Category Archives: Economy

Jan 23 2014
Leave a comment
Economy, Oil and Gas

The stiff upper lip to success

DSC_0026

New Brunswick’s estimable finance minister, Blaine Higgs, promises as a matter of course that he will announce no new tax hikes at next month’s grand budget reveal. To which we curtsy politely and thank the graveyard of foreboding that dominates Fredericton for small mercies.

Still, at this stage in the daily, grinding, “this-too-shall-pass” culture of what is, indisputably, Canada’s least economically promising province, higher taxes will serve precisely no purpose.

The time for a boost in the HST was four years ago. Today, when a precipitous drop in revenue to government coffers is related entirely to a concomitant decline in business income, the taxman’s various dogs just won’t hunt anymore.

Meanwhile, the list of likely economic saviors grows ever longer, even as it begins to blur the boundaries of credibility.

There is a pipeline into Saint John. It will, we are assured, bring Alberta oil into the Port City for refining and subsequent export to locales both exotic and mundane. In the process, it will employ hundreds of skilled and able-bodied men and women (thousands during the construction phase). At least, that’s the scuttlebutt. Boosters are still looking for the project’s starter pistol, which seems to have gone missing.

There is some fresh promise in the mining sector, no thanks to The Potash Corporation of Saskatchewan which, according to a CBC report in early December,  “issued a blow to one of the Alward government’s hopes for job creation in the province.

The company is laying off more than 1,000 people, including 130 in New Brunswick, due to what it describes as slumping demand for its potash and phosphates, which are used to make fertilizer. . .Just last week the provincial government issued a request for expression of interest to explore for and mine potash in New Brunswick.”

Of course, there is always (groan!) shale gas. In fact, there might be 70 trillion cubic feet of the stuff below ground in New Brunswick. If any of it is extractable in a commercially viable sort of way (that is, before oil and gas prices wobble too far into the red zone), then a new fossil fuel industry could create hundreds of jobs and top up the government’s bank account with new taxes and royalties.

On the other hand, there is the little matter of the screaming meemies to which the chronically anxious among us succumb whenever the phrases “government oversight” and “hydraulic fracturing” appear in the same sentence.

It appears that the rest of us are fated to follow their lead as it is embraced by the next premier of the province, Brian Gallant, who has already announced his planned moratorium on further shale gas development once he trundles into power this fall.

And yet, somewhere, in all of this, we’re missing something vital, and it’s getting us down. Behind every commercial and industrial project – large, like a pipeline; or small, like a high-tech joint venture – are people.

That may sound trite, but our tendency is to perceive our economy as intractably composed of forces that are largely beyond our control. This is the language we allow our political leaders to adopt when times are tough and they shrug their shoulders in defeat: “Hey. . .Whaddya gonna do?”

In most cases, the answer to that question is: “Plenty.”

New Brunswick’s future might look rosier than it presently does if mega-deals for oil and gas and other natural resources were firmly on track. Still, this is not the alpha and omega of the province’s potential.

The real, durable future is being written in the idea factories of the private sector, in the common markets of the province’s small cities and feeder towns and villages, on the entrepreneurial front lines where problems are things you solve and obstacles are things you hurdle.

Listen closely, and you will still hear the relentless hum of enterprise, which remains happily oblivious to the macroeconomic demons that torture the province’s elected leaders, appointed officials and, as often as not, professional chatterers like Yours Truly.

If, as one of my colleagues in arms recently claimed, GDP is two-thirds consumer confidence, then attitude is everything.

Perhaps, then, we should try stiffening our lips and, for once, whistle obstinately past that graveyard of foreboding.

Tagged , , , ,
Jan 22 2014
Leave a comment
Economy, Municipal Affairs

Spreading a little of Moncton’s famous mojo

cropped-img-20120922-000031.jpg

Hindsight makes geniuses of us all, which is one reason why the most astute economic development gurus are keen students of history.

For Greater Moncton last week, the past met the present and together they stared steadily, if not altogether fearlessly, into the future.

It’s nearly impossible to get 300 people to sit still in one room, let alone command their undivided attention, but there were times during the 2014 Greater Moncton Economic Summit when all eyes were fixed on the gantlet that history has thrown down.

That gantlet is nothing less than 25 years of sturdy growth in the Hub City regardless – and, at times in defiance – of weak economic conditions elsewhere in New Brunswick and Canada.

