The elephant and the gnat

There is a story in the TJ today that quotes APEC as reporting New Brunswick will likely lead Atlantic Canada in economic growth next year if all the major projects go ahead as planned. That is true. GDP growth is heavily tilted towards major capital projects so in a year where the Potash Corp. expansion, Lepreau refurb and the LNG terminal gets completed, it is bound to drive up the GDP numbers.

But the interesting sub-point in the story is the article makes a point about how the mining sector is on the upswing (another story called interest ‘unprecedented). Spending is expected to reach a whopping $25 million this year (tongue firmly planted in cheek). And the impact on government coffers is not exactly stellar. Here are the forecasted royalty revenues (07/08 budget):

Royalties on Coal $26,000
Royalties on Peat Moss $1,000,000
Royalties on Potash $7,600,000
Royalties on Sand and Gravel $300,000
Royalties on Salt $400,000
Royalties on Natural Gas $3,500,000

On a provincial budget of $6 billion, $13 million is a pittance.

So after we are blitzed with the massive growth hitting the province, the journalist slips in:

Atlantic exports of lumber and other wood products fell 31 per cent in the first seven months of 2007, and further declines in U.S. demand, continued low prices and the strong Canadian dollar will likely lead to further reductions in lumber exports near year, APEC says. In New Brunswick, the economic downturn in the forestry industry has led to the loss of more than 5,000 jobs in less than two years.

Now, what is the story here? What is the economic impact? A couple of mega projects with limited job creation, the wonderful mining sector and its $25 million in activity or the huge challenges in the forestry sector?

We have a pathological need in this province to portray things as always on the upswing. In government press releases and in the media. It’s as if somehow if we only emphasize the positive – it will happen. A kind of The Secret for economic development.

But it’s not true.

I’ll leave with an anecdote I mentioned before but one that is emblematic of this situation. Former BNB Minister Peter Mesheau was asked upon his departure what was he most proud of during his tenure as minister. Without hesitation he answered the saving of the Nackawic pulp mill.

That response stunned me. His greatest accomplishment was a project that actually led to less jobs at lower overall compensation. In essence, a project that moved the province slightly backwards was his greatest achievement.

That’s a metaphor for NB governments these days.

So is the story above one of boom boom boom? Or it one of a few megaprojects not being able to make up for a serious decline in the forestry sector?

We report. You decide.