Category Archives: Economy

The risky business of economies planning for the future

 

A credible line of thinking among economists who are not enamored of their political reputations holds that governments bent on producing surpluses, come what may, are misguided, even morally bankrupt.

The argument goes something like this: Publicly elected officials and their bureaucratic minions produce nothing fungible; therefore, they should produce no returns. Rather, their function is to collect taxes responsibly and distribute the funds for the general good – to the rich, the poor and the rest of us. 

The general good comprises the schools we attend, the clinics we need, the roads we use, the parks we frequent, and the safe streets and gathering places we expect as dues-paying members of just and enlightened societies. 

In other words, there should plenty of work to occupy the minds of those we pay through the ballot box and those who serve the periodic democratic lotteries we call general elections. And, in this line of argument, ideally there should be nothing left in the kitty at the end of the political day. All money is absorbed, all money is spent. No deficit, no debt and, crucially, no surplus.

Except, of course, the system doesn’t work this way, anywhere.

But what if it did? Sort of. 

A reader writes, “I have been to Norway several times. By the way, Norway has some of the highest retail gas prices going and don’t even think about buying booze over there. Hard stuff was $50 per 750 ml 15 years ago and God help you if you did not bring in your duty-free limited when visiting.”

Still, as this reader points out, that Nordic country of just over five million souls has just now demonstrated (on paper, at least) that, thanks to its public sector’s perspicacity, attention and drive, each of its citizens is a millionaire, and will likely remain in that vaunted economic status for some time, as New Brunswick’s and Greece’s economies meet on the slide to perdition.

That doesn’t mean Norwegians get to cash in, individually; it means that Norwegians, collectively, get to enjoy one of the highest standards of living in the world, the chance that their children will be among the most highly educated in the world, the certainty that their health care will cost less for the benefits they receive than almost any other place in the world and that old-age peace of mind is actually, well, fungible. 

Here’s what the U.K.’s Daily Mail online edition had to say about the development in early January:

“Norway’s sovereign wealth fund has ballooned so much due to high oil and gas prices that every person in the country became a theoretical millionaire this week. The nation is proving to be an exception as others struggle under a mountain of debts. Set up in 1990, the fund owns around one per cent of the world’s stocks, as well as bonds and real estate from London to Boston. The surplus revenue is collected in the Government Pension Fund Global.”

Said Finance Minister Siv Jensen in an email to reporters: “Many countries have found that temporary large revenues from natural resource exploitation produce relatively short-lived booms that are followed by difficult adjustments.” Added Oeystein Doerum, chief economist at DNB Markets: “The fund is a success in the sense that parliament has managed to put aside money for the future. There are many examples of countries that have not managed that.”

Indeed, there are. 

Canada’s legislators drone on endlessly about this nation’s enormous natural resource potential. New Brunswick Premier David Alward almost begs citizens of this province to embrace the opportunities (as yet, unrealized) in shale gas development.

But what, exactly, is he and his confreres elsewhere in this country doing about securing the long-term efficacy such massive developments might contribute to social development: education, skills training, economic diversification, even (and most paradoxically) strategies to employ the windfalls from oil and gas to wean us off oil and gas with brave, interesting, new, renewable energy technologies?

So far, the genius of our political leaders seems confined to balancing the books, perhaps achieving small surpluses at some indeterminate point in the extenuated future. 

The risk of bankruptcy in this endeavor is not merely fiscal; it’s moral.

 

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Romancing a stoned and sluggish economy

 

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In hard times, few articles of faith are more dear to the Harper Tories than the dogma of economic salvation through stimulus spending. After all, this is what kept Canada from losing its capitalist soul during the Great Recession. Was it not?

To hear the freshly minted Finance Minister Joe Oliver sputter you might wonder. “We worked hard to return to a balanced budget to throw it all away,” he told a business crowd in Toronto last week, alluding to the feather-weight, on-paper-only budgetary surplus of $2.2 billion for fiscal 2014. 

It was his first speech as the late Jim Flaherty’s successor, and he was, among other things, concerned about establishing his street cred.

“So do not expect a big stimulus program,” he announced with a thump.

Instead, now that the country is back on track, chugging away, it’s only fair and sensible to return the moolah to “hard-working, taxpaying Canadian families.” (Really, Mr. Oliver, is there any other sort?) “We’re going to, of course, be talking to people.”

All of which sounds mighty “Main Street” of the good fellow. Still, his posture towards the economy and his fellow citizens assumes certain facts that may not be in evidence – at least, not entirely. Have the happy days actually returned? 

