David Campbell

Dispatches from the Road: Stiles, Idaho

noreply@blogger.com (David Campbell) — Sat, 06 Dec 2008 20:37:00 +0000

Hi folks. I am in an Internet Cafe in Stiles, Idaho population 212. The town where we stayed the last two days has a population of 1,110 and no Internet access and my Blackberry doesn't work (yikes).

Great fishing here. Looks like a variation of Northern New Brunswick. I'll blog more about it later.

Dispatches from the road: Vancouver

noreply@blogger.com (David Campbell) — Thu, 04 Dec 2008 04:27:00 +0000

I haven't been to Vancouver in 15 years. It's a great town. Walking around Vancouver you do get a sense of how diverse a place Canada is. 15-20 years ago, one of out every 3-4 people I met out here claimed some linkage to Atl. Canada - either they were from the region or their parents or some other family connection. While I haven't had much time to talk to folks out here - my sense is that I would be hard pressed to find many people now that have such ties to back east. One day soon, if not today, it will be these folks in Parliament deciding the fate of the Maritimes.

Hey, I see that British Columbia is branding itself as the Best Place on Earth. I'm not much for marketing but it seems that if you set the bar too high, you set yourself up to fail. It's like our Premier who wants "the best education system in Canada - from worst to first". I'll take a little bit better than last place as it would be a move in in the right direction.

I can't help thinking about Humphrey Bogart's line in Casablanca "...it doesn't take much to see that the problems of three little people don't amount to a hill of beans in this crazy world." Substitute New Brunswick for "three little people" and I get that sense when I visit a place like Vancouver. There are whole suburbs out here where the average price of a house would be higher than the biggest houses in Moncton.

And yet, it is Leslie Neilson's parody of that famous quote that really matters: "It's a topsy-turvy world, and maybe the problems of two people don't amount to a hill of beans. But this is our hill. And these are our beans."

The truth is that New Brunswick matters. In some small way, it matters.

Tomorrow it's on to Seattle.

Region needs a strong economic development voice

noreply@blogger.com (David Campbell) — Tue, 02 Dec 2008 01:46:00 +0000

The Times & Transcript ran a front page article this morning on the future of Enterprise Greater Moncton.

I think it is totally legitimate to re-examine the mandate and activities of EGM at a time of transition (such as when a CEO resigns). Things have changed in the region and the various stakeholders of EGM should make sure that the organization is as relevant as it can be in these times of change.

But the idea put forward by some that EGM should be scaled back or that its municipal funding should be pulled is wrong headed.

I find it ironic that at this time when everywhere you look people are hammering for more 'leadership' on regional and national issues, some want to gut an organization that has played an important role in Moncton's transformation over the last 20 years. Of course EGM wasn't the Moncton Miracle but it did play an important role catalyzing regional projects, projecting a regional voice and implementing regional projects that would not have been accomplished without it.

The whole reason GMEC (now EGM) was founded was to bring a collective voice and collective action on economic development for the region. What has changed to make this collective approach irrelevant?

As I have said before the time is now for Greater Moncton to figure out where it's economic growth will becoming from over the next 10-15 years and to figure out what the role of EGM will be (if any) in catalyzing that growth.

Hollowing out EGM or scaling it back to some local business counselling, etc.. would be a mistake, in my opinion.

There seem to be a lot of voices these days talking about 'overlap' and too many economic developers, etc. But even if you believe that, why cut EGM? Why not cut other levels, layers, laterals?

I think there is a legitimate and emerging view that we need to see more economic development success and the buck stops with the folks in that biz and their political leaders and the policies and directions they take.

But that, IMO, should lead to calls for strengthening EGM - not gutting it.

Educating Americans

noreply@blogger.com (David Campbell) — Sun, 30 Nov 2008 20:26:00 +0000

We know that a lot of central and western Canadians have skewed perceptions of Atlantic Canada but most of us think the average American doesn't have any view of Atlantic Canada at all.

I'll be in Seattle briefly next week. Maybe I should stop into the Seattle Times to try and correct some perceptions. Here is an excerpt from an article in the Times:

Every day, Shell flies a Boeing 727 into the company's private airstrip to rotate crews of workers from impoverished regions in Atlantic Canada.

This article is actually a pretty good one on the challenges associated with developing Alberta's oilsands. I just bristle when I read a journalist use 'impoverished' and 'Atlantic Canada' in the same sentence. There may be companies in the readership area of the Seattle Times that are looking at this region for business investment. Who knows? Do they want to invest in a dynamic, emerging economy or an improverished region?

Gunfight at the O (Ottawa) K Corral

noreply@blogger.com (David Campbell) — Sun, 30 Nov 2008 12:35:00 +0000

Crazy stuff going on in Ottawa these days. I have come to the conclusion (maybe you have too) that our national government is not really really ready to govern without a majority party. We got used to single party led government.

