Category Archives: Business

A two-step made for New Brunswick’s forests

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The twinned announcements last week of a new provincial forestry strategy and a massive series of plant upgrades at J.D. Irving (JDI) Limited’s flagship pulp mill is a textbook example of how government and industry should execute a minuet – with slow, metered steps calibrated to the economic rhythm of the times.

Of course, the dance Premier David Alward’s Progressive Conservatives and JDI are presently performing to generally enthusiastic and receptive audiences – who perceive the dawn of a new day for, arguably, the province’s most important commercial sector – is not without its critics.

Some conservationists in the province are outraged that the Department of Natural Resources’ new strategy boosts the size of the total allowable softwood harvest on Crown land to four million cubic feet a year (about a 20 per cent increase from the current allocation).

“I’m shocked,” Graham Forbes, a forestry professor at the University of New Brunswick, told the CBC last week following the government announcement. “The reduction of the amount of protected land to 23 per cent (from 28 per cent) is not what we could call sustainable forest management. It’s an abject fail. It’s not sustainable.”

Even some industry players have cast a slightly jaundiced eye over the plan.

“We are guardedly optimistic,” Mike O’Blenis, vice-president of the New Brunswick Forest Products Association, told the Telegraph-Journal last week. He had been hoping – vainly, it’s now clear – for an increase in the hardwood allocation. Still, he said, “the devil is in the details. . .There is a lot of detail that has to be worked through with government and with stakeholders to put this plan into place and it is going to take some time for all that detail to come out.”

Still, what’s clear is that JDI’s announced $450-million modernization program (part of a bigger $513-million investment program at the company) for its west Saint John pulp mill will crate hundreds of new and badly needed jobs in the province over the next two years.

What’s also indisputable is that the upgrades (all of them privately financed) are tied directly to the provincial government’s decision to increase the amount of wood available to commercial harvesting. This pledge, according to Jim Irving, co-CEO of JDI, is crucial because, as he said at the announcement, “our ability to to invest and grow jobs depends on the certainty of the competitive wood supply. . .Premier, you’ve got our commitment, and I can tell you the JDI team will deliver.”

This is no mean feat at a time when governments across the western world appear either unable or unwilling to leverage the public resources they control to generate durable, measurable and responsible regional industrial benefits for everyone.

According to the New Brunswick Forest Products Association’s web site, “forestry has been the cornerstone of the New Brunswick economy for decades. More than 20,000 families are supported by the. . .sector. With more than 11,600 people directly working in forestry related jobs, our people produce 30 per cent of total manufacturing output (in) the province.”

Other facts, courtesy of the Association, include the $1 billion in salaries forest sector employees earned in 2010. Moreover, “as of 2010, the sector directly contributed just over five percent to the provincial GDP. At 5.1 per cent, that makes the forest products industry in New Brunswick more important to the provincial economy than in all other provinces in Canada. Total direct GDP in 2010 for the forest products sector was an estimated $1.4 billion in current dollars. The industry has significant indirect GDP multipliers of between 0.5 and more than 1.0 depending on the area of activity. Including direct and indirect effects, the GDP in 2010 was between $2.2 billion and $2.5 billion.”

And yet, for all of this, the sector has endured exceptionally tough years. Over the past decade, the number of milling operations in the province has dropped by 60 per cent. Since 2008, the number of jobs have dropped by 50 per cent.

Apart from the predictable criticisms about the relationships between governments and industries – that they either go too far or not far enough – last week’s twinned announcements demonstrates that in New Brunswick, of all places, government and industry can face the music together as productive dance partners.

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Municipal miracle 2.0 *

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The price of prosperity is, as Ben Champoux might say, eternal vigilance; which tends to explain why the trim, energetic chief executive officer of Enterprise Greater Moncton sits in his office in the city’s downtown core pouring over audio files from a recent blue-chip conference on the municipal region’s commercial future.

There is much to review: Twenty-eight hours of taped discussions among participants to 14 sectoral plenaries. “There is no way we are going to wait another 20 years to do an economic summit,” he says without a hint of weariness. “In the meantime, we need to know what specific initiatives will help us keep the momentum going right now. How do we keep the channels of communication open?”

It’s fair to say that keeping the channels of communications open was the overriding preoccupation of the 2014 Greater Moncton Economic Summit, themed “One Region, one Vision”, which convened at the warm oasis of the city’s Delta Beausejour Hotel on the frigid night, morning and afternoon of January 16 and 17. There, 340 heavy hitters, representing all socio-economic segments of the Moncton-Riverview-Dieppe tri-city area (population: 138,000) gathered to ponder their fortunes together if not, explicitly, to avert catastrophe.

