It's The Economy, Stupid

I know I have posted the link to this organization at least 3-4 times in the past four years but it is well worth posting again for new readers of the blog. The BC Progress Board is an excellent example of a government funded but independent organization set up to report on the progress of the province against a predetermined set of benchmarks. It is non-partisan and the metrics don’t change from year to year (although they do delve into specific topics every year). Click on
the link to have a look at their reporting. You will see that a number of the metrics include New Brunswick and that we are at or near the bottom of the list for virtually all of them.

New Brunswick ranks 60th in GDP per capita; 57th in Real Personal Disposable Income, per capita; 49th in R&D Expenditures, percent of GDP (2nd worst in Canada).

On the plus side:

5th for Personal and Property Crime Rate, per 100,000 population.

I have said repeatedly that New Brunswick needs this kind of independent outside annual review. When this is done internally, the temptation is overwhelming to politicize it. Consider old Jeannot Volpe’s Report Card to New Brunswickers. This thing was send to 250000 households at a cost of what must have been at least a couple of million dollars and it was the biggest piece of propaganda since the case was made to invade Iraq. It was unbelieveable. Statistics were combed over and cherry picked and then sanitized to a fine political hue.

I have no problem when political parties issue such crap to defend their record but when it comes from the Department of Finance – it almost becomes unseemly. People expect accurate information coming out of official government sources – and that has become almost farcical in New Brunswick these days.

So, I hope that the provincial government ultimately will do this – set up a similar model in New Brunswick. Sure, initially, we will be at or near the bottom on almost all metrics but look at the bright side – there is nowhere to go but up.

And I’ll end on a positive note. You will see that PEI tends to rank even lower than New Brunswick on a number of statistics but I saw in the report that in the last 10 years PEI has had the biggest improvement in the area of R&D spending. That is proof that a last place province can turn things around – it takes time folks – if it puts its mind to it.

Uncategorized

Why would the Times & Transcript run an article about the latest migration numbers (and mistakenly call it population), then quote the Minister of BNB talking about the ‘strong’ population growth and never mention the significant net out-migration of people from NB during 2007?

First of all, they rammed together the quarterly population estimates for NB with the migration estimates for SJ and Moncton. Those are two different things.

Second, why would you have a story talking about annual ‘migration’ in and out of Saint John and Moncton and then have the Minister comment on the quarterly population numbers?

For your edification, here is the data you should have read about in the newspaper this morning:

Migration 2006/2007

As you can see, we have had another round of out-migration. I think this is the 15th straight year? Something like that.

Population, is another thing altogether. Migration is only one component of population growth/decline.

Population Estimates Q2 2008

New Brunswick’s estimated population did increase by about 400 people – or the second worst growth rate in Canada but reading the T&T, you would think these are numbers to be proud of.

Secondly, the population estimates get adjusted eventually and these residuals tend to bias these numbers upwards. Also, the Minister is forgetting to mention the thousands of people who moved West to work but are showing up as living in NB (many of them at least).

This is a recurring theme for me and I just don’t understand why the T&T doesn’t want to put out in the public domain the data. They can spin it up or down or sideways but to just ignore the figures doesn’t serve the public very well.

Uncategorized

A couple of years ago I looked at the growing trend of medical tourism in Israel and other international locations (Americans travelling abroad for surgeries). I suggested here (and elsewhere) that New Brunswick should take a long hard look at this. Why not? We are in the backyard of the Boston-NYC corridor with direct flights into NYC. It is significantly cheaper to offer these services here and the health care industry in New Brunswick is, on average, among the highest paying.

I was basically either laughed off, scorned (how dare you) or ignored.

Ontario MDs to launch medical tourism firm
Ailing Americans will soon be able to buy surgery at bargain prices in Canadian hospitals through a new medical tourism company founded by two physicians. Markham-based anesthetist Shehbaz Butt says he can provide international patients quality choices through his company, Canadian Healthcare International Corp., at rates drastically lower than those in the United States.

As I have said before the genius of the call centre initiative was that NB was first in the game. An early adopter. Within five years of NB becoming the so-called call centre capital not only did you have every province in Canada with a ‘call centre team’ out trying to out-NB NB you had international locations such as India and the Philippines attracting this type of work (not directly influenced by NB I might add).

Why not medical tourism? At a theoretical level? Why would it pose any threat to Medicare to offer services to Americans? Sure, you would have to ramp up capacity but in my opinion that would give you more capacity and competencies to offer NB citizens.

But the most forceful response to my suggestion was outright ignoration. That’s a stupid idea. Who would come here? This is New Brunswick, after all.