They should be able to do it. Dozens of democracies operate with coalition governments. I think it is more prevalent around the world than the single party-led approach.

The governing party should not use the confidence vote as its only tool for cooperation and minority parties need to understand they need to be about compromise.

I think that Stephen Harper screwed up when he added that little bit about cutting funding to the political parties. It was a blatant ploy to anger the opposition but to paraphrase Minister MacKay's comments if you aren't prepared to act when you play chicken, you start to look chicken.

Harper should not have used this unsettled period to put the screws to the opposition. He might pay for it.

But the opposition is equally not ready for cooperative/coalition government. The Liberals still think they are the natural governing party and are just looking for that new great leader to lead them to the promised land. It would be interesting to see the Libs play a strong role leading an opposition - it helps clarify the mind and hone the positions.

But who knows what will happen?

Atlantic Canada Dataville - the Information Switzerland

noreply@blogger.com (David Campbell) — Sat, 29 Nov 2008 21:46:00 +0000

Looks like someone in Nova Scotia is taking the data centre industry seriously. My fingers are calloused from all my posts about the opportunity of data centres. Who knows?

The current economic crisis presents the Atlantic region with a unique business advantage, said Anton E. Self, founder and CEO of Halifax-based IT startup Bastionhost.

Self, announced his company's project to put Nova Scotia on the technological map by establishing a system of data centres and digital media storage facilities in the province.
"We can build a new billion dollar industry right here in Nova Scotia," he said, highlighting the region's dense and established infrastructure and relative affordability. "But we need to invest in improving and integrating our critical infrastructure here, now, if we are to seize the moment and realize our tremendous potential as a leading global data haven."

Privacy law expert David Fraser argued that Canada's and Nova Scotia's strong privacy laws offer another inherent advantage to the data centre sector, especially since the United States passed the USA Patriot Act in the wake of 9/11. He said, "we can become an information Switzerland."

The point here is to find a way to generate sustainable competitive advantage in this sector. Ocean water cooling of the data centres might be one way. Leveraging the the country's privacy laws - this has been mentioned many times - may be another. Some other cost or ifnrastructure advantage could be floating around.

I hope Nova Scotia gives this guy a wide berth to figure this out. Because it is a billion dollar industry and it is a high paying industry and it could easily be in this region if the business environment made sense.

I get goose bumps.

The wheels on the bus go round and round....

noreply@blogger.com (David Campbell) — Sat, 29 Nov 2008 14:26:00 +0000

The wheels on the bus go round and round, round and round, round and round. The wheels on the bus go round and round and round.....

Check out some of the content in David Alward's commentary today in the TJ:

Our dependency on equalization payments from the federal government is also rising, despite the Graham government's talk about moving New Brunswick away from relying on these payments.

..er. Didn't they also go up every year under Premier Lord?

Our province needs an economic stimulus package to help get the economy moving, across the board tax reductions to help families and businesses, easier access to retirement funds to help New Brunswickers have access to the cash they need, better home-heating assistance to help New Brunswickers make it through the winter and non-partisan co-operation between political and business leaders so that we can develop and implement the best ideas to help New Brunswickers weather this economic storm.

Across the board tax reductions. Sigh.

On Monday, Mr. Alward will host a non-partisan roundtable discussion of the economy.

Non-partisan roundtable. I wonder if that means it will be made of plastic? The table, I mean.

Staple it together

noreply@blogger.com (David Campbell) — Sat, 29 Nov 2008 00:59:00 +0000

I got several emails about the last post on equalization so let me clarify again that I am not against the concept of equalization or transfers from a federal government to provincial governments to ensure that a similar level of public services are offered in each province in Canada. And, unlike AIMS, I do not believe that equalization is the root of all our problems. We were underperforming Canada in economic performance before the 1950s and we did after as well. Equalization did allow service provision to rise to a similar level and in fact some in Ontario say service provision rose above that province.

But I do think that the focus on wringing more equalization and transfers out of the Feds rather than focusing on good economic development policy and programs has been a mistake.

The reality is that the debate has shifted away from the substantitive issues of 'why' places like New Brunswick need more equalization to whether or not we are getting too much equalization. I'd like to get back to the why.

A few points (reiteration):

Statistics Canada publishes a study last year that shows that Ontario - far and away more than any other province in Canada benefitted from the NAFTA. This is economic development policy.

The Auto Pact almost exclusively benefited Ontario (directly). This is economic development policy.

The St. Lawrence Seaway project almost exclusively benefitted Quebec and Ontario. This is economic development policy.

Canada's industrial research and development policy is heavily skewed towards Ontario and to a lesser extent Quebec. This is economic development policy.

The Pacific Gateway amounted to something like $2 billion in federal funding to lead to direct economic development - particularly in places that were facing economic challenges - Prince Rupert and Prince George. This is economic development policy.

