Elephant in the room

I know that a lot of people that read this blog are appalled by government incentives to industry. I respect that opinion. In fact, I would fully support a full agreement among all North American jurisdictions to refrain from any cash or targeted tax-based incentives. However, we don’t have that and we can’t just ignore facts like this.

The Ontario and Canadian governments put $123 million into about a $530 million Chrysler plant expansion. That works out to be 23% of the total capital cost of the project. We can’t do a ‘per job’ calculation because there are no new jobs associated with the expansion (at least announced).

Now, some say this ‘protects’ the 4,800 jobs. This is called ‘retention’ of jobs. This is somewhat of a slippery slope because the same logic is being used in Newfoundland and other areas to bail out pulp mills. Eventually, this looks like the government bailing out companies with bad business models to retain jobs and no new growth.

But, really, that’s not my point here.

My point is to reiterate ad nauseum the theme of this blog. The NB government talks about self-sufficiency and then turns around and funds BNB at less than half of its funding level a decade ago (expressed as a percentage of government spending and including funding programs). The feds talk about the importance of regional development and similarly have been decreasing significantly spending in this area (as a percentage of overall program spending).

We talk about attracting people (migrants and immigrants) and then spend among the least in Canada in this area.

Ultimately, governments put their money where their priorities are. It’s that simple.

As an example, local officials have been calling for a ‘convention centre’ in Moncton for at least eight years (that’s the first time I heard about it) and not a nickel. Every Premier, MP and MLA has mentioned it but none have raised the funds. Meanwhile they have funded new bridges, a new stadium, etc. The reality that few want to acknowledge is that there really is no interest in funding a convention centre at the provincial or federal level. It’s that simple.

The principle can be applied broadly.

If you want economic development, fund and structure it properly.

If you want to attract people, fund and structure it properly. Cripes, we have had a population secretariat since 2003 and only now we are doing ‘consultations’? No, there have been numerous studies done since 2003 and numerous consultations. Now we go through another round. I’ll be happy when they get down to saying we are going to do these three things, allocate this much funding and expect/measure these results.

Other than that it’s just more smoke and mirrors – acting like you are doing something when you are really doing almost nothing.

Your daily tee hee hee moment
Canada too small for CPP investment fund; commits $573M to European fund

Remember my constain complaining that almost none of our RRSP, pension and government pension contributions is invested in New Brunswick to help grow our economy here? It goes without saying that the Canada Pension Plan doesn’t have a nickel here either. But I had to laugh this morning when I read that the CPP is saying that Canada is too small a market for all their investments and its putting money into fuelling economic growth in Europe. In some ways, Canada is a big New Brunswick, I guess.

But the truth is more stark. These pension fund managers are not tasked with using our pension monies to support economic growth here. They are tasked with growing the investment – plain and simple.

Not so in Quebec where a significant portion of public pension monies is allocated to support economic development in Quebec – and in my opinion it hasn’t done too badly.

The bottom line is that if just 10% of our RRSP and pension monies were invested in New Brunswick it would represent billions of dollars worth of growth capital.

It will never happen, but it does make you stop and think.