2013: The year of treading water

U.S. economy may be heading for a hard, post-election landing

N.B. economy is heading for a repeat of 2013. . .only worse

New Brunswick enters the new year much as it did the outgoing one: Treading shark-infested waters, praying that the mighty predators will ignore it in favour of fatter, tastier castaways.

Under the grim circumstances, it’s a miracle that the government of David Alward was able to accomplish the little it did.

In 2013, population growth was at a standstill, general unemployment was among the worst in Canada (especially among what remains of the youthful labour force), the participation rate (those actively searching for work) was in a nose dive. About the only bright spot was low inflation and a relatively fixed consumer price index (measured in 2002 dollars).

Worse, perhaps, than any of this was the evident lack of new economic opportunities, without which the annual provincial deficit was fated to hover at $500 million on a structural, long-term debt of at least $11 billion in perpetuity. Theoretically, that meant that every New Brunswicker was on the hook for thousands of dollars.

The reality was that fewer public services were available to a dwindling number of people. And in the absence of any real vision for the future – any sense that timely sacrifices will ultimately yield durable boons – the province descended into caterwauling and complaining.

Some, of course, did their best to reverse the tide of bitterness and recrimination, while acknowledging the patently obvious.

“What we are facing in New Brunswick is a structural, secular decline,” former premier and current deputy chairman of T-D Bank Frank McKenna told me one wintery afternoon in his downtown Toronto office. “The problems we have don’t ebb and flow with the quality of our leadership. There is something more serious going on here. We face circumstances that combine to create a very negative outlook. The entire atmosphere is hugely challenging.”

In fact, he said, “the resource base that remains can be exploited with fewer workers and more mechanization, so it can’t support the number of workers that it once did. Yet, we remain a resource-based economy in a world where the Canadian dollar looks to be in a fairly constant state of parity with the U.S. dollar. So, this, too, is a peril.”

And yet, he said, “Even though I think our situation in New Brunswick is quite pessimistic, I don’t think that it is terminal. There are many places in the world that have faced dramatic challenges. In fact, adversity, itself, became the platform upon which they built sustainable economies. . . This isn’t just a problem of leadership in government. It’s also a problem of followership.

“Our citizens have to understand the full depth and breadth of the dilemma that we are facing, and they have to be prepared to face up to some inconvenient truths. It means that they have to become less reliant on government and more entrepreneurial. It means that they have to take responsibility for their own futures.”

For Mr. McKenna and, indeed, Mr. Alward, taking responsibility for the future means brining Alberta oil east for refining in Saint John – which would create thousands of construction jobs – and developing the province’s nascent shale gas industry.

“The way I look at it,” Mr. McKenna said, “the real win comes when we take our indigenous shale gas in the province and hook it into the Canaport liquified natural gas (LNG) facility in Saint John.”

His voice rose as his enthusiasm peaked. “We have in situ now, calculated by Corridor Resources Inc., 67 trillion cubic feet of gas. That’s bigger than western Canada. It’s a huge deposit. If ten per cent is exploitable, that’s enough to create a revenue source for New Brunswick for decades to come. All in, it would result in about $15-20 billion in investment and 150,000 person years of work. And for governments, it would result in between $7-9 billion worth of royalties and taxes.”

By and large, however, these were mere musings of a former public official. They did little to quell the outrage of a vocal minority of residents – people who firmly believed the provincial government had no business encouraging the development of an industry that they said would poison them.

Would it poison them? Was there, instead, a safe, environmentally responsible approach to the whole affair?

The issue will carry forward into 2014 and, like just about every other issue in New Brunswick, remain there unresolved, as the sharks keep circling.

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