The challenge, as always, in the here and now, where and when we gather to consider our options, is in properly appreciating what the community has done right – not to replicate an old vision, but to help create a new one for different and, in some ways, tougher times.

Of course, ever since the financial meltdown of 2008 and subsequent recession cities and towns all over Canada – indeed, the world – have made routine naval gazing a part of their municipal roadshows.

But in my 30-plus years covering city halls and urban planning conferences, only in Moncton have I observed deliberate, indefatigably cheerful determination actually transform street scapes, sectors and even industries.

All of which is fortunate for those of us who live, work and play here. The city – nay, the entire province – is going to need such a patented brand of pluck.

“We’ve seen almost five years with no net employment growth in Nova Scotia, for example, and there’s a big difference too now between Newfoundland and Labrador, which is looking to a long and sustained period of large project activity and all the benefits that brings in terms of high income growth, high employment growth. The difference here in the Maritimes couldn’t be more stark.”

Those were Elizabeth Beale’s words in mid November. She’s the president of one of the region’s leading think tanks, the Atlantic Province’s Economic Council (APEC). Specifically, here’s what the organization predicted for the provinces:

“Newfoundland and Labrador is expected to have one of the fastest growth rates in Canada this year, at six per cent, due to increased oil production and capital investment.

“Prince Edward Island will see its economy expand by 1.1 per cent in 2013, due to a strong labour market. The forecast for 2014 calls for growth of 1.3 per cent, due partly to growth in the bioscience sector, a rebound in aerospace and defence, increased food processing and a decent tourism season.

“Nova Scotia sees flat employment and weak consumer spending in 2013, limiting GDP growth to about 0.8 per cent. In 2014, that is forecast to accelerate to about 2.0 per cent, boosted by a jump in natural gas output and increased investment in major projects.”

And what of New Brunswick, host province of the original “Moncton Miracle” – the retail, transportation, IT and entertainment capital of the central Maritimes?

Says APEC: “New Brunswick will have no economic growth in 2013 as a result of a weak labour market, the closure of the Xtrata mine in Bathurst and a lack of major projects. New Brunswick’s real GDP growth is forecast to expand 0.9 per cent in 2014.

However, that is expected to slow to 0.8 per cent in 2014 due to flat oil production and investment.”

This follows five straight years of double-digit unemployment overall (despite one of the highest per-capita public-sector employment rates in the country) the slowest housing starts and lowest house prices east of Toronto. Then, of course, there is the fiscal morass: a $550-million annual budget deficit on a structural long-term debt of $11 billion, closing in on $12 billion.

This is the context in which Moncton now reviews its history by way of envisioning its future.

What does it want to be over the next 25 years, not merely to itself but to a province that, in important respects, has lost its way along with whatever mojo it once possessed?

History may open doors to the future, but attitude – and lots of it – marches us through them.

Tagged , , ,
Jan 21 2014
Leave a comment
Culture, Economy, Society

Averting the world’s end, on trust

photo 4

As the word, “systemic”, appears not once but three times in the two-page Executive Summary of the World Economic Forum’s (WEF) Global Risks 2014 report, you get the distinct impression that this members-only club of the planet’s uberinfluencers is already planning for the apocalypse.

In previous risk assessments (released annually) the WEF has been content to merely list the various threats – financial, social, economic – that it thinks imperil the world’s fragile accommodations to national well-being.

This year, however, the Forum is determined to emphasize how these risks have become so well integrated that they pose a systemic danger to civilization, itself.

To be sure, it’s a little like watching a street prophet foretell the arrival of the four horsemen.

“Each risk considered in this report holds the potential for failure on a global scale; however, it is their interconnected nature that makes their negative implications so pronounced as together they can have an augmented effect,” said Jennifer Blanke, the WEF’s chief economist, in the news release that accompanied the report last week. “It is vitally important that stakeholders work together to address and adapt to the presence of global risks in our world today.”

The hit parade of hazards include, in no particular order of pernicious effect: income disparity, fiscal crises, monetary collapse and illiquidity (that means you New Brunswick). There’s also structurally high underemployment and joblessness, especially among the world’s youth.

There’s oil price shocks, critical infrastructure failures and currency devaluation.  Then there’s climate change: greater incidence of extreme weather events; greater incidence of natural catastrophes. There’s also greater incidence of man-made environmental catastrophes, such as oil spills nuclear meltdowns.