I could go on and on but the sad thing is that I can't find any federal economic development policies that have directly benefitted New Brunswick. I guess the Atlantic Accord benefitted Nova Scotia and Newfoundland (or the Harper version). What policies were tilted towards New Brunswick?

AIMS wants a scorched earth approach. Cut everything off. Burn it to the ground and hope that Frederich Hayek comes back from the dead and builds it fresh. I don't agree. I still think that government matters and that good policy from government matters. Not an absence of policy. Not bad policy but policies and programs that directly lead to the kinds of private sector business investment that we have seen in places like Ontario, British Columbia and to a lesser extent Quebec. I leave the oil and gas provinces out of it because they are attracting investment for a reason we can never replicate.

Look at the broader picture

noreply@blogger.com (David Campbell) — Fri, 28 Nov 2008 13:14:00 +0000

David Murrell from UNB is weighing in on the Equalization question. He's reasonably sensible on the issue - contrasting himself from AIMS.

I have a slightly different view. On the revenue side, instead of focusing on Equalization my focus is on "own-source" revenue. Because as Murrell points out equalization as a percentage of the budget is actually down slightly from 1981 while being up a billion dollars per year overall. However, Murrell forgets to mention that other transfers are up significantly as well.

Now you will say that all provinces get these other transfers as well (like the health dollars) but there is increasing pressure from Ontario to get this normalized as well (NB gets more per capita than Ontario). So you are seeing more pressure to cut both equalization and other transfer programs. Ultimately the only way to mitigate this is to have a larger percentage of your budget coming from own source revenues. Then your economic fortune is not tied to the vagaries of federal politics and the crankiness of Ontario politicians.

And the other huge thing that neither Murrell nor AIMS even touch on and it is huge is what I call the 'economic development' spending of the Feds. This includes R&D, Industry Canada, DFAIT, etc. It seems to me that for just about every federal government funding program focused on economic development, Ontario gets a higher percentage of the funds and for every program focused on propping up economies, New Brunswick gets a higher percentage of the funds (Equalization, EI, CHST, etc.).

I have pointed it out before. Canada's embassies and consulates are essentially the sales arm of southern Ontario. The Greater Toronto Marketing Alliance one year got 37% of its investment leads from the international offices of the government of Canada. Ask BNB how many leads they get from the Government of Canada.

Check out - even on a per capita basis - how much money the Feds put into research in Ontario. You would be - should be- shocked. R&D is critical to economic development.

Then have yourself a long look at all of Industry Canada's largest funding programs - TPC comes to mind and see how much of that money went to southern Ontario (including Ottawa of course). Then have a look at ACOA and find out that the maximum ACOA can give in funding to a company is $500,000 (Ithink they can go up to $1m with the Minister's approval) of repayable loans. Guess what the upper limit is on Industry Canada funding to the auto or aerospace industry in Ontario/Quebec is? I have no idea but they have given out $200 million to a single company.

When was the last time the feds (or the provincial government) ever partnered on a $500 million or a $1billion dollar busines investment project (other than the potash mine which was not the same thing)? Never. Not that I can remember.

That's the problem. Not equalization or any of these other distractions. The problem is that New Brunswick is not generating enough private sector business investment - this is a chronic problem - and it has left us chronically underperforming and relying more and more on federal government transfers.

And when we get the big investments (like potash or LNG), they have very little economic benefit beyond the construction phase so we get into boom/bust cycles. We need long term, large scale business investments that anchor the economy for at least a generation.

That's the nub of it for me.

Attracting good wage jobs

noreply@blogger.com (David Campbell) — Thu, 27 Nov 2008 11:50:00 +0000

I see that NSBI has attracted two IT companies in the past week. One is based in New Brunswick and the other in Ottawa. I think the key to these jobs is simple. One, they are at salaries well above the call centre sector and two, they are the kind of jobs that people will move back to the region to take.

That's a key point. If much of the future labour market is based on attracting people to New Brunswick, there have to be jobs here that will be attractive for people.

Follow up to previous post

noreply@blogger.com (David Campbell) — Wed, 26 Nov 2008 23:54:00 +0000

You know I am not much of a spin doctor but I just came up with a great new slogan for the Liberals as part of their strategy to attract people back to New Brunswick.

For every 500 people that move to New Brunswick, we commit to hire 3,830 new health care workers.

What do you think? Of course, they will have to borrow that from the Tories because it was actually their population growth to health care worker added ratio from 2001 to 2006 but I think they could get away with it.

This one is pretty good too.

Having trouble finding a family doctor in Ontario? No problem. We commit to hire 320 new doctors for 500 people added to the population of New Brunswick.

That would resonate, folks. That would resonate. Should I quit my day job and become a spin doctor?