True, the country has managed to avoid many of the predations that visited its allies and trading partners during and after the financial collapse of ‘08. Among other mercies, both large and small, the treasury wasn’t impelled to bail out any banks or credit unions.

But the nation’s economic performance cannot, in any rational way, be described as robust. We didn’t come sprinting off the blocks. Our gait was more tentative; like that of a late-night office worker skittering to his car in a bad part of town.

According to RBC Economic, in March, the unemployment rate across the county was 6.9 per cent, representing a 24-basis-point (0.24 per cent) improvement over the previous month. Year-over-year, however, the uptick was almost negligible, even statistically meaningless. 

That’s been more-or-less the story for real gross domestic product. In April 2013, GDP advanced by 13 basis points, then in December of that year, it dropped by 53 points, only to recover in January by 51 points. The net gain was a virtual (though not quite) zero sum.

Again and again, the indicators refuse to support the more populist brands of politicking. Manufacturing shipments swing up a couple of percentage points in one month; and down again in another. Inventories and unfilled orders continue to oscillate gently along the x axis, denoting a no-to-low-growth commercial environment.

Under the circumstances, does awarding Canadians with sums that would, per capita, amount to chicken feed represent the best use of any largess the federal government might one day find itself holding? Are there not more effective ways to stimulate the economy than helping each taxpayer save a few hundred bucks on his T2014 Schedule One? 

In fact, Mr. Oliver said it himself. “We need to discuss domestically the issue of skills shortage, infrastructure and productivity and how that is all addressed in our fiscal framework,” he declared after his speech in response to a question from an audience member. Moreover, he added, Too many Canadians are looking for work.”

But apart from restating the blindingly obvious (over and over again), this government’s chief lieutenants have been loath to embrace a more progressive, pervasive and enduring version of what they all agree worked reasonably well during the Great Recession.

If any lesson emerges from the past few years’ experience on the global roller coaster, it is that government stimulus spending can have important palliative effects on troubled economies. 

The other one is that such exercises in monetary loosening are almost never bold enough or targeted well enough to render the structural changes that are necessary to keeping an economy nimble, entrepreneurial and innovative. The western world can thank the corrosive policies of self-hating government archetypes, such as the late Margaret Thatcher, for that.

When times were hard, the Harper Tories genuinely adored the stimulus phase of their Economic Action Plan. Clearly, though, times change and so does romance.

 

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No need to gild the finance minister’s good record

 

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They came not to bury Caesar, but to praise him. Boy, did they ever. 

Former federal Finance Minister Jim Flaherty’s passing on Thursday – at 64, reportedly from a heart attack – dominated the front page of the Globe and Mail’s Friday edition. In fact, “dominated” might not be the right word; utterly blanketed would be a more accurate description. 

Apart from an ad announcing Toyota’s “red tag” days, nothing else appeared Page-One-worthy for “Canada’s National Newspaper”. 

Our “guiding force” was gone; the man who “shaped the Conservative Party, the nation and the world’s response to the Great Recession” was no more, tragically cut down in the late-middle-age of his life. It took eight reporters and editorialists to say so.

Political Affairs Correspondent John Ibbitson’s walk down memory lane was almost affecting: “In politics, you do what you gotta do. . .At the end he (Flaherty) was pretty happy with his record. . .But then, he was a pretty happy guy. Back when we were  both at Queen’s Park, he’d drop by the press lounge every now and then late on a Friday afternoon to mooch a beer and find out what the boys and girls were saying. He always greeted you with that impish grin, trolling for gossip, though he seldom offered up any of his own.”

At the back of the paper’s front section, the lead editorial continued the eulogy: “Goodbye to the little giant. . .Mr. Flaherty was a giant in the Harper cabinet, and not just because he ran the department whose control of the purse strings makes it, to some extent, the ministry of everything. He was one of the few Harper ministers who acted with considerable independent authority.”

Indeed, it’s difficult, even impossible, to recall another Canadian public official of Flaherty’s metier accorded such a fulsome tribute as this. Pierre Trudeau, Tommy Douglas, Jack Layton, perhaps; still, they were all leaders of national parties and political movements. They weren’t finance ministers.

But, of course, therein lies the answer. 

One of the great foundational assumptions of the post-recession era – especially by the Ontario-centric national press gallery – is that Mr. Flaherty’s foresight and steady hand prevented the country’s Toronto-based financial institutions from circling the drain along with all the others in the wild, wild west during the financial collapse of ’08. For many media mavens, that “fact”, alone, makes the former finance minister’s track record a far more compelling story to tell than even the prime minister’s.   