If that’s not enough to send you back beneath the covers, consider the failure of global governance models, political collapses, increasing corruption, a major escalation in organized crime and illicit trade, large-scale terrorist attacks, the deployment of weapons of mass destruction.

Wait, we’re nowhere near done.

There are food crises during which access to appropriate quantities and quality of nutrition becomes inadequate or unreliable.” There are pandemic outbreaks thanks to

“inadequate disease surveillance systems, failed international coordination and the lack of vaccine production capacity.” And there’s the “increasing burden of illness and long-term costs of treatment” which threaten “recent societal gains in life expectancy and quality while overburdening strained economies.”

Apart from growing income disparity, by which the WEF seems most troubled, the problem of the kids today hovers like a dark cloud. “Many young people face an uphill battle,” offers David Cole, the Group Chief Risk Officer of the Forum-affiliated Swiss Reinsurance Company. “As a result of the financial crisis and globalization, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an aging population. While in the emerging markets there are more jobs to be had, the workforce does not yet possess the broad based skill-sets necessary to satisfy demand.”

Naturally, there’s a bunch more perils – including a nifty event the WEF rather provocatively dubs “cybergeddon”, in which “systemic failures of critical information infrastructure (CII) and networks negatively impact industrial production, public services and communications” – but why blunt the point with too much repetition?

We might as well face it folks. We are well and truly. . .um, you might say, fastened by means of a screw.

Or, maybe not. All good end-of-the-world myths contain escape clauses. And they all share the same qualities: an almost childlike faith in certain principles, the absence of which caused our headlong rush to perdition in the first place. The WEF’s creation/destruction story is no exception.

It wants us to put on our “longterm thinking” caps, get busy getting together for “collaborative multi-stakeholder action” that includes effective “global governance.”

Most crucially, though, its wants us to “trust”.

Trust, it says, “is necessary if stakeholders are to work together to tackle global risks, but trust is being undermined in some systemically important areas. For example, much of the younger generation lacks trust in traditional political institutions and leaders, while recent revelations about cyber espionage have undermined trust in the Internet in general and the governance of cyberspace in particular.”

Of course, restoring trust to a bitter, cynical world on the brink of collapse would be a neat trick, indeed.

One might even call it systemic.

Tagged ,
Jan 20 2014
Leave a comment
Economy, Workplace

For once, a great notion

DSC_0026

Astoundingly, the federal and provincial governments in Atlantic Canada are getting out of their own way and forging a rational, relevant and thoroughly reasonable accord designed to improve both job prospects and economic development in the region for years to come.

And no, bitter winter weather aside, hell is not freezing over.

Witness last week’s announcement of an $8-million joint program (cost-shared between the feds, who are ponying up $4.3 million and the four Atlantic provinces, who will contribute $3.5 million) to promote trades training and apprenticeships and remove educational and labour market barriers that prevent employers and workers from finding  true, wedded, occupational bliss together.

“What’s happening now (is), in essence, we have four provinces doing their own thing virtually doing the same thing,” Nova Scotia Premier Stephen McNeil told The Halifax Chronicle-Herald.

That’s got to go, said federal Employment Minister Jason Kenney at a news conference in Fredericton last week: “We need to break down the unnecessary red tape and bureaucracy that exists to people getting their apprenticeships done and to getting their journeyman ticketed status so they can actually be full journeymen on the job sites and moving around to where the work is.”

In practice, the program will harmonize training, certifications and standards across the region in 10 trades, starting with cook, instrumentation and control technician, bricklayer and construction electrician. The rest will follow in due course, and not a moment too soon.

For decades, certain parts of Canada have been enduring a steady erosion in the number of skilled tradespeople on the job. Where once being a cabinet maker or plumber was considered a thoroughly viable career choice, we somehow got it into our heads that, as Mr. Kenny so aptly states, “everyone just had to go to university. . . We stopped encouraging people to pursue vocational and technical trades in our  high schools.”

In recent years, the pendulum has begun to swing back. According to careersintrades.ca “the wage gap between workers with bachelor degrees and trade certificates is declining.  Between 2000 and 2011, the average weekly wages of full-time workers aged 25 to 34 with trades certificates grew by 14 per cent, while bachelor degree holders saw their wage growth slow to 1per cent. And, apprentices begin to make money right away, earning a wage from their first day at work.”