Speech from the Throne

noreply@blogger.com (David Campbell) — Wed, 26 Nov 2008 23:15:00 +0000

It's hard to get much out of a speech to the throne. There wasn't much that looked interesting from an economic development standpoint. I'll make a couple of points:

Now more than ever, New Brunswick must be competitive in demonstrating that New Brunswick is a great place to be in business. Business New Brunswick has launched an aggressive investment attraction strategy. Your government remains committed to fostering innovation and exploring the potential of promising technology clusters such as advanced learning, health and biosciences.

There are a lot of folks in the ED and research communities waiting for the proverbial shoe to drop. The Liberals were in Opposition for seven years and now in government for two. They have had nine years to 'explore' the potential of sectors. They should be just about ready to go beyond exploration by now.

New Brunswickers across the province are saddened when their sons and daughters, their friends and neighbours have to leave New Brunswick to seek out opportunities elsewhere. In two consecutive budgets, your government demonstrated its commitment to bringing New Brunswickers home by doubling funding for the Population Growth Secretariat last year and increasing it by a further 63 per cent in the current year. New Brunswick's population has increased for six straight quarters and your government is on track to achieving its goal of boosting the province's population by 6,000 by the end of 2009.

Probably not a bad idea to tell your Department of Finance not to publish these numbers which show a 17 year string of more people moving out of the province than in (interprovincial migration) and only about 1,600 new new population in the past two years.

With its new health plan, your government is putting the needs of patients first today and in the future. There are 95 more doctors working in New Brunswick than in October 2006 - the largest two-year increase in almost a decade.

If we take the Census numbers from 2006, that means 320 new doctors since 2001. Almost no new population growth in the province from 2001 to 2008 but 320 new doctors. At $200k a pop (conservative average level), that is $64 million in more costs with almost no new population. From 2001 to 2006, there were 3,830 new health care workers added to the health system in New Brunswick.

The population grew by 499 people from 2001-2006.

In other words, we added almost eight new health care workers for every additional person in population growth.

And that was under a 'conservative' government.

I know the political resonance of health care but someone, some day is going to figure out that we can't keep expanding health care at such an unsustainable rate. I can tell you this. Ontario politicians and policy wonks know this data - better than we know it ourselves. I heard an angry pundit spouting all this data during an The Agenda podcast (TVO) the other day. He was griping because health care cost per capita in New Brunswick were increasing at some ridiculous growth rate compared to Ontario. That's not really fair because if health care costs go up by $200 million and the population goes up by 499 that makes the per capita numbers all out of whack.

But the point is valid.

Your government has kept its commitment to build the best education system in the country through our bold education plan, When Kids Come First. Recent results of reading assessments showed, among other encouraging results, a seven percentage point increase among Grade 2 students across the province since 2006. This year, 76 per cent of students met or exceeded the standard for literacy proficiency, compared to 69 per cent in 2006.

When did we get the best education system in the country? Did I miss a memo? This should probably read the government has kept its commitment to have a plan for the education system - but that whole best education system in Canada is a few years off, don't ya think? In addition, I think there are hundreds if not thousands of parents that didn't appreciate the hatchet job on French Immersion. Blaming French Immersion for the poor outcomes in our education system is a very controversial thing to do.

I suppose I could go line by line and pick it apart but I won't. I truly want this government to be successful. I realize that the Premier has to spin it out just like Lord and McKenna did before him. The problem with Lord (and some say McKenna) is that the spin became the outcome. After awhile, you start to believe your own PR.

noreply@blogger.com (David Campbell) — Tue, 25 Nov 2008 03:58:00 +0000

As you know, in recent years, I have become a big believer that we need to have far more discussion in the public square about economic development and the role of government and communities in fostering economic development.

There are a number of good university-based institutes that are studying issues related to development in New Brunswick and Atlantic Canada. Think of the Canada Research Chair in Atlantic Canada Studies at UNB or the Rural and Small Town Programme at Mount Allison University.

But there seems to be a derth of study and analysis of the most basic, fundamental problem that has been at the heart of Atlantic Canada's economic woes for a hundred years. That is the fact that this region has witnessed chronically low levels of business investment (domestic and foreign direct invesmtent) - for decades.

Here are some of the current study themes at the chair in Atlantic Canada Studies:.
*How Atlantic Canada Invented the Welfare State
*Community Stability & the Role of Migration in Rural Areas Experiencing Demographic Decline
*Immigrants, Temporary Migrants, Work, and Rural Community Well-Being
*Cultural Diversity and Health in Rural Atlantic Canada

And there are dozens more at these various institutes and very few are focused on that huge matzah ball that is business investment.

It's almost like we want to dance around the issue - talk about effects - analyze dozens of derivative areas - without ever talking seriously about the fundamental problem.

How about a symposium on these topics?
*Getting the fundamentals right - the role of infrastructure as catalyst for new business investment.
*What are the medium and longer term effects of attracting FDI to stimulate economic development in rural economies? Case studies from Alabama and Ireland.
*Environmental technologies - New Brunswick's next 'call centre' level growth engine?
*Why manufacturing is on the decline in New Brunswick - and models for growth.
*Attracting venture capital - the good, bad and ugly.
*People follow investment - getting the sequence right when looking at immigration and repatriation.
*Using energy as a competitive advantage for the attraction of business investment.

