The kids aren’t all right and the myth of made in NB

A few observations about the new government.  First, I am kind of glad that there are some older farts in there.  I have said here on many occasions that it is not a particularly good thing to be electing Premiers that are under 40 years old with virtually no leadership or management experience.  Going back to LJR, we have elected a string of kids to be our Premier (to the glee of Al Hogan at the T&T) but I don’t see that this has served us particularly well.  I don’t know Alward’s age but my father says he nearly kicked him out of Greenhill Lake Camp for misbehaving back in the mid 1970s so I suspect he must be around 50 years old.

As usual my political predictions have turned out wrong.  I should have learned my lesson by now.  I said just yesterday there would only be 1-2 fresh faces (non Lordians) in the Cabinet but I believe I counted 8.

The new finance minister actually has considerable real world experience in the private sector.  That can’t hurt.

I had a look at the bios of several ministers from their campaign websites and I am getting that deja vu feeling all over again.    All that talk about “putting NBers first” and “made in New Brunswick solution” and “helping New Brunswick companies” is the same old rhetoric that the former Tory Premier used in 1999.  I know it whips up populist sentiment and garners low hanging votes but it’s wrong headed.  It was then and it is now.

New Brunswick cannot be a closed economy.  It is too small and doesn’t have enough wealth.  It must trade with the world and it must attract its share of national and international investment.    If all these mythical small businesses were going to transform New Brunswick into a booming economy, they would have done it by now.

We’ve hashed this out a thousand times here.  I have challenged the CFIB to a debate on this.  I have asked Chambers to defend this view but no one cares to offer any proof – they seem okay to stop at theories.

Even if it is NB companies that are going to transform the economy, they need capital and that capital will come from the global investment pool so it is investment either way.  I have said before that investment is investment. 

The problem is that this populism gets into policy and you end up with $50 million funds in Northern New Brunswick sprinkled around on projeccts with little accountability and no alignmentn with a broader strategic objective.   The doling out of the money becomes an end in and of itself.  That is a huge mistake.  Government incentives are not an outcome – they should be a tool (if used at all) to leverage private business investment and achieve broader strategic objectives.

Yet when you hear politicians talk they will say “we spent $50 million in Northern New Brunswick” as if that is an outcome.  It’s not.

However, Premier Alward has committed to an ‘InvestNB’ organization that has no definition or structure.  It will be very interesting to see how this organization is developed, rolled out and held accountable.  I have said here and in my column that it should have a hard and well defined incremental taxes generated measurement (i.e. for every dollar spent, we generated 5 in new tax dollars).  This is done in other jurisdictions but it has never even been hinted at here.

In New Brunswick, the journey is the destination.  Spending money is the outcome.  Doing things is the outcome.   We need to change it to the destination is the destination. 

Economic development is a means to an end.  It is not about propping up companies with bad business models or providing risk capital to businesses who don’t want to take on equity or providing lower interest money because the entrepreneur doesn’t want to pay market rates.  It’s not about guaranteeing loans so that the private banks take zero risk.

It must be about driving an economic growth agenda.

2 thoughts on “The kids aren’t all right and the myth of made in NB

  1. “The Harper government is signalling that it intends to scale back the growth rate of federal transfers to the provinces”

    That’s from today’s Mop and Pail. I hope NBers realize that, given abt 40% fed contribution to NB’s annual expenditures, a slowdown or cut has immense implications for NBs budgeting. Mr Higgs, who is an engineer in a cost-control management position with Irving, will not be able to balance the books in 4 yrs unless he makes some major cuts. He’d be better advised to aim for a smaller deficit and forget the balancing act.

    Not only do we not have a closed economy, we do not pay for over a third of our current expenditures. Hard to be master of your fate under those circumstances.

  2. It is time to slash and cut! There is so much service delivery in the NB government that can be privatized for operational cost savings. Assets can be sold off bring in one time capital dollars. The Globe and Mail story is not the tip of the ice burg, that shot across the bow was fired years ago but Graham abandoned his self-sufficiency agenda.

    I hope New Brunswick experiences Alberta circa 1993-1997.

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