Tag Archives: Conference Board of Canada

And now for something completely different: good news for New Brunswick. . .sort of

 

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New Brunswick may be drowning in debt. In fact, practitioners of the wooly science of fiscal forensics may have already pronounced this province dead on arrival. But don’t we just do a bang-up job reporting our woes to the rest of the world?

The C.D. Howe Institute says we deserve a little praise for a change. Specifically, Colin Busby of The C.D. Howe Institute tells the Saint John Telegraph-Journal that, according to his annual study on government spending overruns in Canada (also known as “The Pinocchio Report”), this province does “reasonably well” predicting its financial condition. We are, in a phrase, “middle of the road”, which is better than road kill, I suppose.

What’s more, we’re brutally honest with ourselves and the rest of the country about the hobo clothes we’re forced to wear. “New Brunswick is one of the jurisdictions where you can clearly find comparable numbers,” Mr. Busby says. “You simply find what the budget promises were and then find the numbers in the public accounts and compare them. That’s a positive story for New Brunswick.”

Still, he adds, “When it comes to spending overruns and the ability to hit budget targets, either overshooting or undershooting (New Brunswick) is not in the range of Ontario and the federal government who have done a significantly better job in terms of holding to what they promised in their spring budgets.”

Here’s how the numbers shake out: Over the past 10 years, cumulative overruns, expressed as fractions of 2013/14 budgeted spending, were highest in Saskatchewan (36 per cent), Alberta (26 per cent) and Manitoba (22 per cent), lowest in Canada, overall (one per cent), Ontario (five per cent) and Nova Scotia (seven per cent).

New Brunswick overspent by $1.2 billion over the past decade, which is bad. On the other hand, averaged out over the period, we came in less than 15 per cent off our annual targeted goals, which is good. Sort of.

For a finance minister, there is, I’m guessing, a certain comfort in knowing, with any degree of accuracy, just how badly off your jurisdiction is in the scheme of things. It’s a little like being sentenced to an indeterminate jail term. At least you know you have a cot; let’s just hope your bunk buddies in the bond market aren’t complete psychos.

But, in the larger context, how instructive or useful are these sort of statistical parlour games?

That New Brunswick manages to “present well” is vastly less important than its moribund economy, the structural instability of which makes accurate budget forecasting a near impossibility (a fact which suggests that the province’s reasonably fair reporting record is more a function of good luck than good prognostication).

Meanwhile, the Conference Board of Canada forecasts continued stormy economic weather for the province. “Prospects for New Brunswick’s economy will remain dim for at least one more year,” it said in its revised winter outlook earlier this month. “Cuts in the potash industry, and the closing of the Maple Leaf Food plant in Moncton, will limit economic growth to 0.8 per cent in 2014.”

How will this affect the next round of budget promises?

An even more intriguing question is whether a fully functioning shale gas industry, which should make us all filthy rich, will also make our elected officials filthy liars, though through no fault of their own.

The C.D. Howe Report notes the paradox common to provinces rich in natural resources: Their budgets are even farther from target than are those of patently poor provinces, such as New Brunswick. Economic instability, it seems, cuts both ways.

“Jurisdictions that are more dependent on natural resources showed sizable positive revenue biases: Saskatchewan, Newfoundland and labrador and Alberta all had biases of eight to 10 per cent,” the Institute noted. The natural-resource dependent jurisdictions that more affected by commodity-price swings also had low accuracy scores.”

So, then, the more money a jurisdiction has sloshing around in oil and gas wells, the less veracious are its budget forecasts.

What a delicious irony.

Still, if I had to choose, I’d rather the province I call home be recognized for the power of its industry, than the accuracy of its numbers-crunchers.

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How (not) to breed a culture of innovation

Think about tech at least once in your freakin' life!

Think about tech at least once in your freakin’ life!

Once again, a major Canadian think tank concludes that the nation’s private sector is not spending enough of research and development, on science and technology. Once again, the news runs buried in the tech sections of the day’s print organs, all but guaranteeing the predictable reader response of “so what.”

For decades – at least since the early 1980s – experts have warned that unless industry picks up the pace of innovation, the consequences for Canada’s productivity and competitiveness in the global economy will be dire. But what, exactly, does that mean and why should anyone outside the pearly gates of academe give a fig?

Not long ago, the Conference Board of Canada took a shot at answering the question. In a report entitled “How Canada Performs”, the organization had this to say about the country’s low ranking, compared to other economies, on innovation:

“Overall, countries that are more innovative are passing Canada on measures such as income per capita, productivity, and the quality of social programs. It is also critical to environmental protection, a high-performing education system, a well-functioning system of health promotion and health care, and an inclusive society. Without innovation, all these systems stagnate and Canada’s performance deteriorates relative to that of its peers.”

What’s more, the Board said, “With new key players – such as China, India, and Brazil – in the global economy, Canadian businesses must move up the value chain and specialize in knowledge-intensive, high-value-added goods and services. Although Canada has some leading companies that compete handily against global peers, its economy is not as innovative as its size would otherwise suggest.”