And yet, according to Rick Spence, business columnist, writing in the Financial Post last year, “Studies cited by Skills Canada, a federally supported organization dedicated to trades and apprenticeships, indicate 40 per cent of new jobs in he coming decade will be in skilled trades or technology (think computer animation, network support, etc.). “

Meanwhile, in guidance offices and family dining rooms, the song remains the same: just 26 per cent of young people aged 13 to 24 plan to consider a career in the skilled trades, with 59 per cent of youths saying their parents have not encouraged them to consider the trades as a career option.”

Given the coming demographic changes – the last cohort of baby boomers retiring (we’ll see about that, of course), dropping birth rates, and a steady-state universe for immigrants – a country with an increasingly light supply of people who can actually make things, like toilets, work invites a whole new set of productivity problems not yet imagined in chambers where bankers and economists chatter about national competitiveness.

Indeed, as Mr. Kenney observed, “We have a lot of tradesmen, the guys and ladies who literally built the the country, who are about to start retiring. We have a much smaller group of people to fill their shoes.”

It is refreshing, like a blast of Arctic air, to hear politicians of any stripe, from any level, talk pragmatically about issues into which they are willing to invest some expertise and over which they are prepared to exert some control – and all for the common good.

It is heartening to watch them put their heads together, work out their problems logically and calmly and, when the day’s work is done, unveil the big reveal.

Why, it’s almost as if some of them went to trade school.

Well. . .almost.

Tagged , , ,
Jan 17 2014
Leave a comment
Business, Economy, Workplace

The dos and don’ts of reducing disparity

IMG-20120908-00198

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.

Tagged , , ,
Jan 16 2014
Leave a comment
Business, Economy, Municipal Affairs

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.

Tagged , , , ,
Jan 13 2014
Leave a comment
Demographics, Economy

Can we go ‘up the road’ for a change?

They queued in long, broken lines, some still bleary from the shanks of many recent  evenings of farewells. Some stood, laden down with boxes and suitcases; others carried their entire lives in their wallets and satchels. Each waited patiently for his individual moment of truth to arrive.

At five o’clock on an iron-cold January morning, it was hard to believe that the most vibrant place – where the cultural, social and economic roads converged – in New Brunswick’s Hub City had become the boarding lounge of the Greater Moncton International Airport.

Here the infamous provincial diaspora was well underway: hundreds of young, middle-aged and elderly people voting on their respective futures with their feet.

Sure, some declared that they would one day return from Alberta’s dirty brown fields of opportunity. But just as many or more insisted that they were leaving for good.

“There just isn’t any point in staying,” one traveller told me. “The jobs aren’t here, and most of my family is out west, now, anyway.”

Added another: “I don’t get a sense of any direction or vision in New Brunswick. I mean, what’s the overall plan for the economy?”

Still another captured the zeitgeist of the moment perfectly: “I’m just tired.”

That’s it, isn’t it? We’ve all grown bone weary: utterly, achingly tired.

We’re tired of politicians making promises they can’t possibly keep. We’re tired of tabulating the province’s $538-million annual deficit and $11-billion longterm debt. We’re tired of public sector cutbacks that either go too far or don’t go far enough and, in any case, don’t seem to make a lick of difference.

It is so much easier to heed the siren’s call, beckoning us to leave, to move and never to return.

Why, out in Fort McMurray, if one played his cards right, one could become a project engineer or a maintenance coordinator or an electrical engineer or a mine maintenance manager.

Why, out in Fort Mac, where the tundra mice play, one could earn $100,000 a year driving a truck.

What’s keeping us here? Tradition? Roots? Family ties?

Sentimental nonsense! Off we go and (not looking back), good riddance!

In fact, we have a point, though it’s not an especially novel one.

Outmigration has been one of New Brunswick’s (indeed, all of Atlantic Canada’s) signature demographic features for 150 years. Wave upon wave of Maritimers and Newfoundlanders have left their homes in the East to build new ones in new communities in the West. This transfer of knowledge, skills and capital is what built Canada’s great industries, institutions and infrastructure, from the CNR to the drilling derricks of the oil sands.

What’s unique about the current exodus, however, is that, nowadays, few western-bound sojourners seem particularly interested in the fundamental reasons for our regional ennui. Fewer still are willing to risk their livelihoods and living standards by staying put and lending a hand in what surely must become The Great and Awesome Fix of New Brunswick, circa 2014.