Or even more specific academic level analysis of trends such as:
*FDI into New Brunswick - a 20 year view.
*Why we need more Bricklins - the case for targeted industrial development.
*Has the 25 year policy of fostering small business creation in New Brunswick led to more entrepreneurship or more people with lower earnings and without pensions?
*The long term effects of out-migration - the loss of human capital.
*Why New Brunswick is not an export-intensive economy - debunking a popular myth.

I'm not trying to be nasty here. Is it because these academics are mostly historians? Or social scientists? Is an economic development track not compatable and even integral to the discussion of virtually all of these broader issues?

Report card on economic development

noreply@blogger.com (David Campbell) — Tue, 25 Nov 2008 02:11:00 +0000

NB receives mediocre report card on state of children and youth
MONCTON, NB-A report card on the state of New Brunswick's children and youth was released today, and the province didn't receive a single A. New Brunswick's Ombudsman, and Child and Youth Advocate, Bernard Richard gave B's and B pluses in the areas of education, youth and justice, and child and youth wellness, and only C pluses and C minuses in such areas as post secondary education, child welfare, and health. Richard says, during his investigations and reviews of services in the province, it became clear a lot of statistical evidence is either missing, outdated, or overlooked. He calls the province data rich, but information poor. Richard says, he hopes making a report card like this an annual priority will encourage better advocacy and decision making in all areas affecting the welfare of New Brunswick's young people.

I like how Richard will be putting out an annual report card on the province's young people. Might be a good idea to have an annual report card on the welfare of New Brunswick's economy and economic development. They are linked.

Don't forget to check out the video version of the podcast here. We need to get feedback to figure out if it is worth continuing. Thanks.

The Citi Never Sleeps

noreply@blogger.com (David Campbell) — Mon, 24 Nov 2008 11:43:00 +0000

The first time I visited Brazil back in 1994 I remember being surprised by the fact there were billboards all over Sao Paulo stating in english "The Citi Never Sleeps" with the Citibank logo.

I guess it was sleeping as it made at least $306 billion in bad loans.

Check out this Time article from 1965. It's entitled "We Are All Keynesians Now". Redux in 2008.

Economists talk about smoothing out the business cycle. Hopefully somewhere along the way we will learn that unbridled capitalism on the one end is too much of a temptation for greed and unbridled socialism on the other end is too much of a temptation for a different kind of greed (anyone want a nice dacha, cheap?).

We need free markets but we need to have a legal and regulatory framework that absolutely protects people and their property rights. Taking undue risk with people's investments is a violation of fiduciary responsibility and in my opinion is akin to theft. And the government has a fundamental responsibility to ensure that property rights are respected in society. Otherwise the whole system crumbles.

This is not about sub-prime mortgages or credit swaps or derivatives. It's about greed and people taking wild risks with other people's money. I'd like to see a few hundred Wall Street bankers go to jail for a long time. Then you would see far more adherence to the fiduciary responsibility.

Medical tourism

noreply@blogger.com (David Campbell) — Sun, 23 Nov 2008 23:33:00 +0000

Don't forget to check out the video version of the podcast here. We need to get feedback to figure out if it is worth continuing. Thanks.

We have been chatting off and on about the potential of medical tourism as a growth sector for New Brunswick. No one is seriously considering this but I think it merits at least a high level assessment.

Look at Minnesota. Rochester officials say members of Saudi Arabia's royal family spent enough during a visit to the Mayo Clinic to give the area's economy a shot in the arm. City officials say Saudi Arabian King Abdullah bin Abdulaziz arrived in the Minnesota city on Nov. 15 for a checkup at the Mayo Clinic and was accompanied by at least five princes and hundreds of others. Rochester Convention and Visitors Bureau executive director Brad Jones says a conservative estimate of the royal family's spending is up to $1.5 million.

Obviously that's a bizarre and extreme case but if the province was able to carve out a niche here and generate $50 to $100 million in new health care business it would mean more high paying jobs here (the health care sector is among the highest paid of all industries) and a broader base of health care talent for the local population.

I think this has almost nothing to do with the debate over public health care. In fact, it would mean more revenue to support public health care here.

At its simplest level, the cost of health care is out of control in the United States and they (both the public and the health care financing industry) are turning to alternatives out of country. Why not Canada?

Again, I don't know the specifics of the business model. That would have to be worked out but if a specific surgery that costs $80,000 in the U.S. costs $40,000 here, who wouldn't want to save $40k?

Just to keep the ball rolling on this....