Now, the Science, Technology and Innovation Council (STIC) – a creature of the current federal government – adds its voice to the chorus. “Canada’s gross domestic expenditures on R&D (GERD) declined from their peak in 2008 and, when measured in relation to gross domestic product (GDP), since 2001,” it reports. “In contrast, the GERD and GERD intensity of most other countries have been increasing. Canada’s declining GERD intensity has pushed its rank down from 16th position in 2006 to 17th in 2008 and to 23rd in 2011 (among 41 economies). . .The more recent declines in the country’s total R&D funding efforts are attributable predominantly to private sector funding of R&D.”

The Council also notes, somewhat cheerfully that “Canadians understand that, if we want to create jobs and opportunity in a competitive world and address the key societal challenges that confront us in the 21st century, STI must be an integral part of the national agenda.”

But here’s the thing: I’m not at all sure Canadians do – understand, that is. If they did, then this conversation, which feels like a toothache, would be over. So would the chimerical debate, in government circles, about funding hard, “blue sky” science at the “expense” of applied, commercially viable research. Notice where these discussions almost never occur: Switzerland, Sweden, Denmark, The Netherlands, and, yes, even the United States.

That’s because these nations, unlike Canada, have recognized the truth of their circumstances, which is, both simple and elegant: If you want an innovative culture, you have to breed a culture of innovation. And silos of self-interest won’t help you accomplish the task. All segments of society – government, industry, higher education – must pull in the same direction if we’re going to get anywhere.

Or, as the STIC observes, “The responsibility is shared: all participants in our STI ecosystem have a role to play in driving enhanced performance and lifting Canada into the ranks of the world’s leading innovative economies. It is not just about investing more, but about investing more strategically and coherently, focusing our resources and efforts, learning from the experience of global STI leaders and improving agility to seize emerging opportunities. That is how Canada will truly be able to ‘run with the best.’”

It’s also how you convince average Canadians, who may not often read the tech sections of their newspapers, that their material well being – their wages and standards of living – depends directly on the quantity and quality of the innovations they enlist in the service of their respective futures.

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Canada’s future isn’t what it used to be

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When, exactly, the Conference Board of Canada decided it would serve the interests of policy makers better by dusting off its crystal ball and throwing caution to the wind is not immediately clear. But wonks and pundits of all stripes owe this sturdy think tank a debt of gratitude for producing its first report under its Strategic Foresight Initiative.

This slim study, which weighs in at only 12 pages, posits four possible “energy futures” for The Great White North, and each one makes for fascinating reading. But first, the obligatory disclaimer: “Unlike traditional economic forecasting that focuses on development of a probable or most-likely future, strategic foresight aims instead to develop a series of plausible futures. Its goal is not to predict the future – or even suggest which direction might be most desirable.”

Rather, the authors state, “The goal. . .is to offer insights to decision-makers in governments, businesses, and other organizations on how best to prepare for all possibilities, what they might do to shift toward a future they prefer, and how to recognize and adapt to events and trends that may point toward a specific future.”

That dutifully said, the Board can’t disguise the delightful fact that it had a ball conjuring four distinct scenarios for the shape of things to come “out to 2050” or that the document reads, in places, like Hugo Award-winning science fiction.

Consider scenario number one, also known as “Hockey Stick”.

It’s a world in which “the Greenland ice cap has shrunk, as has Antarctica. Rising sea levels and an increased frequency of extreme weather events are forcing coastal cities to build massive dykes, with low-lying countries suffering extensive damage from storm surges. The Gulf Stream has shifted south, leaving much of Europe to shiver even as former breadbaskets like the American Midwest have baked into desert. Extreme weather has become frequent – damaging crops, disrupting transportation, and eroding infrastructure.”

As for Canada, where “personal vehicles have become a luxury”, we’ve been hit hard. Fortunately, we anticipated “a world of energy scarcity and environmental trauma,” and so “recognized the need to shift” our economic centre of gravity beyond both resources and manufacturing, toward a competitive post-industrial base.”

The section entitled “Superpower” describes a somewhat happier condition for the nation. This is a world in which, “The opening of Arctic waters has enabled exploitation of other energy pools as well as easier access to mineral deposits, and Canada’s North has become a booming frontier. Canadian producers have been able to reap the higher world prices for oil and gas. But even as export pipelines were planned, reviewed, and built, Eastern provinces have moved quickly to build up their own energy sources.”

Life is, indeed, grand for Canadians. But, as the paper warns, it may be too grand: “For more than a generation, they have been getting rich by selling the world what it wants. But most of what they have been selling is finite. Eventually the party must end. The question now is whether Canadians are setting aside enough of their current income – and investing it well enough – to fund their future well-being in a post-resource world.”

Perhaps, a better, more sustainable, future for the country is the one outlined in “Green Machine”. This states that “Governments have quickly recognized the importance of supporting clean energy development through a combination of technology investments and regulation. Major breakthroughs have been made in energy storage technologies for variable energy sources and massive efficiency improvements for renewable energy generation and transmission.”

As a result, “there is a sense of balance across the country, and general optimism about the ability of technology to handle the continuing evolution of the global environment.”

Then, of course, there is the status quo of “Made in Canada” in which economic stagnation in formerly growing and emerging economies has secured Canada’s role as the world’s premier location for immigrants. Moreover, “With gas cheap and the economy strong, there has been little constraint on urban sprawl and lots of money for more roads in provinces with significant energy resources.”

Will any of these scenarios play out in the years to come? Crystal balls are notoriously cloudy. Still, the fun is in the peering.

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