Accessing the right envelopes

We talk about this a lot but it is a fascinating reality.  Yesterday I posted that the feds spend less on culture in New Brunswick than just about anywhere else.  We know the feds flow less R&D spending here than any other province.   All of the flagship federal industry development programs such as TPC, STDC, etc. flow very little funding to New Brunswick compared to most other provinces and, yet, we seem to be able to get piles of dough for highway twinning and construction.

And now we are going after more.  I don’t want to get into the merits of one highway project over the other but the data is clear that New Brunswick spends among the most in Canada – per capita – on highways and among the least on post secondary education.  The most on highways, the least on R&D.  The most on highways, among the least on culture.

Unfortunately, it’s a matter of ‘envelopes’.  The feds have various envelopes full of cash for certain kinds of public spending and not for others.  If New Brunswick wanted to double its R&D spending as a percentage of GDP, for example, good luck with that – there is virtually no way the feds would step because that isn’t how it works.   If New Brunswick wanted to allocated $30M a year to a large scale IT sector development effort, good luck with that – there isn’t a federal envelope.

But if you want to lay asphalt, there’s lots of money around for that.

The Building Canada infrastructure funding was an orgy of spending – the feds were begging for projects to fund – but they had to be hard infrastructure.

In some abstract sense, you would ‘build’ Canada a lot better if there was a serious economic development effort for this province but there isn’t an envelope for that.

I hope this changes.  I hope the feds get behind a tight, focused strategy for economic development in New Brunswick.

By the way, you will take note I didn’t say above “the most on roads, the least on economic development” because that isn’t true.  We don’t have really good comparative data on econ. dev. spending but I did some research a few years ago that puts us well above average in Canada for operational spending on econ. dev. (not including the value of incentive programs – just the bodies and overhead).

So with economic development, it may not even be more money – just better coordination.  You lock the feds, province and local economic development reps in a room and don’t let them leave until they have a plan that aligns resources, efforts, sector focus, etc.  That would be powerful, IMO.

But, you gotta change the envelopes.

10 thoughts on “Accessing the right envelopes

  1. ” The most on highways, the least on R&D.”

    I’ve heard three ‘business’ interviews on CBC-NB radio this past week – one with Ms Holt of Fton CofC, Dr Haan (?) of the UNB Sociology Dept, and one with a hack from the CFIB. When asked what needed to be done to ‘grow’ the NB economy, none of them talked about R&D spending. None of them had anything new to offer, in fact.

    The value of R&D spending has been referred to several times on this blog, David. What needs to be done to get that kind of message across?

    I do not think that putting the feds, the prov, etc etc in a room and expecting something good to come out of the room will work unless we have a new paradigm established before the meeting takes place. Otherwise, we will just get the same old recycled crap (‘lower taxes’, ‘cut red tape’, ‘urbanize’, ‘cut the deficit and a thousand flowers will bloom’, ‘make a pretty city to attract immigrants’).

  2. An important post David. We have to prioritize our ask. While other regions are benefiting from strategic R&D spending and ED funding that advances or spurs economic activity, we are too complaisant accepting Federal money for hockey rinks, community halls, festivals and highways. It is time to target spending at strategic economic development.

    It is important that we have a well developed pitch on this issue. Rather than asking for general R&D funding, we need to have a focused strategy that builds on a strength and/or a competitive advantage that will result in early economic impact. This should be targeted at industrial development; as you point out there is a myriad of academic research funding programs. You’ve mentioned IT, there are a couple other sectors like value added forestry and multi-trophic aquaculture where we have some foundation to build on.

    Once we develop our strategy, we need to relentlessly communicate it to Ottawa and be prepared to prioritize it over more asphalt.

  3. Dont you think that the “envelopes” might have something to do with votes? Maybe the problem is more fundamental…I agree that R&D spending is important to build a better, stronger, more competitive economy but R&D can burn through a lot of cash as well if not spent and managed in an intelligent manner and while always maintaining the end goal of commercializing the technology. R&D spending is not tangible to most NB’ers but but new pavement is. There might be some vote grabbing method to the envelope madness…

    Also, if you lock all those folks in a room make sure that the researchers are there as well. You might be surprised to discover how many researchers want to do pure research with no intention of ever producing anything of marketable value ever…

  4. But if you want to lay asphalt, there’s lots of money around for that.

    You’re right, some of the infrastructure spending can be outright wasteful, especially if it is stems from sheer political motivation. As I like to refer to it, there is “good” cholesterol infrastructure spending and “bad” cholestrol infra. spending. The bad type is the constant maintenance to secondary roadwork (roads to nowhere) that are paved more for political reasons, votes, then they are for useful economic purposes. I saw this first hand when a flurry of activity was unleashed during the 2010 provincial election in government held and swing ridings. On the flip side, the good type is the essential infrastructure, like the twinned-highway across theprovince, or the bridge across the island, which has aided in goods flowing to and from major parts of the maritimes to the US and central Canada. It’s funny, because the twinned highway actually gor built during a time when regional transfers from Ottawa were being reduced. So it goes to show you that the money was there for projects like that. Funny how it took so long to get done.