“The whole point of the summit was to be proactive,” Champoux explains. “Greater Moncton has been on the upswing for many years. But we just can’t rest on our laurels. In this sense, alone, we were just blown away by the community. We had leaders from every walk of life – business, politics, education, culture – demonstrating the maturity and wisdom to say, ‘Let’s not wait until we are against the wall; let’s come together and celebrate our success and, most importantly, let’s redefine who we are today where we want to be 20-25 years from now and figure out how are we going to get there.’”

Aldéa Landry concurs. She’s a Moncton lawyer and businesswoman and a former cabinet minister and deputy premier of New Brunswick in the Liberal government of Frank McKenna. A summit participant and presenter, she thinks the timing of the event was sublimely strategic. “Change happens so fast, if you don’t move forward, you are vulnerable,” she says. “I think that the more we do this sort of thing in a serene manner, the better able we are to avoid a crisis. We are further ahead. If you wait for a crisis, you have to do a lot of crisis management. We don’t have to do that now. We can build with fewer day-to-day pressures to make things happen right away.”

Still, Greater Moncton had to learn its lesson the hard way.

The first summit of this kind convened 25 years ago when the extended municipality faced the sort of wretched economic woes that now routinely topple mid-sized cities across North America. As Moncton Mayor George LeBlanc outlined in his message to the “One Region, One Vision” conference, “In the late 80s, Moncton was at a crossroads. Significant employers and industry had left town, jobs were lost and windows were boarded up.”

Specifically, in the 1980s, Greater Moncton lost its raison d’etre when the Canadian National Railway shuttered its locomotive shops, effectively ending more than a century of steady economic growth. The 1989 summit, called as an emergency meeting to literally re-conjure the local economy, began the arduous process of establishing new commercial edifices and diversifying the labour market. A followup convention five years later sealed the deal – a wholly made-in-Moncton series of solutions that relied, crucially, on private-sector engagement.

As LeBlanc writes, “Greater Moncton came together and reinvented itself. That effort began what became known as the Moncton Miracle – the resurgence of a community that became a leader in economic development and growth.”

It’s still a leader in New Brunswick. As the province struggles overall with mounting annual deficits, longterm debt, stubbornly high unemployment in rural areas, and a virtually stagnant GDP, Greater Moncton is the one indisputably bright spot.

With a 9.7 per cent growth rate between 2006 and 2011, the City of Moncton is the fifth-fastest growing Census Metropolitan Area in the country. Its annual unemployment rate is one of the lowest in the Atlantic region and substantially below the national average.

Over the past three decades, the population of Dieppe has more than quadrupled (up by more than 25 per cent since 2006, alone). Meanwhile, Riverview has enjoyed a 20 per cent hike in its population  since 1986.

Indeed, Moncton, Riverview and Dieppe display all the metrics of eminently livable, dynamic centers: Booming, yet still affordable, housing markets, comparatively low unemployment rates, comparatively high participation rates, robust retail sectors and plentiful recreational and cultural amenities.

For these reasons and others, a recurring theme at the “One Region, One Vision” Summit was securing Greater Moncton’s position as an economic engine not merely for the immediate urban region but for the entire province. Don Mills, chairman and chief executive officer of Corporate Research Associates and conference presenter, thinks the fit is perfect. During his lengthy address on the Atlantic economy and Greater Moncton’s role, he pointed enthusiastically to the city’s resiliency.

“Moncton should be the model for many, many communities across the region,” he says. “Too many are looking for someone else to solve their problems. They are always looking especially to the federal government or the provincial government instead of taking on the responsibility themselves. . .That’s what the Moncton example shows. . .Here is a community that has been prepared to deal with the issues and try to come up with its own solutions.”

None of which is to suggest that Greater Moncton doesn’t face challenges. Employment growth is beginning to slow, a reflection, to some extent, of systemically soft conditions in the province’s export sector. Other issues that arose during the summit’s working sessions included: A growing skills shortage for high-wage jobs; inadequate appreciation within the community of the competitive advantages of its bilingual workforce; and the perception of foot-dragging on plans to rejuvenate the downtown core with a multi-use events centre, a facility that Moncton economic development consultant David Campbell has estimated could annually attract between 317,000 and 396,000 people and generate between $12 and $15 million in spending.

For Ben Champoux and others behind the summit, knowing the challenges is just as important as appreciating the opportunities. “The work for Enterprise Greater Moncton starts today,” he says. “The summit really came from a wind of change in the community. There will be a report that summarizes the essence of the Summit. It’s about gathering all the information to see where we are, what we need to do and how we can proceed together.”

For now, at any rate, it’s back to work. After all, those audio files full of good ideas and brave, new notions won’t transcribe themselves.

* This piece originally appeared in Atlantic Business Magazine‘s March/April issue

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Should New Brunswick become Legoland?

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My grandsons are hopelessly, faithfully, determinedly in love with a little Danish block that appeared almost a century ago in the workshop of Ole Kirk Khristiansen.

