business subsidy’ has become an ideological piñata, whacked by the right wing for the so-called culture of defeatism it has nurtured and smacked by the left wing for lining the pockets of the region’s wealthy elite.

Still, Ontario’s example [the billion dollar auto subsidy program] comes close to proving that in principle and practice timely, targeted and strategic public investments in private enterprise can generate long-term industrial benefits. If we can get out of our own way, we may also recognize that all business subsidies are not created equal.

Britannia calls Robert the Bruce the “greatest of all the great Scottish heroes”. What pray tell should we call our own Alec the Bruce?

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I have seen very little analysis of the rapid rise in provincial government spending since 1999. This is a bit perplexing considering that the bulk of the funding for this expansion of spending comes from federal transfer payments.

So, I did a little analysis for your edification. A study out today from Stats Can looks at non-residential construction spending.

The chart below is a little confusing so let me explain it. What the chart says is that for every dollar spent in Canada in 2005 on industrial construction (which includes all buildings used for manufacturing and processing; for communications or other utilities; for agriculture or forestry; and for mining) there was $1.50 spent on institutional construction (mostly government funded construction – includes schools, universities, hospitals, health clinics, day care centres, churches, museums and nursing homes).

In New Brunswick, for every dollar spent on industrial construction, there was $2.50 spent on institutional construction – yet again the highest rate of public spending in Canada.

I still maintain you can’t use government spending as a proxy for private sector industry spending. I’m all for public investments in infrastructure, but there must be a similar spending in the private sector.

Non-Residential Construction (2005)
Institutional to Industrial Construction Ratio

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