The exact same response when we talked about attracting these multinational call centres/back offices in the early 1990s.

I am not saying that medical tourism is sure thing. I am saying that we should have done a serious feasibility study 2-3 years ago when it came on the radar.

Uncategorized

Watch the tiny totters inching up a hill
It may seems to you he’s merely standing still
Though the steps he takes are infinitely small
They’re a step in the right direction after all.
-from Bedknobs and Broomsticks

You will have to forgive me but my kids have a bunch of Disney CDs and they play them in the car all the time. This one keeps going through my mind – particularly as a expectation adjusted theme song for New Brunswick.

The latest quarterly population numbers are out and New Brunswick added 400 people - the second worst growth rate in Canada among the 10 provinces.

Although we could use Bruce Springsteen’s “One step up and two steps back” because the migration data is also out for 2006-2007. New Brunswick lost another net 1,400 people last year to out-migration. That’s about 2 people per 1,000 – slightly better than 2005-2006.

The problem here is how to match the data with the lofty rhetoric. Unless we start turning that migration inward – eventually who will be left?

Uncategorized

I know a few Ontarioians read this blog so I have a reasonable question for you. I have not read much about the fiscal gap that Ontario has with Ottawa but I keep reading stories about how unfair it is to Ontario and the fact that Ontario is the poorest province in Canada because of this gap – no wait, I just made that last part up – Ontario is still the richest province in Canada if you measure it by per capita income/net worth (although Alberta must be sneaking up here I haven’t looked recently).

But let’s say majority rules and Ontario’s fiscal gap gets erased. Where does the money come from? In virtually the press I have read on this the complaints are about Equalization, and unequal health transfers and unfair EI allocations – all Atlantic Canada and Quebec focused.

Why target the guns at the poorest parts of Canada? Why not talk about Ontario’s ‘share’ of all that oil wealth in Alberta?

Serious question. Newfoundland notwithstanding, places like New Brunswick would be hit hard if you clawed back a few hundred million each year to fix the imbalance.

I am not an advocate of NB being a ward of the state so to speak but in the short term, our existence depends on it. I would like someone to tell me if Daulton McGuinty has an opinion on where all this money for the fiscal imbalance should come from?

Finally, I don’t think there are too many New Brunswickers who wouldn’t be ready to switch the imbalance in favour of Ontario – more EI, Equalization, etc. as along as the economic fortunes of each province were switched at the same time.

But to paraphrase old Mike Harris who once said Nova Scotia wanting its equalization and offshore oil royalties was “like the welfare bum who wins the lottery and wants to keep his welfare cheque”, if Daulton wants to fix his imbalance by beating up on places like New Brunswick it would be like the millionaire wanting to cut the housekeeper’s salary because he lost a killing speculating in the market.

My point is the reason why there is a fiscal imbalance is precisely because Ontario has been the strongest economy in Canada for decades. I don’t think Ontario will solve its short term economic challenges by by trying to beat more money out of New Brunswick.

Ontario would be far better off showing strong support for a real self-sufficiency agenda in New Brunswick. That would lower our requirement for elevated transfers and presumably free up some of this money for Ontario.

But that’s just my opinion.

Uncategorized

I see the provincial government trotted out that statistic about New Brunswick having the third lowest net debt per capita in the country when it released the government financial statements on Friday.

This issue of debt is a bit of recurring theme here because I have a slightly different take on things but first, let’s use Statistics Canada data for a little comparison.

New Brunswick has the highest debt charges per capita of any province in Canada. Scroll down to page 52 in this report to view. (By the way, this is an interesting comparative view of government spending in Canada)

Also, I believe that NB Power’s $3 billion in debt is not included in the data. That would increase NB’s net debt by over 40%. Now, of course not all of NB Power’s $3 billion in debt is ‘stranded’ but a big chunk is and the NB taxpayer is on the hook for all of it.

But even if you agree with the assertion that we have low net debt relatively speaking, to me that translates into more wiggle room for investing in economic development.

Consider this analogy. If the roof on your house was collapsing and you had what the bank considered a good debt load and you had a credit line would you say “I am not fixing that roof because I like having a low debt load” or would you take on the debt to fix your house?

Or another. Would you not take student loans and forgo university just to stay out of debt?

The truth is that New Brunswick should be investing a lot more into economic development and I wouldn’t worry an iota if the net debt increased or if we ran some short term deficits. This deficit fighting bogeyman is left over from the 1980s when governments ran deficits year after year with no spending control. If you are spending on the right things, a small deficit or increase in net debt is fine IMO.