As the story goes, faithfully recounted by Wikipedia (surely, by now, we may trust the source), “in 1916, Khristiansen purchased a woodworking shop in Billund which had been in business since 1895. The shop mostly helped construct houses and furniture, and had a small staff of apprentices.”

Naturally, of course, “the workshop burned down in 1924 when a fire ignited some wood shavings” – the kind of misadventure that literally prescribed the fortunes of post-industrial, small-time manufacturing operations the world over at that time.

But good old Ole Kirk was made of stern stuff. First, he built “a larger workshop, and worked towards expanding his business.” Then, when the ‘Dirty Thirties’ settled in, he decided to “focus on smaller projects (and) began producing miniature versions of his products as design aids. It was these miniature models of stepladders and ironing boards that inspired him to begin producing toys.”

And, so, Lego was born.

These days, thanks to my grandsons and millions of other grandsons and granddaughters (and parents and uncles and aunts and, yes, grandparents), the brand is riding high on a global marketing tidal wave.

This is from reporter Katie Hope, writing for cityam.com the other day:

“Lego yesterday laid out its plans to dominate the world toy market after revealing sales for last year that trumped the general market. The Danish maker of colourful toy bricks, already the world’s second largest toymaker after barbie-maker Mattel, said it expected to continue to grab market share. The popularity of its city range, which features police and firemen as well as its China toy tribe of animal warriors, helped to drive sales up 11 per cent in 2013, outperforming the global toy market which fell slightly in value.

“Net profit at the firm rose nine per cent to 6.1bn (£673m) kroner from 5.6bn in 2012. . .Revenues rose 10 per cent to 25.4bn kroner. . .It said it now employed 180 designers across 24 different countries as the group’s ‘creative core’, charged with creating new products. Lego’s popularity means that on average each person on Earth owns around 86 of its bricks.”

Actually, I own about 450 pieces from the 1960s. I won’t hazard a formal inventory of my nephew’s horde, but I imagine his collection now tops 10,000. My legacy boys, Euan and James, are beneficiaries of the extended family’s generosity.

But I wonder whether there’s a broader benefit to be extracted from all of this – an example that Denmark sets for debt and deficit-laden New Brunswick. Indeed, is there one for all of Atlantic Canada?

To what depth of ingenuity – apart from the technology required to exploit our natural resources – have we in this region of Canada plumbed to invigorate our entrepreneurial class of decidedly home-grown producers and job-generators?

It’s true, we have the great family firms who employ thousands of people. In the Maritimes, alone, the names Irving, McCain, Sobeys, Bragg and Jodrey lay testament to   a vigorous form of private enterprise that stands the test of time.

Still, what of the future? Where are the new brands consecrated by, even reconstituted from, the old ones?

Lego has effectively reinvented itself at its birthplace in northern Europe. It continues to provide jobs there as it expands, like a juggernaut, everywhere else. Its secret is simple, or so it says for itself on its website:

“Curiosity asks, ‘Why?’ and imagines explanations or possibilities. . .Playfulness asks ‘What if?’ and imagines how the ordinary becomes extraordinary, fantasy or fiction. Dreaming it is a first step towards doing it. Free play is how children develop their imagination – the foundation for creativity. . .Creativity is the ability to come up with ideas and things that are new, surprising and valuable.”

Dreaming it is a first step towards doing it? Creativity is the ability to come up with ideas and things that are new, surprising and valuable?

Yes, that’s what my grandsons will say as they build their plastic spires into the imaginary sky.

Shall we ask any less of ourselves in the world we call real?

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Flying the costly skies in Atlantic Canada

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It’s one of those questions for the ages – right up there with “Why is the sky blue?” and “How is it that Rob Ford is still alive?”

Why does it cost so much more to fly from Halifax to St. John’s than it does to fly from Halifax to Toronto?

Given the distances and the presumed cost of fuel, it seems counterintuitive. More than that. To at least one regional newspaper, it seems downright scandalous, especially in this penny-pinching, expense-scrutinizing age of so-called government accountability.

“A list of travel and hospitality expenses claimed by Liberal members of Parliament . . .show Gerry Byrne spent $21,470.22 and Judy Foote tallied $22,131.68 and Yvonne Jones claimed $24,590.22 from Oct. 1 to Dec. 31, 2013,” the Corner Brook Western Star’s lead editorial last Wednesday observed.

Are these excessive? The editorialist does not venture an opinion. He or she does, however, declare “The cost of air travel to and from Newfoundland is excessive and the cost for Labradorians to fly anywhere is outrageous.

“If any partisan pencil pushers are inclined to pick through the expenses of Liberal MPs looking for political ammunition, maybe they could also mount an investigation into why it costs almost as much to fly to St. john’s from this region as it does to fly from Halifax to Vancouver.”

I, for one, am glad he or she asked. I happen to have an answer. Sort of.

