It's The Economy, Stupid

It seems like a lifetime, but just over one year ago, the New Brunswick PCs were riding high in the polls (someone told me their internal polls gave them a 12 point lead on the Liberals) and hoping to cruise to an electoral victory.

The media was very supportive of Premier Lord and his government – yes, even the Telegraph-Journal was mostly kind (not compared to the gushing and swooning of the T&T but from an objective sense).

That was then. This is now. From an editorial in the TJ entitled “Where are N.B.’s Conservatives?”:

At the provincial level in New Brunswick however; it [the Conservative party] is faltering – not for lack of potential public support, but due to the paucity of its ideas and weak leadership. Rather than championing a bold, alternative vision for New Brunswick, the party’s interim leadership continues to lick its wounds in public, bitterly lamenting an electoral defeat that should not have been a surprise.

It’s the time-worn tactic of blaming the media. Where are New Brunswick’s Conservatives? Where is the party’s intellectual strength, its dignity and courage, its sense of urgency and purpose? Is this really all that’s left? If Conservatives are serious about wanting to be heard, they should take the initiative and speak.

Now, the truth is that the Telegraph-Journal has been quite harsh towards the Tories and mostly supportive of the Liberals since their election. But to have the media – and, I might add, the credible English language daily in this province – come down this harshly is, I would think, a major problem.

However, 12 months as we have seen is a lifetime in New Brunswick politics. If the Tories elect a strong leader that casts a bold vision for the province – and if the Liberals stumble – all will be forgiven so to speak – by the voter and the media. I, for one, hope the Tories elect a good leader. A good opposition with ideas of their own is a vital part of democracy – in my opinion.

As for Graham’s Liberals, it is fascinating to watch the tide of support going up. From the same editorial:

New Brunswick is entering a period of industrial growth, economic revival and demographic change.

I would slightly modify that to read:

New Brunswick has entered a period of unprecedented expectations but no real concrete action. The refinery expansion and LNG plant in Saint John so gushed over by the Tele-Irving Journal were announced under the previous government. The Lepreau refurbishment as well. Everything else, in almost a year of being in office, is just talk.

We had another mill (Fraser) close this week. The example of Moncton in the the 1990s should be ample proof that the success of one city in New Brunswick will not be enough to drive economic growth at a provincial level. Saint John is heading into a period of strong growth – no doubt – but much of the rest of New Brunswick is a question mark.

Can Fredericton continue to see the growth of the public sector – with the government’s desire to be self-sufficient? Much of Fredericton’s growth in public sector jobs has been fuelled by increases in Equalization and now we are expecting to decrease Equalization.

Can Moncton continue to grow? The two sectors that drove the growth of Moncton over the past 15 years were call centres and manufacturing. Call centres are peaking and manufacturing jobs are stagnant. What’s next?

What about Miramichi? There has been a build out of retail which has offset some of the mill losses but that is not sustainable. Swapping mill jobs for retail jobs is a deadend strategy.

What about the north? The opening of a mine is good news but the collapse of the Envirotech Park in Belledune is a sad outcome. Bennet Environmental aside, the general concept was good and the horsepower behind that park should have led to better things.

No, in my opinion based on 17 years of studying this stuff, I think the little retail and services bubble we are in right now will stabilize over the next 12-18 months. Saint John’s growth should continue for 7-10 years. Moncton has a few more years of economic gas in the tank but past 2010 – particularly if the federal Conservatives move to that “per capita” funding formula for Transfer Payments – I am not optimistic at all.

My overall prediction for New Brunswick for the next ten years – barring a significant change in direction – is continued population stagnation leading to outright decline by 2010. Rural New Brunswick will decline even further. The cities will still consolidate some rural activity but will start to peeter off by 2012 or so.

I wouldn’t bet on this because there are too many unknowns.

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If you are having a slow day at work or other free time, you may want to check out this site. It give current wage rates by a number of different categories (education, industry, occupation, age, etc.). The frequency of observations is quite low but nevertheless there is some interesting data that should feed into public policy.

For example, a lot of you folks love small business and chastise those evil large corporations that are sucking the life out of local economies (sarcastic emphasis added). I have reported to you in the past that small businesses offer considering less benefits (pensions, health plans, etc.) than large businesses. This chart shows the median salaries by company size. You will note that wages basically increase by the size of company. It is interesting to note that businesses with 20,000 to 50,000 employees (worldwide) have a low median wage in Moncton. That is because in this specific market, that segment is dominated by call centre companies which do offer lower median wages.

