It’s dangerous to comment on economic development elsewhere and draw some learnings for New Brunswick because there are inevitably folks around that have a disparate view. But at the risk of that, I’ll say that I am reasonably impressed with this summary of economic development efforts in Northern Ireland over the past six years. A few observations:
1. They spent about 514 pounds per person on ED over six years. I don’t think this included operating costs – just direct funds to business but I could be wrong. Anyway that equates to about $930 Canadian dollars. Multiply that by the NB population and the equivalent spend over six years – directly on company projects would be around $690 million. I don’t know how much NB spent but it was somewhere far south of $690 million. They say that leveraged about $2.4 billion (CDN) in private sector investment and created/sustained 28,000 jobs.
2. They spent $515 million (CDN) on R&D (that is the government’s portion of the spending) over six years or about $80 million per year.
3. It’s a blend of local investment and foreign investment attraction and - key – the salary levels were above average. 93% of the jobs were above the average for the country.
4. Finally – and this is crucial – “Mr Morrison highlighted that the average time taken to process a request for assistance to an offer of support has reduced during the last two years from 43 to 25 days.” Anybody know how long it takes in New Brunswick? I have talked with firms that didn’t get a call back within 25 days let alone project approval.
I like the language used by this guy. “…the mechanism for Northern Ireland to ‘catch-up’ with other regions of the UK”.
That should be what it is all about in New Brunswick as well.
The Telegraph Journal ran a story yesterday detailing the spending from a northern New Brunswick development fund. It chronicled how funds were used to build statues, renovate historic train cabooses and renovate golf course clubhouses. It was one of those stories tailor-made to convince us that government recklessly wastes taxpayer monies. The story quoted the Finance Minister as saying that job maintenance and investments in strategic infrastructure were necessary.
At the risk of biting the hand that feeds me, I respectfully disagree with both sides. I assume the newspaper doesn’t disagree with the restoration of historic train cabooses, the renovation of golf clubhouses or the building of statues. Take a drive around Saint John, Moncton or Fredericton and you will see such things and more that never make the news in such fashion – most with public money in them. No, it seems to me that the newspaper is annoyed with the source of the funds for these projects rather than the projects themselves.
As for the government, again with all due respect, the notion that many of these projects are “strategic infrastructure” does seem to be stretching the limits of both the term ‘strategic’ and ‘infrastructure’.
For me there are a few learnings that come out of this story:
1. I am increasingly hearing the term ‘job maintenance’ or ‘retention’ – think auto sector in Ontario as the biggest example of that but it also is used to justify giving all kinds of projects government money on a small scale as well. Once again, I never say never on this stuff but I think Northern NB needs economic development right now not maintenance or retention. So if our actions don’t turn the tide of out-migration and decline, we have failed no matter how many statues are erected.
2. I guess there should be funds set aside for statues and cabooses – but maybe not from a fund that was supposed to be a catalyst for economic development. It seems to me that more and more of the spending from government (and I include ACOA here) that is said to be ‘economic development’ spending has a very weak link to direct economic development. You can build a bridge to nowhere in the name of economic development but at the end of the day governments need to invest wisely and strategically on projects that have the best chance of success. I propose that we need to rethink what we really want in Northern NB and then put the tools in place to make it happen. The last 20 years are ample proof (from the Transitional Jobs Fund to these current funds) that just setting up a fund, putting in $10 million and spending it over five years does not work.
3. Really who should be deciding whether to build a statue should be the local municipality but many of them are so small and have access to very little discretionary funding. We need to dig out the Finn report and look at implementing it. We need to find a way to get scale in municipal government in New Brunswick without sacrificing the character of our smaller communities. The Finn report made a lot of sense.
Someone who knows about such things told me the other day that someone should tack on telecommunications infrastructure to that energy corridor into the United States idea. If the right of way is given for pipelines and electricity transmission lines why not telecommunications at the same time? This could further the potential of New Brunswick becoming a low cost location for data centres or other telecom-intensive business.
Anybody know the salary levels at Primus? I think increasingly we need to focus on the quality of the jobs (i.e. wages, benefits, career pathing, etc.) and not just the quantity of jobs. Certainly Edmundston needs good jobs so I am happy to see this announcement but it would be nice right up front to know the wage scale in the facility.
I am officially Twittering these days. If you want to be tweeted with economic development snippits feel free to follow. Just search for Jupia – you should find me.
When ‘rural’ means only 14% of your population like it does in Ontario, looking at rural development is a relatively small scale issue (not to downplay its importance) but when it is 47% of your population as in New Brunswick, it is a fundamental issue. It has preoccupied my thinking for some time now and my thoughts have been evolving. I now believe that a key to successful rural and small town development is proximity to a larger urban centre. I’ll have some more to say about this in my column this week in the TJ.