A while ago, bugged to near distraction by this conundrum, I did a little digging. According to Monette Pasher, executive director of the Atlantic Canada Airports Association, “Pricing is often a result of market demand and competition. . .There are over ten flights a day offered from Moncton to Toronto by three air carriers. From Moncton to Halifax there are four flights a day offered by one carrier.”

What’s more, she said, the cost competitiveness issue is not restricted to Atlantic Canada; it’s actually a national problem, though it may be more prevalent along the East Coast. Here, she noted, “U.S. airports are in close proximity. . .You see the low-cost carriers in the U.S. and they are setting up services at the border to attract Canadians who will travel for cheaper fares.”

In fact, according to her estimates, this country is losing five million Canadian passengers to the U.S. every year. That equates to $1.3 billion in lost Canadian GDP and $200 million in lost tax revenue.

For Atlantic Canada, the issue is clearly a personal economic concern. “While we have a relatively modest population base of 2.3 million people, we welcome over five million visitors to our region every year, which makes tourism an important sector in the economic generator in Atlantic Canada,” Keith Collins and David Innes, the CEOs of the St. John’s International Airport and Fredericton International Airport, respectively, told Standing Senate Committee on Transport and Communications not long ago.

“Our 14 airports move more than 6.5 million passengers per year, which is three times the total population of the region. That number has grown by an average of five per cent annually since 2002. We are not only moving passengers and cargo in and out of Atlantic Canada; we are enabling the growth of our local economies. Our airports together generate over $2.6 billion in economic activity every year, supporting just under 17,000 person years of employment and over $500 million in wages alone.”

There may be solutions, however. “The maritime airports have worked together with Air Canada’s business sales team to develop a more convenient approach to business travel in the region,” Ms. Pasher reported. “In 2012, they created the Halifax Commuter Flight Pass, which allows for consistent pricing for air travel between many Maritime cities and Halifax.

“You can select one traveller or business and it will give you options and cost for packages. This gives a business traveller a set cost to travel by air between a number of Atlantic Canada cities and Halifax. It works out to $245 for a one way flight credit for a single traveller.”

Not bad. Still, my travel consultant just booked me on a Moncton-Toronto return for three-hundred bucks, taxes in.

The fact is, until more competition crowds the costly skies, we’re stuck paying through the nose for regional air travel. And, unlike Mr. Byrne and company, we can’t pass along the cost to the taxpayers as, well. . .they would be us.

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Who’s your daddy, now?

Hello Big Daddy!

If we read our digital propaganda correctly, then we should all be over the moon after learning that a fresh day dawns on the global circuitry that tracks our every move, intentions and even aspirations.

Welcome, fellow plebes, to the era of big claims and big mouths – to the age of ‘Big Daddy’ (also known as Big Data), with all of its magnificent liens on our vanishing sense of privacy.

Mindless of any threat, existential or otherwise, Big Daddy’s acolytes were front and centre-stage this week in Saint John extolling the virtues of collecting, parsing, analyzing, and recruiting – in the service of capitalist enterprises and nosey governments – our personal information.

On the occasion of Big Data Congress II in New Brunswick’s port city, local show promoter Marc Fraser (executive vice-president of T4G) effused, “It’s about the phenomena that we have here in Atlantic Canada, which is being able to continually punch above our weight when it comes to technical capability and entrepreneurial capability.”

Not ready to be outmatched in the time-honoured craft of cliche production (reader note: no big data required for that particular exercise) T4G’s president Geoff Flood offered this bromide: “It’s all about understanding the opportunity to use Big Data to change the world, improve businesses and build opportunities right here.”

Not for nothing, but who are they kidding?

The phrase, ‘Big Data’, has been slinking around the edges of the Internet since before the George W. Bush administration declared war on the wrong Middle Eastern country in 2003 (thank you Big-Daddy CIA and NSA miners for completely missing the point of your 15 minutes of fame).

The fact is almost no one knows what to do with these petabytes of information on everything from my ridiculous love affair with slim jeans readily available at the Moncton outlet of The Gap to ex-spy-in-exile Edward Snowdon’s rather more substantial revelations about spooks, creeps and authorized assassins of world peace.

Still, the official, meaningless bafflegab spills from the mouths of the babes we elect to purportedly represent us with, at least, some modicum of intelligent reflection. Oh dear, what was that you were saying Premier David Alward to Big Daddy Congress Part Deux the other night? Something about “collaboration and co-ordination”, perhaps?

As it happens, that’s the last thing your audience wants. And unless you’ve figured out a way to use Big Data to rescue the province from its impending fiscal doom, it’s the last thing you should want either.

In fact, there is almost nothing about this phenomenon – this gargantuan belch of information collected and floating in the electronic stratosphere – that lends itself to fair, egalitarian or democratic purpose.

“Big data. It’s the latest IT buzzword, and it isn’t hard to see why,” writes John Jordan in an October 2013 edition of the Wall Street Journal. “The ability to parse more information, faster and deeper, is allowing companies, governments, researchers and others to understand the world in a way they could only dream about before.”

