My wife and I decided to spend a few days in Spain. I’ve been working like a dog for about six months or so and we needed a little break.
When we arrived, there was a general strike – so just about everything was closed including taxi service from the airport. We are told they are back in biz tomorrow. They are just staging these day long strikes to make their point.
The unemployment rate here is 20% and there are some visible signs of the economic downturn although by the number of cranes and public infrastructure work I see here – it does look like they are following at least for now the stimulus route.
It’s not a particularly good time to leave New Brunswick as the unexpected results on Monday night are sinking in. I think most people thought the Tories would win after the polls showed a wide margin but I am not sure anyone predicted such a romp.
My very limited survey of economic development types so far would indicate there is optimism that Alward’s government wll have a strong economic development focus. I think the risk would be that other challenges will overwhelm the economic development file. Investing in economic development is a longer term effort with no guarantee of success. Slashing spending and moving back to a bare bones model might be recommended by some.
It is worth pointing out that McKenna’s greatest economic development successes occured in the middle of the last recession. Companies were rethinking their customer service and back office models (consolidation, new technologies, outsourcing, etc.) and that opened up an opportunity for NB to carve out a niche. I think it is harder to define those niches now but it is mandatory that we do so.
Spain is an excellent example of why Alward has to reduce and eliminate the budget deficit. The higher the debt (and the uncertainty about future deficits) drives down your credit rating and drives up your interest rates. We are in a relatively low interest rate environment right now (generally) but that is likely to change in the next 1-2 years and as the province has to issue more debt, the cost can be significant.
Every single point on the province’s debt servicing costs can add up to millions of dollars that are needed just to pay for the spending of the past.
So, Premier Alward has to deeply cut the rate of spending growth, develop a bold new economic development agenda, fix a broken energy model, address the worst demographic crisis every to hit New Brunswick (for every person 60-65 years of age, there is only 0.8 between the ages of 15-19), and keep a cranky, populist leaning caucus in line. He may also want to throw in municipal reform if he is into self-flagellation (likely a good thing that Baptists don’t believe in that method of punishment).