Actually, the trick is to get a Federal government job in Moncton. You are paid higher (relative to the overall median) and your cost of living is lower

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Alec Bruce and I apparently share the same opinion of our New Brunswick’s New Premier (TM).

Only the indefatigably optimistic Shawn Graham could interpret a comment like “we never say never” as definitive proof that his genial negotiating style is winning friends and influencing people among the recalcitrant ranks of the federal Tories.

He is talking about the Petitcodiac River restoration project and the fact that the Feds are already hedging on their part of the funding of this restoration.

It does seem like Shawn Graham has essentially become the Anti-Bernard Lord in his approach. Either that is inbred or his advisors see that as a better way to build longer term connection with the electorate.

Lord had little interest in working with Maritime Premiers (he had a better rapport with Manitoba’s Premier) – Graham has been all over that file. Lord wasn’t overly interested in shaking hands and kissing babies. Graham loves this. Lord didn’t spend a lot of time directly interacting with the minions in actual New Brunswick communities. Graham loves to drive around, smile and mouth the priorities of each communities as the priorities of his government. Lord was outspoken in his criticism of the Liberal Prime Minister. Graham is in a love fest with the Conservative Prime Minister.

But exploiting Lord’s perceived weaknesses is not necessarily a good approach. You can say you are committed to the Petitcodiac but unless something gets done, you will breed the kind of resentment that Lord attracted. The same with Saint John. The same with Miramichi. Fredericton. And all other cities in New Brunswick that are feeling like the government is on their side.

Eventually, the government has to make hard decisions. Decisions that are unpopular. Decisions that burn through political capital.

One hopes that overall, voters will judge your government as successful. But there is no way that ‘indefatigable optimism’ is a substitute for leadership and results. It is a good precursor to leadership and results but it is not leadership and results.

So, my advice to Graham is to keep up the big smiles, the endearment with New Brunswickers. Golly gee. But eventually, he will be judged on whether he can break the cycle of declining population, increasing dependence on Equalization, rural decline, dealing with serious challenges in the forestry sector, etc.

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….So I put the darn thing away.

That’s how I feel sometimes when I see this stuff. When I hear talk about spending potential ‘gateway’ funding on electricity infrastructure to the U.S., I just get frustrated.

What about the inland port? What about rail infrastructure? A transportation gateway is just that. Spending the money on infrastructure to make it easier for NB electricity to be used for U.S. economic development doesn’t make much sense to me.

I believe in the concept of an “Atlantic Gateway”. A Halifax columnist unearthed a quote from 200+ years ago where some Crown representative sent a memo to London saying that Atlantic Canada should be the ‘gateway’ of trade from the U.K. to her Majesty’s colonies in North America.

I think it still makes sense today. But filling potholes or putting up transmission lines is not the answer. Making sure that New Brunswick directly benefits from the ‘gateway’ is the answer.

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In the last federal budget, the government announced that it would be moving its health and social transfers system to a “per capita” model where in order to get more funding, your population would have to be growing. This was a demand of the Ontario government to address the fiscal imbalance.

At the time, the media in New Brunswick barely covered this. I think it was mentioned briefly and one newspaper columist said this would be a problem.

Now PC Opposition leader and Health Minister Murphy are said to be pushing for more health funding as boomers begin to retire.

It seems to me that this is missing the bigger point. The Feds have just said they are moving to a funding formula that will flatline health funding to New Brunswick (because our population is stagnant) and our guys are dutifully asking for more dough for health.

What they should have been doing is fight hard against this per capita funding model for health and social transfers. An issue that it seemed to me was almost not even on the local agenda for concern.

Better than that, we should be looking at better ways to generate own source tax revenue to lessen our dependence on Federal funding overall. While I have no problem with transfer programs as a concept, I believe increasingly this leaves us at the mercy of the winds. Political winds that is.

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A number of folks have commented on my last post about the East Coast Connected initiative. After a 90 second perusal of the website (and reading the Herald article), I suggested this might be a good way to link into the diaspora. Most of the comments (posts, emails and a couple of telephone calls) provide good points.

Some have said that this initiative is more about sucking talent out of Atlantic Canada rather than ‘circulation’. Some say it sounds like an initiative to make Atl. Canadians more at home in the big city. This may be true. Who knows.