But, he says, (and it’s a big but), “Big data. . .introduces high stakes to the data-analytics game. There’s a greater potential for privacy invasion, greater financial exposure in fast-moving markets, greater potential for mistaking noise for true insight, and a greater risk of spending lots of money and time chasing poorly defined problems or opportunities. . .Unless we understand, and deal with, these challenges, we risk turning all that data from something that has the potential to enhance our organizations into a diversion, an illusion or a paralyzing turf battle.”

Or worse.

Consider Cindy Waxer’s reporting in Computer World a year ago. “Hip clothing retailer Urban Outfitters is facing a class-action lawsuit for allegedly violating consumer protection laws by telling shoppers who pay by credit card that they had to provide their ZIP codes – which is not true – and then using that information to obtain the shoppers’ addresses,” she wrote.

“Facebook is often at the center of a data privacy controversy, whether it’s defending its own enigmatic privacy policies or responding to reports that it gave private user data to the National Security Agency (NSA). And the story of how retail behemoth Target was able to deduce that a teenage shopper was pregnant before her father even knew is the stuff of marketing legend.”

Big Daddy, to satisfy your insatiable appetite, how creepy must our lives finally become?

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If we build it, will more be in store?

If a city measures its civic ambitions by the plans it makes for its downtown areas, then is Moncton poised for a new age of urban renewal?

We can boost and boast till all the pigeons fly their concrete coops along Main Street, but we must admit that the business core – stretching west to Vaughan Harvey Boulevard, east to King Street, north to St. George and south to Assumption Boulevard – has not always reflected the broader community’s tough, entrepreneurial, sophisticated, technologically savvy, and culturally rich attitudes and endowments.

Too many store fronts remain shuttered, too many office spaces are begging for tenants, too many edifices exude that unpleasant aura of dissolution so familiar to urban planners the world over.

And that’s a problem because while other parts of the city can periodically languish without compromising the social and economic integrity of the whole, the downtown is the community’s commons. Its vibrancy electrifies the neighborhoods that surround it, just as its rot eventually spreads throughout the civic body.

Fortunately, we are in no immediate threat of contracting such municipal gangrene. A few years ago, Mayor George LeBlanc offered me a vigorous defense of Moncton’s progress. “Look at what has been happening in just the past five or 10 years,” he said. “In 1996, we had 8,000 people working in the downtown area. Today, we have 15,000. We’ve opened up a public Wi-Fi network, and we’ve seen quite a few high-tech companies doing big things locate in the downtown.”

He wasn’t wrong. In fact, progress is palpable today, even in the downtown, which plays host to thousands of businesses, bars, restaurants and cafes,18,000 office workers, and anywhere from 1,200 to 5,700 residents depending on how you fixes downtown “borders”.

Today, Moncton is a major Canadian customer contact and back office centre with a robust “near-shore” IT outsourcing industry. And it continues to leverage its success with a plan that calls for new partnerships with regional universities to deepen the region’s knowledge economy, diversify the IT economy, and actively promote tech-based entrepreneurship.

Still, a downtown is more than the sum of its moving parts. Like any good and growing garden, it requires constant attention and vigilance – even a little creative experimentation, from time to time.

As The Moncton Times & Transcript reported on Friday, the “proposed Downing Street restoration, a project in honour of Moncton’s 135th anniversary in 2015, is embracing four key themes – Downtown, Celebration, Art & Storytelling and Sustainability.”

The idea is to redevelop the dead-end street – between the Blue Cross complex and the McSweeney Block – that spills out into combined parking lots into an avenue down to the river. “This is an opportunity to explore every possibility,” Mr. LeBlanc said, referring to the plethora of planning options available to the city.

Some may question the value of the project on strictly economic grounds. Shouldn’t we spend our time and money of a downtown events centre? After all, we already expect that such a facility would draw 350,000 a year, generate about $14 million in spending and, in the words of economic development agency Jupia Consultants, “support retail, food service, accommodation and other services in the downtown,” where it “should also support residential growth.”

Meanwhile, another report has estimated that the construction phase, alone, would generate $340 million worth of “economic impacts” for New Brunswick and other parts of the country, as well as nearly $17 million in taxes for the provincial and federal governments. Moreover, it indicated, sales from ongoing operations could easily reach $9.5 million in 2015 (assuming, of course, the centre is open for business by then).

Compared with this, critics may query, what does a road to the river offer?

That, of course, is the wrong question.

The marvelous thing about investing in urban infrastructure is the multiplier effect. Almost any beautification, redevelopment or expansion project yields new opportunities for others.

In this respect, the Downing Street initiative and an events centre complement one another. Both will encourage people to get into the happy and productive habit of spending time (and money) in (and on) our core, of forging the common bonds of community that, in fact, attract and keep industries, entrepreneurs and skilled workers.