  5. “discover how many researchers want to do pure research with no intention of ever producing anything of marketable value ever…”

    Ironically, some of those are the ones who produce the most valuable marketable technology. That is how the discovery process works.

    “R&D spending is not tangible to most NB’ers but but new pavement is. ”

    A statement of the obvious. But that does not apply just to NB, but to all regions. The difference is that in those other regions (where R&D investment has been historically higher) there is a component of the leadership that has appreciated the long-term value of R&D. Regardless of the Party in power, that position has been put forward with good effect. That is what NB has lacked – the right leadership.

  6. To answer Richard, what it ‘takes’ is more political activity. Nows a great time to start that, in fact, in the Irving rag an editorial says exactly that-“Higher education trumps highways”. In another story, the biggest union in the province is telling the government to scale back their plans (for different reasons).
    What is still lacking is any kind of identifiable plan where somebody can say “here, do this”. As David points out, throwing money at students results in more educated workers who then move west, and as Richard points out, the educational institutions that exist do not do a stellar job with what they have NOW. As a poster from BC pointed out long ago, it may be the case that anybody who WANTS funding can get it, but there aren’t enough people looking for funding. And finally, on CBC they talked to a woman who owns a fast growing company from Alberta no less, who complains that they can’t access government money fast enough.
    So, what would be interesting to see, is some kind of concrete proposal from here. It’s one thing to criticize, its another to go the extra step and have something positive to push, and yet another to actually push it.

    And again, given the interest kids have in technology, this would NOT be such a hard sell to get people motivated by things like the Radian6 story. Now that those guys have some money, maybe somebody should remind them where they got some of their startup money from, and set up some kind of incubator to foster innovation.

    On the realistic side of that, I should point out that a recent media story here in Waterloo was that a company has finally ‘graduated’ from the ‘accelerator centre’ (which is a business incubator) to actually making some money. That’s from a BIG centre, with a lot of companies that are still dependant on external funds. So sadly, it DOES always come down to ‘picking winners and losers’, and thats a tough sell if you don’t do it right.

  7. As David points out, throwing money at students results in more educated workers who then move west, and as Richard points out, the educational institutions that exist do not do a stellar job with what they have NOW.

    They’re both correct. To rip off a tag line Jack Layton used, “we need to create wining condition” — in NB for highly educated people. Don’t get me wrong, we can’t keep ’em all here, but if we can start creating more “winning conditions” some may chose to stay back. And it is with that core group of people that more strength will be added to overall productivity. Hopefully it will eventually lead to a more robust economy where more then just NBers want a piece of the action.

  8. It’s one thing to say ‘winning conditions’-every place in the world is saying that-the question is, WHAT exactly are the policies that lead to those conditions, let alone what those conditions actually are. It’s unfortunate that David no longer has time for his video podcast, what is really necessary is to interview guys like those at Radian 6. There are a few lessons we have learned from the media, but it would be nice to know some specific details.

  9. With respect to R&D investment, there certainly are opportunities right now to re-orient things here in NB. We have new govts in both Fton and Ottawa than pethaps have some political capital they can spend. There are some faint hints from the political and societal leadership of increased recognition of the value of R&D – the success of some local companies that have developed from uni R&D having received some press. I think it is less important at the moment to identify likely areas of success that it is to emphasize the value of increasing R&D investments such that we are at least on a par with other parts of the country. That creates the base for public acceptance of these expenditures – which after all do not result in highly visible paved roads.

    Another factor is the impact of internet-distributed education and its likely impact on NB’s universities. That creates opportunities for specialization, and, in UNB’s case, an opportunity to move from an undergraduate enrolment model to a graduate/R&D model. That means a lot of messy resource re-allocation; but the govt has to set its expectations and make the UNB admin accountable for getting there.

  10. I guess the “winning conditions” for the last provincial government fell within their reform package under the ethos of self-suficiency. It was soundly rejected, parts of it anyway. Which in turn led to a cooling off period for risky policy proposals (i.e. debate about reality). In other words, if citizens are quickly “fatigued” by talk of grandiose policy changes (which is necessary), then politicians would rather go back to a fantasy world where the line on everything is wait and see? code word for do nothing…rather than try to retrench again, on the policy front, for the betterment of NBers.

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