Another key supposition of the modern age is that Mr. Flaherty’s fiscal stimulus program (Economic Action Plan) – all tallied, about $150 billion – was singularly responsible for preventing the economy from crashing and burning, given the private lending community’s terror of bad debt during the recession. Again, this “fact” has served the frequent press portrayals of the “little giant’s” rock-star status both at home and abroad.

There’s truth in both claims: Mr. Flaherty was a competent steward of the economy in tough times; had he been an inflexible ideologue with a fetish for balancing the nation’s accounts in a zero-growth environment, the road to recovery would have been much rockier than it was. 

But the real secret behind Canada’s relatively robust financial performance during the era of diminishing expectations – at least compared with those of the United Sates, and much of continental Europe – was, and is, its responsible and well-regulated banking system and monetary traditions. 

Mr. Flaherty deserves plaudits for not messing with these (the way former U.S. President Bill Clinton disastrously did with his nation’s laws when he repealed the 1933 Glass-Steagall Act that had, for 66 years, successfully separated commercial from investment banking). But he doesn’t deserve credit for engineering a recovery with a system he merely inherited. 

Neither does he warrant much praise for using the Economic Action Plan creatively and to truly productive effect by making strategic investments in crucial infrastructure, higher education and training, advanced technology commercialization, and work-based poverty reduction programs. To have done so would have invited internecine warfare in his own party. 

Mr. Flaherty should be remembered in public circles as a bright, decent, effective, and tough cabinet minister. He was also that rarest of birds in the Harper government: he could both tell and take a joke. 

But he was not Caesar, and he never sought that company. 

Perhaps, that’s one reason he left Parliament a month ago: Too many little emperors running about, taking credit where credit is, most certainly, not due.

 

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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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Fat and poor: What’s not to love about the East Coast?

Evidence of Atlantic Canadian exceptionalism mounts with each day that passes. Judging from the headlines, our position within Confederation has never been more secure, our role never more crucial.

Do we serve the rest of Canada as both the butt of their jokes and the source of their ire? Of course we do, and with brio, mister.

Merely consider the following from the Globe and Mail, Canada’s self-assured, self-identifying “national” newspaper, the other day:

“The number of obese Canadians has tripled since the mid-1980s, a phenomenon driven by a sharp rise in the number of extremely overweight adults whose health complications are expected to place a heavy burden on the health-care system.”

And where, pray tell, will we find the highest rate of corpulence in Canada?

“(The) burden is not spread evenly, with the highest proportion of obese adults in the Atlantic provinces and the lowest in wealthy and healthy British Columbia, according to a new study that predicts the country’s weight problem is only going to get worse, especially in the fattest provinces.”

What’s worse, the piece goes on to say, “the study warns that, if the trend continues, more than one in five Canadians will be obese by 2019. In five provinces – Newfoundland and Labrador, Nova Scotia, New Brunswick, Saskatchewan and Manitoba – there will be more adults who are overweight and obese than adults who tip the scales at a healthy weight that same year.”

Oddly, there’s no explanation for why Prince Edward Island, alone among East Coast provinces, is missing from the list. It’s conceivable that with a smaller population than Metro Moncton’s, the Island failed to impress itself as a province upon the study’s authors, one of whom is, herself, a resident of Atlantic Canada.

“We have a growing number of these people (overweight and obese) and we haven’t really sorted out the treatment. ” Laurie Twells, a prof in the faculty of medicine at Memorial University in St. John’s. “We’re not actually curing it (obesity). We haven’t managed to help people lose weight and keep it off, other than through something like bariatric surgery.”

Now, as other research links obesity with straightened socio-economic circumstances, it should come as no surprise to anyone that Atlantic Canada is not only home to the nation’s highest proportion of fat people; it’s also home to the highest proportion of poor ones.

According to Statistics Canada’s The Daily a year ago, “the income gap between the top one per cent and the rest of filers has widened over time. In 1982, the median income of the top one per cent of filers was $191,600. This was seven times higher than the median income of $28,000 for the other 99 per cent of filers. By 2010, the median income of the top one per cent of filers increased to $283,400, about 10 times higher than the median income of $28,400 for the rest. The income of top filers was increasingly dependent on their jobs, rather than on investments.”

Meanwhile, “in 2010, four provinces – Ontario, Alberta, Quebec and British Columbia – accounted for 92 per cent of the 254,700 people in the top 1 per cent.