In the meantime, another important thing we need to start doing is thinking about rural and northern New Brunswick again through the lense of economic development. There are lots of voices calling for more EI, save our hospitals, save our ferries, fill our potholes, broadband, etc. but there is less thinking – serious thinking – about a successful economic development model – particularly for Northern New Brunswick. I think the rural and small communities that are within the orbit of Moncton, Saint John and Fredericton are a different story and need to be looked at in the context of sustaining urban/rural linkages.
Here is an interesting initiative in South Dakota called “Reimagine Rural“. Here is a blog about how they turn the state’s intellectual horsepower to thinking about the future of local areas.
I completely understand former Premier Frank McKenna’s positive reaction to the tax cuts in the most recent Liberal budget. Frank has always relished his role as Salesman in Chief for New Brunswick and now he has another tool to go out and talk about. I also understand Britt Dysart’s reaction. He realy seems to enjoy his role as hammerer-of-all-things-PC.
But these guys like Thomas d’Aquino, president of the Canadian Council of Chief Executives coming out in support of the budget? I think that is just plain cynical. The CCCE has 150 members – almost all of the largest corporations in Canada and other than the NB firms Irving, McCain – these companies have almost completely ignored New Brunswick. I remember back in my call centre days – I was told that New Brunswick had better luck attracting U.S headquartered companies than Canadian headquartered companies. More recently, Halifax has attracted almost a dozen financial services firms to that city – how many of them are based in Toronto? None.
It’s stunning really. The largest financial, ICT, manufacturing and service firms in Canada and other than small retail operations here – they have not invested in New Brunswick – ever. RBC, TD and a few other have call centres here. McCain, Irving & Ganong are here to be sure but how about manufacturing, software development, distribution facilities, financial services back offices, R&D labs, pharmaceutical benefits management centres, etc.? Nothing. $3.5 trillion in assets.
I’ll tell you what. If Thomas d’Aquino’s members start flocking to New Brunswick to set up new manufacturing, software development studios, animation studios, media production facilities, etc. then I’ll say he is not being cynical. But until then I’ll continue to believe that he just wants to put pressure on McGuinty and other provinces where these firms actually do have more than just a retail presence to cut their tax rates.
I believe passionately in New Brunswick and its ability to compete in the global market place. I really hope, and spend much of my time advocating for it, that New Brunswick can turn itself around and become a place of growth and economic dynamism in my lifetime. But unfortunately I think we will have a easier time trying to attract manufacturing and software development, etc. out of Europe, maybe India and the US than out of Toronto. It’s unfortunate. You would think that these big national companies would have an interest in Canada having a strong and successful economy from coast to coast but I see no real evidence of that.
Someone asked me why I haven’t commented yet on the Irving feasibility study for an energy corridor connecting New Brunswick with Maine. So here goes.
I think it seems like a great idea. It should create good paying jobs and it is a fairly green energy project (natural gas co-gen and wind energy). It is only at the feasibility stage – it is not an announcment of $2 billion in spending so let’s see where it goes.
I also wonder why NB Power is not around. You know my position on energy. If Irving does it, they will want an economic return on their investment – full market value. They will sell energy at the highest price the market will bear and so they should. Therefore, this project does not mean cheap energy for New Brunswick economic development.
I have this romantic notion of using NB Power as an economic development driver – though I realize they are not currently mandated to do so. Power generation projects are capital cost intensive – lost of economic activity during the construction phase but the cost of operating facilities is realtively limited.
The good old days of NB Power building large electricity generation capacity and then offering it at incentive rates to attract and grow industry may be behind us – but I don’t have to like it.
The media’s approach to covering economic data can be confusing. It has been a fascinating thing to watch over the years. The release of provincial budgets over the past week or so is an excellent case in point. New Brunswick announced a $700 million deficit and some fairly limited tax cuts (the corporate tax cut is only $6 million in year one) and the media coverage was overwhelmingly positive. Both the Globe & Mail and the National Post ran op/eds praising New Brunswick and the National Post piece hoped that Alberta and Ontario were watching New Brunswick.
Then Manitoba – a have not province not much larger than New Brunswick with no oil and gas royalties – comes out with a balanced budget and the national media focuses primarily on the tax and fee increases required to reach the balanced budget. No mention of whether Alberta or Ontario should be watching Manitoba. In fact, the Hurculean feat of achieving a balanced budget was hardly mentioned.
Then Ontario comes out with a budget than includes a deficit that is less than half of New Brunswick’s – based on the size of the budget – and McGuinty is roundly criticized for being just another Bob Rae – in fact I saw Rex Murphy last night and he is absolutely livid about this reckless spending. The media did spend a considerable amount of time covering McGuinty’s move to the HST.
I have said on these pages that I don’t have a problem with short term deficits – particularly if the money is going to economic development efforts – so I am not going to backtrack now. I am not criticizing the government for running a deficit. I am expressing confusion as to why a massive deficit is a secondary consideration to a small tax cut.
It’s back to the future at Enterprise Greater Moncton. Former CEO John Thompson is back and starting in the job on Tuesday.