For better and for worse

noreply@blogger.com (David Campbell) — Sun, 23 Nov 2008 17:41:00 +0000

I got an email the other day from an old friend I hadn't talked to in probably 10 years. He had been reading my columns/blogs and wanted to assure me that there would be no way in heck any government would set aside $50 million or more for the development of a single industry sector (like I have been advocating).

I believe that we need to be very tightly focused on a few industry sectors that have real potential as economic growth engines over the next few years and that means investing in R&D, workforce development, business attraction, supply chain development, entrepreneurial development, etc. in those targeted sectors.

My response to him is as follows. How come it is easy to put together a $50 million fund for the 'Miramichi' after the mills go down but impossible to put together a $50 million fund before the mills go down? I realize the logistical and political realities here but it is far more easy to do proper economic development before the major crisis than after.

We need to make the right investments when times are good so that when things turn south (collectively or on a sectoral or community basis), we are better protected.

Warning - rant ahead

noreply@blogger.com (David Campbell) — Sat, 22 Nov 2008 16:43:00 +0000

I have been saying for years now that the slavish adherence to balanced budgets in New Brunswick is a false security. That balancing NB's books because of the largess of the federal government is not good public policy over the long term (short term it's fine).

Of all the things people criticize me about that was probably the most pronounced. Specifically I have said that running a short term 3-4 year deficit in New Brunswick in order to invest in economic development would be a good thing. Even most of my economic development colleagues said the same thing.

Now I hear Jim Flaherty saying exactly the same thing - verbatim - about the Canadian economy. He is prepared to run significant short term deficits to support the economic development of the country.

This is the double standard of the decade. Miserable little provinces like New Brunswick - with population stagnation, industrial decline and being propped up by 3x the rate of inflation government spending - which desperately need economic development focus - ignore it to get some faux balancing of the budget but the national government has no problem running deficits in tough times for economic development (i.e stimulus packages, auto bailouts, etc.).

NBT was right (though we disagree about the fix). New Brunswick has been in a kind of recession for decades. Not the traditional GDP-based calculation but if you look at the significantly high rates of unemployment, the annual need for more Equalization to balance the budget, the chronic challenges with some of our industrial and regional development - we have been in a kind of recession. And yet successive NB governments point to balanced budgets and puff their chests out.

Bottom line. If Canada had the exact same economic performance as New Brunswick - it would be a national emergency. The federal government would run billions in deficit to try and fix it. In New Brunswick, we claim it as success.

Now, the feds are turning the screws on equalization and own source revenue in our province will be affected by the North American recession. We will probably start running deficits just to keep our inflated government spending up. But we should have been far smarter during the growth years of the Canadian economy.

Rethinking Moncton

noreply@blogger.com (David Campbell) — Sat, 22 Nov 2008 12:14:00 +0000

While I am based in Moncton, New Brunswick I have the privilege of working with communities all over New Brunswick, Nova Scotia, PEI, Ontario and the State of Maine. But an important client of mine over the years has been Enterprise Greater Moncton.

It's a bit of a shame to see John Thompson leave as CEO of EGM. I have always felt that the heads of economic development organizations should stick around at least five and up to 10 years to give themselves time to get things done. In any organization, two or three years running the place doesn't give much time.

But John said from the beginning he wouldn't be there long. He viewed the job as a short term opportunity and I think he has done good job.

Now my thoughts turn to the next leader of the organization. I have no doubt that EGM will be able to find an able replacement -from within or without - but the question for me is actually quite simple. What will be the sector (s) that drive Greater Moncton's economy over the next 10-15 years and what will be the role of EGM in catalyzing that sector development?

This is not an easy question. In 1989/1990 when Moncton, Riverview and Dieppe first decided to act together and create the Greater Moncton Economic Commission, the term "call centre" or any related term was nowhere to be found in the strategic plans or strategies for the community. It started to find its way into subsequent plans and was a mainstay by the late 1990s. And, despite the criticism the industry has garnered from some quarters, the call centre/back office industry has anchored Moncton's growth resulting in something like 5,000 new jobs over 15 years. ExxonMobil has three facilities in Moncton. UPS has 800 employees. Royal Bank, on and on.

In addition to the call centre sector, Moncton has witnessed strong growth in its IT industry. I was surprised to see recently that there are more people working in IT jobs in Moncton than many other similarly sized cities in Canada. This has gone under the radar because many of the jobs are not in small IT firms but in larger firms in other sectors such as Medavie Blue Cross, Assumption Life, Altantic Lottery Corp., etc.

Of course, Moncton has been witnessing strong growth in retail and personal services and other industries but those are not stimulative - those are reactive. Construction, retail, personal services and most professional service sectors grow reactively - not proactively. For example, 5,000 call centre jobs leads to the need for 50 new lawyers. Adding 50 new lawyers won't lead to 5,000 call centre jobs. Same for retail and the others. Now, of course, there is the multiplier effect as 50 new lawyers will create the need for two new food service workers and three new retail workers.

