Highways aren’t economic development

As with most people, my thoughts tend to coalesce around certain themes.  I look for a common thread or the connective tissue.  It seems to me that governments have agreed that during a time of recession, they need to spend more money – not less.  Even many right of centre economist are calling for short term deficits to prop up the economy during these down times.

My issue is then why don’t we use that thinking to our advantage and make serious investments in economic development?  We could (and probably will) just plow a few hundred million more into highways, bridges, schools, etc. but wouldn’t it be interesting if we sat down and discussed what types of investments would lead to longer term economic advantage?  For example, how about investing in research and development in key growth sectors?  As pointed out elsewhere on this blog, New Brunswick as a government spends among the least in Canada per capita on R&D.  A little bit of operational funding for RPC and a few bucks through the Innovation Foundation but comparatively very low.  There are a host of other areas as discussed here in the past.

I am not against funding transportation infrastructure.  It is a needed, ongoing public expenditure.  But I do think we get swept up in national trends and would be wise to step back a bit.  If you are in Ontario which has added 3 million in population over the past 15 years, you could argue it is bursting at the seams and needs new infrastructure.  New Brunswick’s population has remained essentially the same in that time period. We also spent more on highway infrastructure during that time than any other period in our history.  At best, we might need some maintenance dollars but we don’t need to go around spending like we have been growing strongly – when we haven’t.

We are better off focusing on the growth and worry about funding the consequences of that growth after the fact.

6 thoughts on “Highways aren’t economic development

  1. I think investment tends to happen when government’s set the table well for business and let them proceed as they please. Think buffet.

    But when they try to interfere and tell them what to order (or do in their case), business tend to go elsewhere to seek what they once had (buffet).

    As an example, think Asian investments in British Columbia pre-NDP.

  2. Or think New Brunswick with the fewest mining regulations in the western hemisphere, virtually no forestry regulations, letting lease holders essentially do what they want. Wait a sec….

  3. You are right, and it goes even deeper than just funding schools, and transportation infrastructure. Most don’t even have a plan as to what they are spending money on within those sectors.

  4. Governments have successfully used tax policy (i.e. tax reductions and penalties) to encourage or discourage various activities. No reason that more of that cannot be done to encourage R&D for example. There are also areas such as R&D where direct government investment has been successful. Governments need to do more than set the table by broadly cutting taxes or reducing regulatory oversight; I’d like to see some data that that approach actually works.

    Governments need to and do invest directly in economies. The issue is really how that is done. David is correct that we need infrastructure other than roads and hospitals. But first we need to see a transparent plan; in Atlantic Canada we tend to get short term grab-bags. That’s a recipe for failure. I think we need to be asking the MPs and Premiers what their plan is, and keep asking until we get a detailed answer. Not a grab-bag like the McGuire Report but a sensible direction.

  5. Richard’s right. Economic development and transparency don’t go hand-in-hand in NB. For far too long the governments of the day have used BNB and the Enterprise system as a political dumping ground for pork barrel projects. Not only is that damaging by itself, but it’s even worse that the government has freed the enterprise system from any accountability or transparency. I’m not saying all the projects that go through there are crooked or partisan, but the public perception is bad when the books are glued shut to taxpayers, the ones funding all their initiatives.

  6. That’s not actually what Richard said, he said ‘we need a transparant plan’. That’s different from transparancy. Actually, the government books are quite open, you can go online and read the public documents, you can go to ACOA’s website where all the funds and grants are listed. I think it was NBT, or somebody a while ago that posted a website where federal grants were going, you could read right through them.

    It’s hardly ‘transparant’ when the government adds 300 million to its debt that it SAYS went to the highway in Woodstock. That’s not a mystery or ‘hidden’ from view. Anytime the government is putting money into a company they advertise it, there is at least mention at the government website, if not in media, because they know that most people usually support anything that creates jobs.

    A transparant ‘plan’ is something else, but so far we have pretty good criticisms whether the government even HAS a plan, let alone a transparant one. As has been mentioned often, every time the government does anything they say “this will help us be self sufficient” with virtually no mention of HOW it will do that.

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