Why self-sufficiency matters

We have talked a lot here about the future of the Equalization system and transfer payments in general.  There is a growing consensus, I believe, that federal transfers to New Brunswick and other Maritime Provinces are going to begin to moderate and even go down in the future.   Here is the recent trend in transfer payments for New Brunswick.  If that happens, we will need to find more own-source revenue and I believe the best way to do that is through a sustantative and sustained economic development effort.

For me one of the top reasons why Equalization will be going down eventually is the growing trend in Ontario to blame the system for its own woes.   Historically, Ontario was more pragmatic about it, IMO, realizing that it was better to be on the giving than the receiving end of that process.  But since Daulton McGuinty’s ‘fairness’ campaign, the discussion has fundamentally shifted in Ontario.  Increasingly Ontario pundits, think tanks and other influencers are blaming Equalization and other transfers for Ontario’s problems.  Take this example. It is the U of T president commenting in The Varsity:

President Naylor believes the problem of funding the university is twofold: first, that post-secondary education is low on the list of provincial priorities after health care and the financial crisis, among other issues; second, that the policy of equalization is seeping money out of Ontario to other provinces. “Something about a crowded [university] classroom doesn’t seem to grab public attention and political capital the way that a crowded primary school classroom does,” he said in an interview with The Varsity earlier this month. “In essence, Ontario students and universities and colleges are paying higher tuitions that subsidize tuitions in other provinces.”

Now, as I have pointed out before, if you can convince Ontarioians that Equalization is the reason why the province is not able to invest in its universities that makes it far more than a nuance in the mind of Ontarioians.

The changes are coming.  We can either get out front and be more intentional about developing own-source revenue or we can wait and get squeezed from the top down.

7 thoughts on “Why self-sufficiency matters

  1. Its subjective I know, but more importantly the ‘future’ of equalization has more to do with the financial prospects of the federal government. When the feds have money problems, expect equalization to suffer, that’s how it worked in the past. Ontario hasn’t been shown to have that kind of clout, the main reasoning so far is the feds desire to do as little as possible outside of security issues. In ontario virtually nobody in the public looks at this, the E-Health scandal has the media wrapped up. It’s costed ontarians almost as much as NB gets in equalization, so don’t confuse media’s coverage with actual interest.

  2. If that happens, we will need to find more own-source revenue and I believe the best way to do that is through a sustantative and sustained economic development effort.

    David, I think everyone here supports you, but is the government actually listening, or are they still wasting time (and money) on the unsuccessful options?

    Things seem to be happening in Northern New Brunswick but, until one of these companies actually break soil, I’m going to remain a little skeptical. Tag wants to buy Weyerhauser, but the government won’t supply the crown wood; Bill Fraser is hinting at a 100M dollar company coming to Miramichi, but it is still nothing more than hints; UMOE Solar is (supposedly)building a plant that will cost 600 million and employ 300 people, but they could also just be a scavenger company who is looking to sell off assets.

    Do you have any indication that the government is willing to and capable of selling New Brunswick? And if so, is anybody actually going to listen?

  3. John Doe,
    I would say that Tag is a possible. UMOE seems to be legitimate – but as you say we will be happier when they actually start building the $600 million facility. I remember former Premier Lord flying to Finland to ‘save the mill’ but it turns out he was just giving UPM $5 million to stay open through the 2006 election. As for the rumoured $100 million project – I think politicians would be wise to avoid making those comments publicly unless they are 99% sure it’s a done deal. I used to work for BNB in the early 1990s and we would close only about one in 20 or so ‘hot leads’.

    Your broader question about selling NB, I have been saying there should be far more work done on the product development side. We don’t have much to sell these days. If you don’t believe me ask former ADM in charge of investment attraction Cecil Freeman.

    If we want to attract industry x here – let’s build a powerful value proposition for that industry. Let’s crank out workers. Let’s set up R&D chairs in that industry at UNB. Let’s set up a tax incentive program targeting that industry. Let’s attract immigrants with the specific skills to work in that industry. Let’s build our business or industrial park infrastructure tailored to the needs of that industry. You get the point. Much of this can be done concurrently but it has to be done if we are to gain traction in specific industries. Pick your industry: aerospace, eLearning, animation/new media, remote technical support, nutraceuticals, data centres, translation, green energy systems development, food/beverage manufacturing, etc. I don’t really care at this stage but the steak is far more important these days than the sizzle. You need to have a team of professionals out selling lead by the VP sales for the province – no question – but you have to arm them with something to sell.

  4. Finance summit “brave” own company for over 200 million.

    Published 06.10.09 15:50 | Last updated 06.10.09 16:04

    – Returns to shareholders, “the message it has sent to Brønnøysund Tuesday.

    Dermed kommer det 201 millioner blanke kroner inn på Jens Ulltveit-Moes private konto. Thus the 201 million kroner in the blank Jens Ulltveit-Moes private account.

    Null i 2008 Zero in 2008
    Selskapet ble stiftet i oktober 2005: Det hadde 20 millioner kroner i finansinntekter de tre første driftsårene. The company was established in October 2005: It had 20 million in financial income in the first three operating years. Last year was the result zero.

    Ulltveit-Moe granted themselves a dividend in forfjor of 13 million, and assets of 31.12 last year, was booked at 283 million kroner.

    The company was called before the Agra group, but changed its name to Kagra group two days before Christmas last year.

    73 mill. igjen 73 million again
    Shareholders’ equity was recorded at 31.12 last year to 273 million dollars, but this account shrinks to 73 million by the financier gets paid gigantic sum for itself within two months.

    Ulltveit-Moe is even chairman of the company and owns all the shares himself. The company also owns a subsidiary called Agra. Det nedskrev sin aksjeportefølje med 97 millioner kroner i fjor. It recorded its share portfolio of NOK 97 million last year.

    Egenkapitalen i dette selskapet er bokført til 187 millioner kroner og gjelden er på 123 millioner kroner. Equity in this company are recorded at 187 million and debt is at 123 million.

    It has ownership interest in two companies, and owns six properties.

    Jens Ulltveit-Moe har ikke svart på NA24s henvendelser. Jens Ulltveit-Moe has not responded to requests NA24s.

  5. Besides selling NB to business, we must learn how to sell to the Federal government.

    Federal programs are not benefitting NB like they benefit Ontario. We can debate why, but there is no question we do not get our fair share of major Federal programs such as NCE.

    We do have ACOA but that is not an economic development initiative. Check out the news section; water treatment, community halls and hockey rinks. It is a clearing house for funding that does not make the news in Ontario but we line up like puppy dogs thankful for the crumbs we get tossed.

    We need a strategy that attracts Federal support. On our own, we will never have provincial resources to propel a sector initiative like aerospace or biotech to be globally competitive. That support includes money but also policy such as the Autopact, HST and NAFTA which has provided economic prosperity for Ontario.

  6. “Besides selling NB to business, we must learn how to sell to the Federal government. ”

    I agree, but learning how to sell NB to the feds means (assuming you wamt something different in NB than we have now) having a real development strategy that can be sold. That means, as David and others here have said, prioritizing and perhaps having an explicit anchor company strategy.

    As a number of posters have made these points, perhaps we need to have some discussion about how NB can be moved in this direction, and how the mass media can be used to at least talk about the real options. David’s column in the TJ is perhaps part of this, but we need a lot more.

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