So what will be those stimulative industries for Moncton? Those industries that are not based on the local market but providing goods and services beyond our borders?

I have some optimism that the IT industry will continue to grow here. I hope that a more deliberate provincial approach and strategy is developed on which Moncton can build but I think we can expect more jobs in IT over the next 10-15 years. As I said above, what then is the role of EGM (if any) in catalyzing this sector's growth?

I expect the call centre/back office industry will plateau and slowly decline over the next 10-15 years. Not precipitously but slowly. The trick will be convince these firms as they move more and more to the Web, that they should put those technical jobs in Moncton. But I don't expect this sector to be a major growth engine over the next 10-15 years.

Life sciences? Maybe but not based on what we have seen in the past 10 years. There are nuggets of very interesting LS activity here that could be the start of something but I think EGM could play an important role as catalyst here.

Aerospace? Not likely. That stuff is mostly carved up in Ottawa among Quebec and Ontario with scraps going to Nova Scotia and Manitoba.

Manufacturing? Not likely - although the whole environmental technologies sector has interesting global potential.

What else?

That should be the single question for candidates for the EGM top job. I am not saying they need to have a concrete answer to this question but they need to realize its primacy in the equation.

Sometimes economic development agencies get caught up in the work itself - marketing, small business development, labour market efforts, youth, etc. etc. etc. but at the top - you need to have a clear understanding of the goal - the long term sustainability of the Greater Moncton economy such that it can be a great place to live and work.

Autos and economic development

noreply@blogger.com (David Campbell) — Fri, 21 Nov 2008 11:32:00 +0000

Someone asked me yesterday about the problems in the auto sector and the implications on the economy of New Brunswick. They also asked about the bailout request.

This is a complicated issue but here are my thoughts.

On the one hand...

I say good riddance. The auto industry and its unions never gave a rip about economic development in Atl. Canada. In fact, the piddly warehouses that GM and Chrysler had in Moncton have been closed. The Canadian Auto Pact was arguably the single biggest economic engine for the Canadian economy over the past 30 or so years and there isn't a single direct job in New Brunswick to show for it.

But on the other hand..

the industry is so big (regardless of its concentration in Ontario) that if it were to go down - the ripples would be felt across Canada - with the possible exception of Alberta. You see the quid pro quo for all that economic development in Ontario over the years has been more equalization, transfer payments and EI here. If the largest manufacturing industry in Canada collapses, it will trickle down to New Brunswick in the form of less money from Ottawa and that will hurt us all. Think about the impact on consumer confidence and ultimately spending if this industry collapses. We will be in for a much longer and broader recession.

But on another hand...

Giving massive bailouts to companies that can't produce a sustainable business model - it could be argued - is the opposite of economic development. I heard the UAW yesterday called the bailout down there as the same thing as Alabama giving incentives to attract Mercedes, Toyota, Hyundai, etc. That's a smoke screen. Those incentives created thousands of new high paying jobs and bolstered the Alabama economy. The bailout of the domestic auto industry will not create one new job - in fact - even with the bailout - thousands more will be lost. Governments have to be very careful about propping up bad sectors of the economy for political motives. They risk turning whole regions of the country and whole industries into Cape Breton circa the late 1980s. In other words, industries completely dependent on government subsidies to survive. We do it with agriculture but I am not sure how many other industries we can perpetually prop up without serious damage to the economy.

But on still another hand....

There have been thousands of jobs created in the auto sector by the foreign-based firms. Just about all the major players are in North America now - some in a huge way. Toyota is now a major manufacturer on both sides of the border. How will the bailout of the domestic industry impact the potential growth of the foreign-based manufacturers? Maybe New Brunswick should come out strongly against the bailout and then position itself on the side of the foreign-based firms.

The truth is as you can see there are no easy answers here. My fundamental premise has been governments should almost never prop up or bail out companies or industries with bad business models. I think there are many examples of how in the medium and longer term that is bad for the economy. But, what about this whole issue of "too big to fail"? Can we really let Canada's largest manufacturing sector collapse and ripple through the supply chains and into the broader economy? But can we continue to bail them out? The governments of Ontario and Canada have already given something like $2 billion to the domestic industry in the past 10 years - and not for net new jobs but mostly to retool.

Not the way to go

noreply@blogger.com (David Campbell) — Thu, 20 Nov 2008 14:24:00 +0000

I like Bruce Fitch. I run into him occasionally at church. His commentary against upping the HST has been published in at least the T&T and the Gleaner.

In the commentary he hammers the idea of raising the HST and lists all the same old tired arguments that have been published before.

He says it is not the way to go.

Then, what is the way to go?

That's the problem. It is easy to hammer away at any change at all (remember the HST was 15% just three years ago so those people like Fitch claiming doom and gloom apparently don't remember just three years go - if a 15% HST was so damaging to the economy why didn't his government drop it?).

