One of my core themes is that New Brunswick should be attracting more investment from national and multinational firms. In my opinion, a core reason for our economic under-performance for generations has been this structural deficit – the capital flow is mostly one way – outward.
But what types of investment and how to attract it are the main issues.
This article in the NY Times talks about the massive tax incentives that are used to attract the video game industry in the States (or more accurately to keep it from moving to Ontario, Quebec and BC which have the richest incentive structures for this industry). But it is not just video games, medical devices, green energy and many more industries receive very lucrative incentives that are hard to compete with.
As I have pointed out elsewhere most of the U.S. incentives are straight tax incentives (i.e. against taxes you owe) versus the refundable tax credits (straight cash from the government). This matters because I think a place such as NB is already more competitive with its current tax structure compared to traditional tax breaks.
It seems to me that we have to face competitive realities. We need to focus on industries and opportunities where we have a clear value proposition – i.e. something most of the other guys can’t compete with. We have some gas and mineral resources that at least some jurisdictions can’t compete with. Manitoba can’t compete with Moncton for regional warehousing and distribution in the Maritime Provinces (unfortunately Montreal and Toronto do compete in this area). We have a bilingual workforce that 50 U.S. states can’t compete with. We have lots of coastline, water and fish. We have more trees per square km than most other jurisdictions in North America.
As a side, I am told the reason we have so many trees is that our terrain and soil is not as conducive to agriculture and so the original settlers didn’t cut down all the trees and convert the land to agricultural use as was the case in many North American jurisdictions. A guy who studies this stuff at UNB told me this a few months ago.
Anyway, the other interesting thing about the NY Times article is that despite the criticism of EA for moving jobs to Canada to take the incentives – the bulk of their workforce is still in the USA.
The reality is that the leaders of companies have a preference to stay in their local communities. Entrepreneurs who start up in Saint John – will move if they feel they have to but would prefer to grow their business in Saint John. Because of this, in some of those highly competitive areas we may not have as much opportunity to attract industry but we could nurture more growth from within and then, maybe, connect it to the larger industry through mergers, partnership, etc. (i.e. Chalk Media, Radian6, etc.).
I’m not convinced New Brunswick can and should try and compete dollar for dollar with Quebec for incentives. I would be happy to have the debate and listen to all the sides but my hunch is we would be better off looking for low hanging fruit – the Millstream potash deposit through mining and secondary processing could provide 600 or so high paying jobs. I’d like to see us pursue the social media industry in a more deliberate way because we have 20 years of experience with telecom-based customer contact – a logical fit with social media-based customer contact. Maybe cloud computing. Maybe the next generation of aquaculture (further offshore and the systems and technologies needed to get there).