But the bottom line, for me, is this. Something like 550,000 people have moved out of New Brunswick since 1976 (some have moved in but this is the out-migration total). I suggest (and you mostly would agree I submit) that the single most popular reason to migrate out of New Brunswick (and ATLCAN) is lack of economic opportunity.

So, in general, keeping these folks in some form of ‘loop’ for the ‘if’ and ‘when’ they would be candidates to come back here is a good idea. There are an increasing number of wage competitive jobs (adjusted for cost of living) available down here in financial services, IT, health care, etc. And my experience is that a lot of ATLCANers want to move back here when it comes time to raise their family.

So, I think this type of networking process is highly valid (without knowing the specifics) and its up to NB companies and NB governments to ensure that it in fact is a two-way street. This should not be about brow beating ex-Maritimers to move back out of some sense of guilt or about greasing the skids for the folks moving to Toronto (remember, Toronto has a net out-migration of Canadians over the past 10 years – its populationg growth is being driven by immigrants – not migrants from other areas of Canada).

From the self interested perspective this region, it should be a venue to get access to the diaspora when these good jobs come available and are not being filled by local residents.

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I decided to bring the kids to NYC for an extra long weekend. I hadn’t been here in eight years and wanted to get back to see Ground Zero, et. al. If there is such thing as a global economy, than New York must be its hub and its exemplar. We saw a $250,000 toy in FAO Schwartz and a couple of blocks away, a couple of hundred people waiting in line at the local soup kitchen.

But it’s an amazing city – economically, culturally, ethnically. We heard at least eight different languages scrolling through the radio dial and ate lunch at an Italian restaurant in an Italian neighbourhood – the real deal – the owner still greets his guests in the language of the old country.

However, New York is made up of the world’s diaspora. And as I was travelling in the subway my mind was mulling how tiny little places like New Brunswick could benefit in some way from this economic juggernaut.

Then I just stumbled upon this. There’s a good overview of the East Coast Connected program here.

One guy calls it a “Brain Circulation” initiative rather than just the well known brain drain.

I think it makes some sense. I can’t seem to figure out who’s funding it, however.

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A Times & Transcript report today summarizes a new Statistics Canada report shows New Brunswick drivers clock an average of 18,558 kilometres a year per vehicle — more than any other Canadians. The article speculates some of the reasons for this.

I have two points:

1. Drivers in British Columbia drove their vehicles the least. British Columbians are the most physically active population in Canada. Guess which province is the second least active in Canada. You guessed it.

2. I have always grumbled about this. New Brunswickers have either the lowest or second lowest ‘average commute distance’ to work (among Canadian provinces). At the same time, we will drive two hours to save 25 cents on toilet paper by purchasing 500 rolls at Costco. It seems that Statistics Canada is confirming my angst.

Don’t get me wrong. I am sensitive to global warming. But when I looked this a few years ago unemployment rates in communities 20-30 minutes from Moncton were as high as 18% while Moncton employers were facing worker shortages.

My advice? We should get of our collective arses and walk more. And if there’s a job in the next town over. Gas up.

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Ouch. Nothing like having the same name. I can assure you that I am not the David Campbell that has just been fined a pile of dough for breaking New Brunswick securities laws.

Your humble servant’s most controversial activity is grumbling about over zealous newspaper editors.

Oh, and maybe juicing up some numbers to make my point.

No, I might also be the target of the Inquisition because of my clairvoyance.

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The CEP is coming to the rescue. From a press release yesterday:

Northern New Brunswick is in the midst of an economic crisis that is likely to get a lot worse, says the Atlantic Region Vice-President of the Communications, Energy and Paperworkers Union of Canada (CEP) and his Union plans to do something about it.

“We in the CEP have no intention of sitting idly by while communities like Miramichi suffer the consequences of mill closures and cut backs. We intend to lead a campaign to find a better way – as a province – to deal with the loss of thousands of good paying jobs.”

“This train for change is leaving the station,” Mr. Cronk said. “The Miramichi event on Sunday is only the beginning of our efforts to build a better way. We think the revitalization of the economy must become the number one priority for all levels of government and they need to open the process for input from all stakeholders.”

I don’t know. Maybe this is a good thing. Maybe the union will be able to put its deeply vested interests aside.

But that comment from a union rep. back in the 1990s still rings in my ears. He said, refering to the REPAP mill that was going through a crisis, “we’ll shut this plant down before we take a dollar an hour pay cut“.

I wonder if there has been a little learning since then.

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