Whither conservativism in NB?

The subtext, of course, to the overwhelmingly positive response to the NB budget is what to do if you are a conservative.  The rightest of the right wing think tanks, AIMS, was gushing like a love struck teenager in the Globe & Mail about the budget.   Jack Mintz, the free marketeer crusader of the new West, was equally giddy proclaiming New Brunswick the next ‘Switzerland’.    The national standard of the Right, the National Post, was equally thrilled about New Brunswick’s tax cuts and opined that it hoped Ontario and Alberta were watching.

So what to do if you are a PC in New Brunswick?  I guess there are three options: 1) agree with the right wing punditocracy (Mintz and Cirtwell, by they way, were key influences on the plan so it would be a bit strange for them not to be wholeheartedly supportive); 2) say it doesn’t go Right enough (righter than AIMS?) and 3) devolve into a kind of Jeannot Volpe-esque/Pat Buchanan populism that rails against the evils of big business and global trade.  My guess is that the pull will be towards door #3.

I actually support having competitive tax rates – so don’t think I am against this tax plan. I just find it fascinating that many of the ‘best minds’ and leading pundits are so sure that business investment will just roll in because of a few million dollars in tax cuts.  If it were that easy, everyone would have done it. 

We already have an example in New Brunswick.  Bernard Lord cut the small business tax rate to the lowest in Canada and every single think tank (including AIMS) was equally giddy.  Problem is that the Fraser Institute did a study of small business creation during that time frame and ranked NB 58th out of 60 US states and Canadian provinces.  

I worry that AIMS and Mintz and the National Post are using New Brunswick as the patsy to stimulate a national agenda of pervasive tax cuts.  Everyone who even takes a modest look at the data will see that New Brunswick generates very little corporate tax compared to Ontario (as a percentage of the budget).  Cutting the rate to 8% in New Brunswick will be hardly noticed (at full implementation it cuts out something like $37 million out of the budget with a deficit of $700 million).  The numbers just don’t work.

What New Brunswick really needs is an economic development strategy that follows best practice models for stimulating significant new business investment.  Those elements include: targeted tax incentive programs for direct business investment and job creation; investing in capacity and infrastructure to support key industry sectors (low energy costs, high quality workforce, excellent R&D infrastructure, etc.) and then promoting the heck out of the province in key global sectors.  

Cutting a tax and then waiting for the Cirtwell/Mintz/National Post business investment to come pouring in seems like a risky proposal to me.  I wonder if Mintz will be recommending New Brunswick to his business clients?  Maybe.

4 thoughts on “Whither conservativism in NB?

  1. This blog is perfect evidence of just how stupid an idea this is. Over the past X years David has continually posted the new initiatives in Nova Scotia, and the LACK of initiatives in New Brunswick. Even PEI has outperformed NB on the kind of technological innnovation that is part of the ‘new’ economy. Did they do it with the kind of tax policies that NB is talking about? Hardly.

    Tax credits for specific industries is a different story. Anybody that thinks the NB government is using this to create investment is, again, sorry to be extreme, but simply nuts. We’ve been waiting YEARS for the liberals to offer SOMETHING to counter Nova Scotia’s tax credits on cultural industry’s, yet they haven’t come out with anything.

    The mainstream media apart from the cbc, unfortunately, is largely irrelevant. The case of the PC’s choosing number 3 isn’t as likely as them simply talking about ‘scandals’ and waiting for the economic numbers to get worse so that they won’t have to say ANYTHING. Although there have been some populist rumblings, and I suspect there is a reason the Irving media puts Graham’s face on the cover of the Journal every opportunity they get.

    But with what is going on, I don’t think its simply a ‘strategy’. The Cbc and Irving websites are becoming more and more filled with VERY disgruntled NBers. Like any political opposition they are responding to public pressure, like the liberals when they adopted as policy public insurance. The question, as always, is whether they KEEP those promises once in power.

  2. I’d recommend a fourth option of responsible tax cuts. The Government only followed through with half the tax reform, as the HST and the carbon taxes were a bridge too far. Therefore, we’ve had to cut spending to the bone, and we’re still going to run deficits for at least another four years. Fiscal conservatism has been bastardized into standing only for tax cuts while balanced budgets have been thrown out the window.

    It’s very hard to come out against tax cuts. I think someone should stand up and criticize what we’ve done to pay for them. We’ve borrowed money, and we’ve cut services. People are upset about the closures of the ferries, of Mactaquac, etc. If we had politicians putting two and two together to get four, they might be able to catch a break.

  3. “I worry that AIMS and Mintz and the National Post are using New Brunswick as the patsy to stimulate a national agenda of pervasive tax cuts. ”

    I don’t think you need to worry; you can safely conclude that this is what they are doing. It will backfire, tho, because NB will likely become a basket-case, rather than a Switzerland.

    If the next election returns the PCs to power, the ferries might get restored but we won’t see any meaningful changes to the tax system. The tories will simply hope and pray that the big energy construction projects will generate enough revenue to keep us from slipping even further into the red. Faint hope.

    NB needs a sensible strategy, to be sure. There needs to be political support for that strategy before anything will happen. Perhaps we need some way of reminding everyone in NB, on a regular basis, just how badly off we are here, how reliant we are on federal transfer payments, and how fragile those payments are as a reliable source of GNB revenue. In short, how do we get people to face our fiscal reality?

  4. When governments consistently demonstrate their incompetence and willingness to spend taxpayer dollars for selfish poltical gain, it lulls one into thinking that a dollar kept out of government’s hands is a dollar thay can’t waste (or another dollar they have to borrow).

    Things need to change. We need proportionaal representation so governments have a more difficult time getting elected by promising to patch potholes or to give up tens of millions in tolls so a couple dozen people can drive to Costco for free. We need to challenge governments to present and debate their economic development strategies prior to being elected. We need to see through catchy slogans and question strategy. We need to be prepared to reward governments that can deliver on economic development, education and health care.

    Or, we can continue to elect governments based on their ability to lower insurance rates for high risk drivers and erect moose fencing.

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