After reading a few of my G&M Economy Lab blog posts, someone from out west sent me an email asking me “what do you want?”.
I guess for new readers of this blog or my columns it might be helpful to boil things down once in a while.
Essentially, what I am pushing for is a few main changes in policy and approach in New Brunswick – and with some differences in the other Atlantic Provinces.
One, we have to be more serious about trying to attract business investment – and the resulting jobs and taxes from that investment. A chronic lack of investment here has led to the need for large scale federal transfers, higher than average personal tax burdens (including sales tax), ongoing out-migration – particularly of young NBers, an ongoing lack of immigration, an inability to amass personal wealth and savings anywhere near the national average (which will come back to haunt us in 10-20 years out), lower levels of education in the workforce (as out-migrants are more educated), timidity in the business culture/an unwillingness to take risks, etc.
Two, this business investment needs to be primarily tied to export-based industrial activity. More Walmarts, local accounting firms, construction firms and other business activity that is focusing only on the local market is essentially just reshuffling the deck and not growing the pie. Sure, there are efficiency gains in there and we want a robust, competitive local market but a serious growth agenda has to be tied to exports.
Three, I don’t believe that economic destiny is inevitable. There are those – in the halls of power – that believe places like NB are destined to be chronic under-performers because of geography, lack of natural resources, back luck, etc. I think this fatalism has actually embedded itself into much of our thinking – I can’t tell you how many times people have said to me “why would company x ever want to invest here?”. That is a question with both a negative and a positive answer – the problem is the positive answer requires more work and creativity.
Four, I believe the federal government could be a far more important partner in regional economic development. Not with more subsidies, not more transfer payments and not even the dreaded “picking winners and losers”. The federal government does almost nothing to promote FDI into Atlantic Canada. The feds have hundreds and hundreds of people working in trade and investment offices around the world and you can go ahead and ask the NB government how many investment leads from from the feds each year. I haven’t asked recently but the last time I did, it had been ‘years’ since a bonafide lead for FDI came from the federal government. This has always been stunning to me given that Canada has attracted billions in FDI in an average year from hundreds of multinational firms. Almost all of that investment goes into Ontario, Quebec and increasingly Alberta, SK and BC.
The big provinces in Canada – all of them – have foreign offices promoting their provinces for trade and investment. NB has none. We have 600 people here in NB doing economic development but none out there where the actual foreign companies with the investment are located. I’d like to see the feds – through ACOA – do far more to promote NB in foreign markets. This should be done in very close collaboration with Invest NB.
Five, but they need something tangible to sell. NB has been trying to sell cheap labour as its main feature for decades. Now that is a very hard sell for a variety of reasons. We should be developing specific opportunities – like natural resources, regional distribution/warehousing, specific areas of ICT where we are building strengths such as social media, and other sectors where we can clearly define a value proposition.
Six, we need to get our economic development focus off of “being a bank for industry”. See many previous posts for my thoughts on this.
Seven, we need a large scale innovation and productivity agenda. See many previous posts on this.
Eight, we need government spending to be aligned with economic development priorities. As I have said many times before, NB spends the most per capita on pavement and asphalt and the least per capita on R&D.
In essence, this is what I want. I haven’t had much success but I continue to chip away. Governments think if they carve off a few million a year and plow it back into the NB economy through grants and loans to local firms that is their role when it comes to economic development. That has always been wrong-headed. You have to start with your vision and grand objectives and then work down to tactics (such as grants to industry). The current approach clearly hasn’t worked.
What do I want from Alberta? An understanding that the “out-migration solves all problems” view of the world hasn’t worked. For decades, the only economic development viewpoint I have heard from Alberta is that people should be encouraged-forced to move from places like NB to Alberta and that would solve all the problems. However, we de facto followed that model for decades and all we ended up with is going from the second youngest province in 1971 to the second oldest in 2011. If Albertans really don’t like equalization payments, they would be far more supportive of efforts to build a solid economic foundation down here. In a country like Canada – with constitutional protections tied to the quality of public services, there is almost a presumption of regional economic development or far more transfers.