In our capacious suburban homes where we park our cars and RVs, we would do well to remember that our downtown areas are not only the manifestations of our ambitions; they are also the means to those ends.

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Inequities in the do-nothing budget of 2014

 

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For proof that George Orwell was right, look no further than the 2014 federal budget. There, indeed, all men are created equal, though some clearly appear to be more equal than others.

As, increasingly, modern legislatures confer “personhood” on multinational corporations, we may reasonably consider car and truck makers direct, if not actual flesh and blood, beneficiaries of Finance Minister Jim Flaherty’s munificence. How else would you characterize the $500-million top-up to the Automative Innovation Fund, created in 2008, the last time Chrysler and General Motors came poor-mouthing to Ottawa, caps in hand?

“The automotive industry is among Canada’s leading employers and exporters and is a key contributor to our economy,” the budget sonorously declared. “The sector also directly employs more than 115,000 Canadians in Southern Ontario and across Canada from automotive assembly to parts production.”

Never mind that successive Federal and Ontario governments have had to repeatedly bribe the major manufacturers into keeping their operations in Canada more or less intact. Or should we forget the $3 billion in loans and “non-repayable contributions” both levels of government arranged for the carmakers, courtesy of taxpayers, in 2009?

Back then, the companies complained bitterly about the financial meltdown and the great vanishing act of ready credit. But that was a smokescreen, and not a very thick one. North American automakers, then and now, wouldn’t know good productivity tools if they arrived at their front doors in a fleet of Nissan Sentras.

And, still, their temerity is breathtaking.

Apparently, an additional five-hundred-billion bucks might not be enough to satisfy the ravenous appetite some corporations have for found money. As the Globe and Mail reported this week. “Chrysler Group LLC is seeking a contribution of at least $700 million from the federal and Ontario governments in high-stakes negotiations about the future of its Canadian operation.”

Naturally, that’s a threat – the standing operating procedure of businesses that have grown too big and self-important to fail. They strap governments over barrels because, while they may enjoy legal status as people, they’re the sort of people we typically recognize as sociopaths who have no expectation of ever growing consciences. If they can get away with something, they will.

Alas, twas ever thus and ever thus shall be.

Not so, perhaps, for some of the pricier talent – the genuine humans – who actually occupy the upper management ranks at the car companies. Mr. Flaherty now seems less committed than several of his Cabinet colleagues, to the absurdly wrong-headed and patently unfair income-splitting device for rich folks, for which the budget was overtly paving the way.

“I’m not sure that overall it benefits our society,” he said to his eternal credit this week. “It benefits some parts of the Canadian population a lot, and other parts of the Canadian population virtually not at all. . .I think income splitting needs a long-hard analytical look.”

In fact, it’s already had at least one. Back in 2011, the C. D. Howe Institute concluded, in a special commentary on the subject, “The gains would be highly concentrated among high-income one-earner couples: 40 per cent of total benefits would go to families with incomes above $125,000, and the maximum annual gain from federal splitting would exceed $6,400. The maximum gains from provincial splitting would range from zero in Alberta to $5,750 in Ontario.”

What’s more, the Institute said most households wouldn’t see a dime, while the annual cost to the national accounts would likely exceed $2.5 billion. In other words, “income splitting would fail to achieve its ostensible horizontal equity goal.”

That’s economic-speak for “not fair”.

Still, Mr. Flaherty’s deathbed conversion on the issue (he is widely rumored to be drafting his exit strategy from federal politics) is not likely to convince many of his confreres. The ghosts of Ronald Reagan and Margaret Thatcher are far too comfortable haunting the Conservative corridors of Parliament Hill to brook any collective change of heart among the living.

For them, all men are not created equal.

They never have been and they never will be.

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The dos and don’ts of reducing disparity

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In an astonishing turn of events, worthy of major international coverage, your humble scribbler finds himself in actual, authentic agreement with the right-wing, free-market- loving think tank, the Fraser Institute.  Sort of.

How this happened is less important than why, which I can summarize thusly: Even a blind pitcher will hit the broad side of a barn once in a blue moon if he’s standing next to a silo. . .or. . .something like that.

The point is when the Institute’s recent report, The Economic Effect of Living Wage Laws, concludes that such legislation in the United States – which is designed to raise poor people’s salaries and, so, reverse growing income disparity – are backfiring, it is largely, albeit lamentably, correct.

“The best available evidence from the U.S. serves as a cautionary tale for us in Canada about adopting living wage laws,” said Charles Lammam, the study’s author and Fraser’s resident scholar in economic policy. “When governments try to legislate wages, there’s typically a trade-off – while some workers may benefit from a higher wage, their gain comes at the expense of others who lose as a result of fewer employment opportunities,”

The press release continues on to explain: “Although activists claim living wage laws can increase wages with minimal costs, the reality is quite different. According to the best available research, a 100 per cent increase in the living wage (for example, going from an hourly minimum wage of $10 to $20) reduces employment among low-wage workers by between 12 and 17 per cent.”

