This is a good article outlining Susan Holt – the Fredericton Chamber and soon to be Biz Council CEO – and my views on economic development. The piece reflecting my comments is mostly clear and accurate although I never used the word ‘begging’ to describe companies looking for money from government.
There are legitimate gaps in the private financing market and there are genuine competitive threats that require governments to take on the role of bank – my personal view is that I think the incentive regimes to shift more to tax breaks (non-refundable Mikel) to limit taxpayer risk and to better align with the competitive realities.
The article is a bit too edgy on my view of government – agencies and on sector development. While the principles are solid, when discussing this in public I am not so dismissive of government. I do believe that government-led economic development has become too focused on the banking function and I argue that the entire system is mostly about matching government funding programs to companies in need rather than what I would call economic development – efforts to identify, qualify and develop sector opportunities and the value proposition needed to encourage investment into those sectors.
I think the system could be relatively easily reoriented with a more streamlined banking function and far more focus on the nitty gritty of economic development but it does require stepping out of a several decades long comfort zone.
If you talked to folks involved in economic development in the 1950s and 1960s there was far more effort on attracting industries and building new sectors. LJR actually hire a British guy to lead efforts to attract firms from the U.K. When was the last time that happened in New Brunswick? I’ll give you a hint. It was LJR.
I’m not saying that is the right approach today – although I have been clear in my view that we should bring in strategic leadership from other jurisdictions that have been successful.
I also think the federal government relationship should be redefined with a greater alignment to provincial objectives.
It seems to me there is more interest than in the past at adopting a new approach but I admit that many people in the system (and likely without) are happy with the status quo or a slightly modified version of it.
I was told by a recently retired economic development guy – who was fairly high up in the system – that my problem is I expect too much. He told me that these agencies can’t solve New Brunswick’s underlying economic problems -the best they can do is support local industries and hope that they are able to create jobs and taxes. He said my view that changing the model will lead to far greater results is pie in the sky.
Maybe so and it is true I cut my teeth on the call centre initiative so I got my start with the idea that big things can happen if the right mix of public and private sector players get involved in an initiative that is based on a very strong value proposition and a rapidly growing North American market. Maybe there aren’t many of these big ideas left.
However, no one will be able to convince me that we spent enough time thinking through and really trying to model the opportunities in a host of sectors (some of which are mentioned in this article).
Finally, the writer of the story rolled in wind turbines as a sector of interest to me. That is only partially true. My point to him (and I was speaking fast) was that we have a pile of wind energy now (I believe it is over 350 MW?) and not a single manufacturer of turbines or gear boxes or electronics. There is no R&D – the reality is this is just another industry where the value is added elsewhere and New Brunswickers are left to pay the excess costs. At least when you build a hydro-electricity dam or a nuclear power generating station – the construction value is accrued in New Brunswick. With wind the generation systems are trucked into the province and assembled with relatively little economic value.
The reality is that Ontario will build the renewable energy industry – get most of the value – and New Brunswick ratepayers will pay for it.