The truth is that New Brunswick never really changes. All governments come in with great rhetoric but if you read (and I have) the narrative going back 50-60-70 years or more the talk is always about New Brunswick becoming a better economy. A place that doesn't see great out-migration, etc. And nothing changes.

Why?

Because even the simplest of proposed changes gets hammered and governments back off. It's unbelievable. Changing the HST to 15% is about the most tepid change in tax policy that you could implement because it was that level just three years ago.

When the PM cut the GST, virtually all economists said it was a bad idea. Think tanks right and left saw it for what it was - good politics. It was visual. It was immediate and people saw the impact.

Essentially the NB government is saying that this province should have smarter tax policy that is designed to incentivize more investment here (not more consumption) - at least that is my hope.

And along comes Bruce Fitch, Al Hogan, the CFIB, the Retail association, the Chamber and just about every other influencing agent in society to hammer as cataclysmic something that was in place just three years go with no cataclysm. In fact, I don't recall any of the things Bruce Fitch discusses actually happening three years ago.

But we all have short memories, don't we?

I say the odds are 50/50 maybe less that we get any substantitive tax policy changes. It is far easier to do nothing and coast along rather than risk the wrath of the vested interests. Just ask Bruce Fitch.

It's the economy, stupid video version

noreply@blogger.com (David Campbell) — Wed, 19 Nov 2008 19:55:00 +0000

A bunch of folks have been asking me to consider a video version of the blog. I tried it before but found it too cheesy. But the good folks over at iCommunications said they would dress me up like Anderson Cooper.

A little ED primer for you

noreply@blogger.com (David Campbell) — Wed, 19 Nov 2008 18:41:00 +0000

A little primer on economic development for you. A case study if you will.

Bell Aliant is trimming its workforce by laying off more than 100 non-unionized managers across Atlantic Canada, CBC News has been told.

Bell Aliant has been downsizing its skilled workforce and management for awhile now - ever since the merger - with some ups and downs. The reality is that Aliant is in a highly competitive market now with Telus, Rogers, Eastlink and the IP guys like Vonage, etc. so some attrition, cost consolidation, etc. will be necessary. I was kind of hoping way back when that NBTel/Aliant would have went the Telus route and tried to go national. Remember Telus used to be the teleco in Alberta, then it merged with BC and then went national.

Bell Aliant has transformed into primarily a local service old style teleco. It's wireless is gone. One assumes that XWave will go once a buyer is found.

But I digress. That is not the primer.

The primer is this. Bell Aliant lays of 100 managers. Telus and Rogers hire 100 sales reps and customer service guys. In other words, we lose the high paying jobs for relatively low paying retail jobs.

Economic developers need to find a way to get the higher end Telus, Rogers, Vonage etc. jobs here as well. If Telus is a 'national' player, then why not work them to get an IT development centre in this province? Why not some higher end back office work? Same with Rogers. The call centre work is fine but we can't - at an aggregate level - lose high paying jobs at Aliant and replace them with lower paying jobs at Rogers.

That would be the opposite of economic development. Economic regression - but with all those cool phones.

Finding a niche for NB ports

noreply@blogger.com (David Campbell) — Wed, 19 Nov 2008 12:14:00 +0000

It seems to me that the Port of Belledune and other Maritime Ports need to figure out what their niche is within the Atl. Gateway concept. Complaining about Halifax won't help. Halifax will always be the dominant port in the region - even though my talks with folks that know Melford say they are going to be an aggressive competitior.

I don't know much about the Port of Belledune but my first inclination would be that it should be positioned more as an economic development catalyst than plain vanilla cargo transit point. For example, if a wind and other industrial turbine manufacturer can be attracted here - it will need to be located near to water (and preferably rail). I would site it in Belledune. In other words, use the port as a venue for manufacturing/assembly that must have access to water.

That doesn't mean ignoring a cargo strategy where that makes sense. It is just about raising the bar on what you want to do with Belledune. How about a Free Trade Zone in Belledune? I know this is part functional and part marketing but why not?

In my opinion, we need to have a medium term economic development strategy for northern New Brunswick that reflects the skillsets of the workforce and the diaspora workforce that would come back. That means industrial and manufacturing jobs - preferably in durable industries that have at least a 20-30 year shelf life. The longer term strategy should include more of a concentration on technology and higher value added service jobs but that is tied to education levels which need to improve up in the North over time.

Edmundston-Bathurst-Tracadie Corridor
Port of Belledune as key catalyst on the east
Edmundston as anchor to the west
Bathurst as the growth pole services centre
Industrial/manufacturing base - preferably industries that have at least a 20-30 year shelf life
Longer term transformation into technology jobs

Cheque please.

Oh, what about Miramichi?

I have always thought that the 'Chi is more aligned with the south and really in the orbit of Moncton. I think its future is tied more to the south than the north. Just an opinion.