The reason has to do with labour market shock. When living wages are “mandated” to rise regardless of other factors and circumstances, businesses cut back jobs – especially the lower-end ones – and training programs precisely because they are not likewise “mandated” to employ anyone. The relationship between the supply of jobs and the regulations governing pay rates asymmetrically disadvantages workers.

This has the corollary effect of undermining overall productivity and innovation in the private sector despite the fact that Mr. Lammam found evidence suggesting that “employers also respond to living wage laws by hiring more qualified workers and passing over those with fewer skills thereby reducing the opportunity for less-skilled workers to participate in the labour market.”

All of which only means that which we already know: Governments are lousy micromanagers of wages and prices. But can they play any productive role in narrowing the income gap between the rich and the rest? Fraser doesn’t say, but I suspect their answer would be: “a minimal one, thank you very much.”

This is where I (with a sense of great relief) would part company with the Institute.

The socio-economic costs of wage disparities, which are growing rapidly in the western world, are several and serious. As more money flows to fewer people, lobbies and special interests skew public spending priorities.

Suddenly, the infrastructure on which a fair and democratic nation relies – everything from public transportation, roads and bridges to schools and hospitals – becomes less important than tax cuts for the wealthy.

The malign effect on the culture is equally worrying. Prolonged, structural economic inequality creates class systems and all the attendant evils of social immobility: little access to high quality education and jobs; and few, if any, opportunities for meaningful career advancement. In effect, permanent, grinding working poverty becomes the norm for millions until, of course, comes the revolution.

Governments, then, owe it to themselves and to the people – all the people – they represent to be mindful of even the slightest imbalances in the scales of social justice. The role they play is not properly reactive (living wage legislation, as one example), but proactive. Robust, progressive, encompassing social policy designed to create the conditions for broad and general prosperity is what they can and do best.

They should start with a redistributive frame of mind by tithing the personal wealth of rich more aggressively. The notion that economic opportunity trickles down from the top is utterly bankrupt. Rich people spend less of their incomes, per capita, in their local economies than do middle-class wage earners.

Governments should also provide corporate generators of wealth with more incentives for plant reinvestment, job training and apprenticeship programs – for, in effect, a national, private-sector “manpower” program that focusses, once again, on people as much as it now does on profits.

Such are, of course, humble proposals that have, in the current political climate,  about as much chance of being adopted as I have.

On this matter, too, I am certain the Fraser Institute would concur.

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Retooling New Brunswick’s economic engine

Resurgo, indeed!

Resurgo, indeed!

This past summer, the Petitcodiac River roared back to life, its tidal bore once more ascendent. Californian surf-boarders came to marvel at its muddy might and frolic in its frothy curl. You Tube went berserk and, for a short, sweet time, Moncton made headlines around the world.

Perhaps, then, it is fitting that the city’s largest downtown hotel, the site of the first economic summit for the municipal region in 20 years, should overlook a waterway whose resurgence holds more than metaphorical meaning. After all, it was not fate that brought back the bore after an absence of 40 years; it was us, mere mortals, who opened the causeway flood gates and kept them open.

As 300 of the community’s movers and shakers from all avenues of life prepare to assemble tonight at the Greater Moncton Economic Summit 2014, one wonders: What new gates shall they open?

Not even the event’s organizers can be sure. “We don’t know what they are going to come up with,” Ben Champoux, CEO of Enterprise Greater Moncton, told the Moncton Times & Transcript. “The tangible result is we are going to have a list of great ideas that are realistic, that are tangible, that people agree with.”

Still, why gather and why now? By every possible yardstick, the Greater Moncton  area has exceeded its own and others’ expectations over the years.

Dieppe, Moncton and Riverview currently comprise the fifth-fastest growing Census Metropolitan Area (CMA) in Canada. In fact, the region has typically attracted at least three times as many people every year than any other area in New Brunswick.

Since 1990, this CMA has added more than 25,000 jobs to its workforce. The annual unemployment rate is one of the lowest in the Atlantic region and substantially below the national average.

In Moncton, alone, home sales in 2011 reached the fourth-highest level in the city’s history. Yet, with an average house price of $158,561, the municipality remained one of the most affordable housing markets in the country.

Meanwhile, the total value of building permits issued in 2011 reached $184 million, the second highest level on record. What’s more, retail sales reached $2.1 billion in 2011, 17 per cent higher than the Canadian Cities’ average.

Then, of course, consider Greater Moncton’s formidable technology sector: major Canadian customer contact and back office operations with a robust “near-shore” IT outsourcing industry. It continues to leverage its success with a plan that calls for new partnerships with regional universities to deepen the region’s knowledge economy, diversify the IT economy, and actively promote tech-based entrepreneurship.

