It’s about votes, duh

I have finally taken a few minutes this evening to scan a dozen or so articles and commentaries about the new Fed budget. Essentially, it boils down to this: Alberta and Ontario are more or less happy with the budget because it includes cash for them and a promise to move to the ‘per capita’ funding formula which will benefit provinces with growing populations and penalize those with shrinking populations. Quebec is happy as it was the single biggest beneficiary. British Columbia is grumbling but ultimately will be happy about the oil/gas revenue threshold which is not as severe as the non oil/gas provinces wanted. So Alberta, Ontario and Quebec are happy (73% of the population – i.e. voters) and Newfoundland, Nova Scotia and Saskatchewan are angry (7.4% of the population). The rest are either slighly grumbly or slightly happy.

Minority government. Structuring a budget aimed at 73% of the population.

That’s at least somebody’s version of democracy. If Newfoundland wants more dough, it should add a few million more to its population.

Ultimately, ‘good’ government is not about grabbing votes. It’s about having some overall vision and working towards that vision – come hades or high water. That, however; is not pragmatic.

For example, the basic concept of Alberta getting hundreds of millions more from the Feds when they have more money than they literally know what to do with (billions in the bank for a rainy day), tax cuts galore, record spending on education, etc.) while little old New Brunswick is raising taxes and just trying to balance the books and keep its head above water – is a bit weird – if you step back and look at it as if you were a Martian.

However, to some (I suspect the few Albertans that ocassionally read this blog), this is just Alberta getting its ‘fair share’ and why should it be penalized because a few other provinces have weak economies and shrinking populations?

I am not being sarcastic when I say that I don’t know the right answer here.

I have become convinced over the past 15 years that the Feds will never be the primary driver of a successful economic development programme in Atlantic Canada. Structurally, Constitutionally and even bureaucratically this is almost a virtual impossibility.

If a province like New Brunswick wants to get back in the game, so to speak, it will have to go it alone – or partner with other provincial governments. I do think the Feds may come along side and support a locally generated economic development renewal program if they see that it is beginning to work. They will want to jump in and get some credit. But I do not seem them as a primary driver.

I think I read the Tory budget adds $10-$12 billion in new spending to the Federal budget. Just 2% of that money, or $240 million, put into a matched program with New Brunswick would provide a pool of $480 million a year to fund my proposed “Department of Economic Renewal”. Imagaine that. Of course, the NB government just cut the economic development budget to $28 million – among the lowest in North America – so my $480 million/year mega development programme is likely a complete non-starter.

But it would be interesting if all of the players would have a serious look at this. If New Brunswick (and other have nots) got serious about becoming world class leaders in a few specific industry sectors and actually attracted thousands of new jobs and billions in new investment (using that $480 million/year), wouldn’t that be a better model than just inching up the $1.5 billion in Equalization every year? Wouldn’t that be money better spent than the $600 million per year in mostly seasonal EI?

If it worked, we would create some economic balance in the country. We would have strong economic regions from coast to coast (not every single community of course but broadly speaking regions). We would have more even development across Canada more like the US where every single region has had a boom cycle over the past 40 years (Northeast, midwest, southwest, west, central, southeast).

And I would argue we would have a more productive and efficient economy. This last point, that I’ll slip in, has got me in trouble with my economist friends but I maintain it as one of my themes.

When investment starts leaving certain states such as New York, Illinois, California or Michigan for ‘greener pastures’, it forces those states to take a long hard look at their own fiscal and regulatory environments. New York, for example, cut or eliminated something like 90 taxes and fees to help them become more competitive. Cripes, I didn’t even know there were 90 different taxes and fees. California, in response to the out-migration of people and capital to adjacent states has reset its own approach. Illinois and Michigan similar stories.

But how about Canada? According to Statistics Canada, something like 80% of all new population growth in Canada since 1970 has been concentrated in four areas: Greater Vancouver, Calgary/Edmonton corridor, the Ottawa/Toronto corridor and Greater Montreal.

Manitoba, New Brunswick, PEI, Nova Scotia, Newfoundland, Saskatchewan and Quebec outside of Montreal have not had population growth even at the national level in that whole time frame. What a shame. Seven of the ten provinces have not been able to muster even the national rate of population growth and in fact, from 1996-2006 – most actually suffered population declines.

Do the math. Better balance in regional growth would benefit, I believe, the whole country.