Again, they just announced a onetime increase of $368 million to the net debt to pay for a highway. Why would it be so unconscionable to announce a one time increase in debt to build an Energy Park in Sussex or a Bay of Fundy cold water energy system to attract a data centre cluster to Saint John or a large scale wind turbine manufacturing and refurbishment facility in Belledune or an auto plant in Bathurst?

Because that, my friends, is outside our neatly constructed box and going there might entail some risk and might open someone up for scrutiny in the op/ed pages of the newspapers.

Like most things in this province, I think we need to look at debt through a slightly different lens. If you are piling on government spending because you have no discipline on expense control – that is one thing. But if you are increasing government spending in strategic investments that will pay dividends down the road, that is another.

Uncategorized

Business New Brunswick has a new booklet – titled Tell The Story. This article talks about the Minister’s trip to LA and this new booklet.

Anybody have a digital copy they can send me? I’d love to see the story. Hope it has more in it than energy.

Uncategorized

I guess you can accuse me of having a one track mind but, oh well, everybody’s got their own rice bowl.

I was reading an article in the Daily Gleaner that interviewed Andy Scott about his 15 (?) years in Ottawa. Andy reamed off a pile of things he was proud of from his work with the Aboriginals, to the same sex marriage file to his work on the Referendum. Not one mention of any economic development file in New Brunswick. I suppose he could point to some if he thought about it but it seems to me that for an NB politician – that should be at the top of the priorities.

During Andy Scott’s time in Ottawa Canada went through the longest period of sustained economic growth in history – 14-15 years straight with no recession – something like 4 million in population growth – unprecedented economic success – and yes, the bulk of it was under the Liberal administration.

But all New Brunswick has to show for all that Canadian economic and population growth is a slight decline in population and an ever increasing need for federal transfers just to make the payroll. And not even a passing glance of this fact by Andy Scott as he reminisces about all his time in office.

I would think there would be a lot of regret among provincial and federal officials as to why New Brunswick couldn’t join the growth wave that hit Canada in the early-mid 1990s and sustained up until today. I would think there would be a lot of retrospective thinking as to what went wrong. But nothing. Nada.

I just looked at the data today again. New Brunswick’s population growth rate steadily increased in the 1950s and 1960s and then started to drop off into the 1980s around that recession and then kept slowing until it dropped into outright decline from 1996-2001 and then stayed the same through 2006.

Why? What, if any was the government’s role? Certainly there was a large scale expansion of UI/EI in through the 1980s and beyond? What role did that play? What role did the federal government play, if any, in the allocation of FDI over those years and its total concentration in Ontario/Quebec (with the exception of oil in Alberta and Hong Kong investment in BC)? What role did regional development policy have on this decline?

If this stuff is not even on guys like Andy Scott’s radar – how will we ever figure it out? And what about the next big recession in Canada? What will that do to New Brunswick now that we are so exposed with our cheese in the wind?

One track mind but it would be interesting to hear Andy expound on this.

Uncategorized

Actually, check that. More babies means more out-migration to Alberta unless we get our economy going down here.

Stats Can just released its latest baby production data in Canada.

You would think with 100,000 season workers and among the lowest labour market participation rates in North America, that New Brunswickers would have more time to hanky panky. Then again, we are among the oldest populations in North America and age does matter in this area. Although Trudeau sired a child at something like 70 years old.

Births per 1,000 population (2006)

Uncategorized

Awhile back someone on this blog put me on to the Council on Foreign Relations podcasts – and I have been listening to 4-5 of these every week since. If you want to talk about Ukraine and NATO or microfinance or currency stability in Argentina, giddy up!

Last night I listened to an interesting session with Cristina Fernández de Kirchner the president of Argentina (think of her as a kind of Hillary Clinton as her husband was previously the president).

She gave a good speech but her most salient points were around the culture of gambling and risk that has pervaded the U.S. economy – particularly Wall Street. She said the U.S. must get back to what made it great – the creation of value through goods, services and knowledge – and not just gambling on the market.

I think we have got to find a way to limit gambling on stocks. I know that old Greenspan believes that ‘liquidity’ is the ultimate goal and the short selling of stocks and the other fast flipping of stocks to make quick profits is good for the market but I am increasingly coming into disagreement with the old coot.

It seems to me that we need to find a way to breed out the gambling and revert to stock price setting based on real underlying value.

But I’m not a expert on this stuff. Just a guy whose already small retirement savings has shrunk further in the past little while.

Uncategorized