Given the broader context of a fiscally imperiled province and a moribund national economy, Greater Moncton is not only punching above its weight class; its punching above just about everyone else’s .

So, again, why bother brainstorming?

The answer is in the question. And it has something to do with an ounce of prevention.

Summits, conventions, conferences are only marginally useful when their conveners are mired in full-blown crises. Adrenaline and cortisol may be handy hormones to have in a fight. But they are not particularly conducive to rational, creative or innovative thinking.

Greater Moncton’s relatively healthy and prosperous economy permits the sort of blue-sky musings that arc out over the horizon to destinations that remain hidden in bad times. And, of course, the whole point of an idea factory, such as Summit 2014, is to figure out how to avoid the bad times altogether.

What new gates shall open, indeed?

What fresh ideas will be brought to bear on a downtown core that has, frankly, seen better days?

What will impel municipal officials and entrepreneurs to transform the concept of a multi-use events centre into actual bricks and mortar, sooner rather than later.

As Mr. Champoux astutely notes, “The dance floor is more crowded than ever before in economic development and business development. Let’s brainstorm and and define who we are now, what we want and how we are going to get there and who is going to lead that.”

Let us, indeed. Let us begin again.

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That’s one for you and 171 for me

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The wretchedly poor are far more likely than the stupendously wealthy to publicly disclose their incomes. After all, the former needn’t ever worry about being kidnapped for a ransom of mac and cheese.

So, we must turn to the Canadian Center for Policy Alternatives (CCPA) to learn that the rich are, indeed, getting richer faster than everybody else in the country.

According to a folio entitled All in a Day’s Work? released last week, the annual compensation packages of Canada’s 100 highest-paid CEOs included, on average, a base salary of $1 million, cash bonuses amounting to $1.73 million, corporate shares and stock options worth $3.93 million, and miscellaneous perks and pensions valued at $1.29 million for a grand total of $7.95 million, giver or take a grand or two.

If anyone is counting, that amounts to 171 times more than the average Canadian wage, which tops up at about $47,000 a year. And, it gets worse (unless, of course, you’re rich, in which case it’s getting better all the time).

“The average wage in Canada increased by 6 per cent between 1998 and 2012 while the average compensation of Canada’s highest-paid CEOs increased by 73 per cent during that same time period (inflation-adjusted),” author Hugh Mackenzie writes. “Reality was harsher for Canada’s minimum-wage workers: If they were lucky enough to have a full-time, 40-hour a week job, minimum-wage workers earned, on average, $20,989 in 2012.”

In fact, another source, the AFL-CIO, says the wage cap in industrialized countries – including Canada – is wider and accelerating faster than even these numbers indicate. In the United States a top CEO, earning an average of $12.2 million annually makes 354 times what a wage-earning stiff pockets in a year. In Canada, the ratio is 205:1. In Germany, it’s 147:1. In England, it’s a downright egalitarian 84:1. “In the past few decades, CEO pay has skyrocketed while the average worker’s pay has stagnated despite increases in productivity,” the union’s website observes.

Of course, the purpose of these timely revelations is not a little political. Neither the CCPA nor the AFL-CIO are especially fond of corporate fat cats. To be sure, the CCPA can’t resist thundering its disapproval: “Five ears after a global recession knocked the wind out of Canada’s labour market, throwing tens of thousands of workers onto the unemployment line and sidelining a generation of young workers, the compensation of Canada’s CEO elite continues to sail along.”

But if such criticisms are expected from the usual assortment of fellow travelers outside the gates and beyond the moat, less predictable is the chorus against excessive compensation rising within the castle keep, itself.

Here’s what McGill University professor of management Henry Mintzberg had to say in a piece he penned for the Wall Street Journal in 2009:

“These days, it seems, there is no shortage of recommendations for fixing the way bonuses are paid to executives at big public companies. Well, I have my own recommendation: Scrap the whole thing. Don’t pay any bonuses. Nothing.”

As Dr. Mintzberg concludes, “Too many large corporations today are starved for leadership – true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.”

The larger point is that, ever since much of the world’s financial sector collapsed under the weight of an adept minority’s avarice, fairness and equity (or least some semblance of these scarce resources) have become centerpieces of economic development and job creation among the abused and disaffected majority.

That’s why obscenely high pay packets for CEOs, such as Canadian Pacific’s E. Hunter Harrison who earns a staggering $49.1 million a year, affects public opinion (and perhaps even public policy) more directly today than ever before.

Will it be enough to imbue the system with a little sanity? “Despite the scrutiny and pressure,” Mr. Hugh Mackenzie writes, “the pay of CEOs in Canada and elsewhere has proven to be remarkably resilient.”

All of which suggests a reason other than fear of kidnapping why Canada’s stupendously wealthy are loath to discuss their loot in public: Lest they die of embarrassment.

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