Asymmetricalism makes sense

From Wednesday’s Globe and Mail:

Ottawa drafts new deal for provinces
Tories willing to extend greater economic autonomy – such as allowing Quebec to negotiate unilateral labour deal with France
July 30, 2008 at 4:00 AM EDT

QUEBEC — The Harper government is prepared to let Quebec negotiate a unilateral labour-mobility deal with France, and is willing to provide each province with similar autonomy on economic issues, the Prime Minister’s Quebec lieutenant, Lawrence Cannon, has announced.

In the clearest indication to date that the Conservatives are willing to offer exclusive arrangements for each province, Mr. Cannon signalled the Harper government is prepared to shift the way the national government works with its provincial counterparts.

Quebec offers potent political benefits for the minority government and with economic volatility affecting all provinces differently, Mr. Cannon said in an interview that it is time to deal individually with each province’s needs.

While he declines to use the word “asymmetrical,” Mr. Cannon concedes the effect of his proposed framework creates precisely such a landscape.

The collapse of a manufacturing base in Central Canada and Alberta’s work force shortage mean each province’s story has to be addressed through an autonomous approach. Mr. Cannon acknowledged the concept of autonomy is dear to Quebec nationalists in particular.

I have been calling for development of a new economic development partnership between Ottawa and NB that is unique to our situation. It is absurd to try and lump all the provinces together into these national programs when their situations are so individual these days. It seems that if Alberta, Quebec and Ontario need an “autonomous approach” maybe finally New Brunswick will get treated by the feds based on its unique circumstances.

Why is NB unique? I’ll give you the top ten reasons:

1. It is not – regardless of what some say – going to benefit directly from oil, gas and other mineral revenues. There will be some – but only a fraction of other provinces including SK, NS, NL, AB and BC. NB’s economic growth, unlike most of those other provinces, will have to come from some other location.

2. Our traditional industries are in decline. This is not a unique situation in Canada but it is unique in scope and scale. Over 8% of our GDP is tied directly to the forestry, for example, compared to less than 1% in Ontario. So the effect is much greater.

3. Our population is in decline. It went up slightly in the last year but the trend is downward.

4. We are starting to see some specific labour shortages despite a 9.6% unemployment rate. The pull of Alberta and now Saskatchewan is causing challenges.

5. We are not investing in industry sectors with growth potential.

6. We have the lowest level of spending on R&D among the 10 provinces in Canada.

7. We are not seeing the growth in higher wage, private sector jobs that will be needed to attract skilled workers from away.

8. Economic development spending as a percentage of both federal and provincial budgets in New Brunswick is well below the level it was a decade ago.

9. Northern New Brunswick.

10. Increasing dependence on Equalization.

So, for the feds to roll in with “Building Canada” and other national programs doesn’t make much sense. It makes far more sense to establish a new economic development partnership where both governments invest, let’s say $500 million each over eight years with the specific goal of making New Brunswick attractive for business investment and expansion. It would put serious dollars on the table to attract/leverage private sector R&D, it would help New Brunswick promote itself internationally but most important it would provide funds to invest in industry-specific infrastructure.

And, lest you think my dollar amounts are crazy, the feds just gave Nova Scotia almost $900 million more to go against the offshore royalties agreement and the feds spend close to $400 million per year on EI payments in New Brunswick – every year – I would think a fraction of that amount on economic development might be a good idea.