Ontario had 110,300, followed by Alberta with 52,200, Quebec at 42,600 and British Columbia with 29,500. Between 1990 and 2010, Alberta’s share of the top 1 per cent of filers doubled from 10 per cent to 20 per cent, while Ontario’s proportion fell from 51 per cent to 43 per cent.”

The only reason why no Atlantic province gets a mention is that the incidence of conspicuous wealth in the region is so rare, it’s statistically insignificant.

On the other hand, reported the Globe last year, “new data shows the share of individual income that comes from government transfers is highest in the Atlantic provinces. Three of those provinces. . .receive slightly more transfers than the total taxes they pay. The main factors appear to be higher unemployment in Atlantic Canada – but also an older population.”

Uh, no kidding Sherlock.

To be sure, though, we along the seabound East Coast might yet salvage some dignity. A new Scotiabank poll finds that Atlantic Canadian small business owners are more inclined than their counterparts elsewhere in the country to work until they drop.

That, too, makes us special among our countrymen.

Still, who’s complaining? As long as it keeps our minds off the junk food.

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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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Let’s own all of Canada’s podiums

If nothing else, the Sochi Olympics proved beyond a shadow of a scoreless-soccer-game adherent’s doubt that everyone – even a polite, unyieldingly apologetic, ceaselessly accommodating Canadian – loves a winner.

Perhaps, now, especially a Canadian loves a winner.

The medal haul for this country was, indeed, impressive: 10 gold, 10 silver and five bronze. Overall, the total was just shy, by one, of the nation’s tally in Vancouver four years ago when Canuck athletes brought in 14 gold, seven silver and five bronze.

The shortfall this year may have disappointed certain die-hard proponents of the country’s coordinated “Own the Podium” program, the expressed objective of which in Russia was to “maintain the momentum” of La-La Land’s earlier success.

Still, the sad faces in the Canadian contingent of well-wisher were few and far between during the medal events at which our sportsmen and women excelled. In fact, how could it have been otherwise?

There were golds in women’s and men’s skiing; women’s bobsleigh, curling and hockey; and men’s curling, speed skating and hockey. There were silvers and bronzes in freestyle and alpine skiing, figure skating, speed skating, short track, and snowboard.

And who will ever forget the women’s hockey squad?

Going in, they were deemed, in certain quarters, to be too old and too slow. In the end, and in the words of one commentator, they were “champions”, pure and simple. Nor did their male counterparts push up daffodils: Not once did they fall behind in scoring en route to Olympic Gold.

Some in this country have reviled the whole prickly and archly competitive reasoning behind “Own the Podium”. They consider it rude and decidedly un-Canadian. I’m not one among this crowd.

The bottom line is that we, as a nation, should be owning all podiums in every walk of life that matters to this country. And if we can take inspiration from our fittest and most fiercely determined fellow citizens, then the $80-million that taxpayers have spent to train and send them to the international games is worth every loonie.

Why not own the podium, for example, with advanced research that leads to flexible, renewable, sustainable energy? Are we so blinkered by the quotidian realities of our abundant reserves of oil and gas, that we can’t perceive the economic opportunities  that come with leading the world in the production of solar, wind, smart grid, biomass and biofuel technologies for domestic and export markets?

Why not own the podium with a public, universally accessible, national system of early childhood education, integrated into the primary school system? Must we perennially lag our sister states in the Organisation for Economic Co-operation and Development in providing good quality ECE?

According to some recent research, national spending on pre-school is only 0.2 per cent of GDP. That compares with expenditure rates of between two and ten times the Canadian amount in the United States, Finland and Sweden.

Meanwhile, our own regional turf in the Maritimes, can we finally own the podium with a truly effective strategy for inter-jurisdictional economic collaboration, risk-sharing, innovation and foreign market development? Aren’t we about ready to concede that the three provinces, which collectively house the population of Montreal, would benefit from closer ties among them?

In New Brunswick, of course, no one’s winning any medals for stellar performance on the fiscal field. That a province of 750,000 people should sport a deficit of $500 million on a debt of nearly $12 billion staggers all rational appreciation for prudent management in government.

But is there even here, buried somewhere beneath this mess, a podium to own?

What new feats of financial derring-do will we authorize future finance ministers to undertake? How much more belt-tightening will we be prepared to endure?

What do we visualize as the shape of our future, and what great sacrifices and immense efforts will we make to bring that future into focus and, finally, ascend the pedestal to receive our rewards?

These are the urgent questions of the day. They are for winners to answer.

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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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