I can see both sides of releasing the CENB report suggesting that the provincial government spends more money on the south than the north in this province.
But as someone who has staunchly fought for a new, serious and credible economic development strategy for the north, I feel this is a mistake.
First, the debate between the North and Fredericton looks an awful lot like the debate between Fredericton and Ottawa. We know Ottawa spends far more – even per capita – on R&D in Ontario but the Feds will tell Fredericton that New Brunswick gets far more Equalization, EI and other income propping up money.
Because it is exactly the same argument in New Brunswick. The average adult in Gloucester county receives 24.5% of his/her income from government transfers. The average adult in Saint John county receives 16.3% of his/her income from government transfers.
What does that mean? It means across Northern New Brunswick, each year the federal and provincial governments spend several hundred million more on income support in Northern NB than in Southern NB. And, if you take into consideration the lower average income (hence lower taxes paid), the subsidy is exacerbated.
My point is not to pick on the North. This is exactly the same argument that Ontario would use against New Brunswick.
In both cases it is irrelevant. In fact, both the CENB report and my analyis auger for a more serious economic development effort in the North. All the CENB and all the wizard economists need to do is look across Canada and they will see that government investment in physical infrastructure tends to lag economic activity. They don’t build roads, schools, hospitals based on potential demand in the future (most times). They wait until the need is there and then they invest.
Government investment in R&D and specific industry growth efforts (like auto in Ontario, aero in Quebec and new media in British Columbia) tends to lead economic activity.
So the CENB, as I have argued, should spend less time arguing for more lagging government investment (roads, schools, hospitals) and more time arguing for leading government investment (i.e. sector development investment).
Now I admit there is overlap here. Government spending itself is an economic driver but the argument put forward by the CENB will be easily countered – as I have shown above – by the huge amount of income support in the North. By any measure, government spends more in Northern NB across all spending areas – than in the south -with the isolated exception of Fredericton where the ‘head office’ of government is located.
I have spent several years slowly trying to convince stakeholders in the south that economic development in the North is a good thing for the province. Every coffee, multiple columns, hallway conversations, blogs – but in the end it’s all about goodwill. The population base in Ontario means that on a purely political level – the feds need to do very little in New Brunswick in terms of economic development. The same holds true within New Brunswick. If stakeholders in the North push too hard and the power base in the south pushes back – they will lose – and New Brunswick will lose.