For, without exaggeration, this is what’s required: a thorough overhaul not only of the way we spend public dollars and account for public programs, but of the way we govern ourselves and even of the expectations we create and maintain for ourselves and our neighbours.

In this, our finest resource may well be the self-reliance for which we have, until recently, been known. From this has stemmed the optimism, energy, derring-do and entrepreneurial courage and savviness that is always necessary to people who want to get important things done.

Important things like a downtown multi-purpose events centre for this city, a facility that Toronto developer and Moncton native Vaughn MacLellan hopes to complement with his own in the near future.

“We believe that the property is ideal for high density, multi-use office, retail and multi-residential development,” he told the Moncton Times & Transcript the other day. “At the end of the day, we want to try to create a lively, energetic area where people live, work and play.”

And not, dare we hope, find ourselves too tired to grab our future by the scruff and give it a good shake.

Tagged , , ,
Dec 29 2013
Leave a comment
Business, Economy, Energy, Environment, Oil and Gas, Politics

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.

Tagged , , ,
Dec 29 2013
Leave a comment
Economy, Society

Sweetening the CPP is long overdue

DSC_0180

It’s always disheartening, though lamentably predictable, when politicians, who ought to know better, adopt the talking points of a vested interest to justify the clearly unjustifiable.

So, when Canada’s Finance Minister Jim Flaherty says that “now is not the time for CPP payroll tax increases”, as he did earlier this month following a meeting with his provincial counterparts in Meech Lake, P.Q., he is merely lifting a line from the Canadian Federation of Independent Business (CFIB) playbook, to wit:

“CPP/QPP increases would mean a significant premium hike for working Canadians and even more serious impacts for the economy. . .Higher labour costs, with no increase in productivity, would lead to job losses or reduced hours for many workers over the first ten years of a CPP increase, and wages would go down by 1.5 per cent. Many Canadians would go without work for years. Some might escape unscathed, but everyone would be at risk.”

This dire warning appears on the organization’s web site, where “research” clearly indicates that most Canadians don’t want to pay higher premiums because, simply, they can’t afford the ones they are facing right now.

Instead, an Angus Reid Global survey says “they believe that government should control spending and reduce taxes to allow more savings. Moreover, many feel that new incentives and voluntary measures to save through existing and new retirement savings tools including the CPP/QPP are the next most effective solutions. Immediate CPP/QPP mandatory increases impose adverse effects: about half of working Canadians express that such increases would reduce their ability to spend on essential goods and services such as food and housing while close to three in four business owners would face increased pressure to freeze or cut workers’ salaries.”

I am not prepared to concede that “most Canadians” actually feel this way, but even if they do, this doesn’t mean that they are right.

As a Globe and Mail editorial, entitled “Flaherty to savers: You’re on your own with CPP as it stands”, admirably pointed out a couple of weeks ago, “The CPP is not a welfare program, or an income-redistribution program. It’s not paid for by taxes. It’s a defined-benefit pension plan, and how much you get out of the program is based on how much you put in. It’s actuarially sound, independently run and low-cost. It’s one of the world’s best-run retirement safety nets. But the maximum pension for a lifetime of contributions is just $12,000.”

Clearly, that is not enough for most working Canadians. By “most”, I am not referring to the rich or lucky few who stand to pull one of those gilded public pensions that assorted bargaining units have been loathe to see watered down.

Nor am I talking about the impoverished, who must subsist on various forms state-supplied handouts and subsidies.

I am looking straight into the worried eyes of those who populate the once sturdy middle class in this country.

The sad fact is Canadians with steady incomes don’t save enough for their retirements. They haven’t in some time. Pundits of quasi-Libertarian bent and their right-wing fellow travelers in political office adoring placing the blame for this conditions squarely at the feet of the non-savers. They’re spendthrifts or layabouts or, simply, poorly advised about their options .

The truth, however, is complex, involving many factors that are out of an individual’s control, not the least of which was the disastrous implosion of financial markets a few years back – a calamity that destroyed trillions of dollars in personal assets, including those held in retirement portfolios, all over the world.

Nothing, of course, will rebuild these funds. But even a small expansion of the CPP – which is a far less risky savings instrument than just about every other option –  will buffer the financial shock of a lower living standard in retirement.

What’s more, it will cost far less now to sweeten the CPP than it will to prop up droves of aging Canadians who will fall into poverty and endure all of its associated evils: ill health, hunger homelessness.

Tagged , , , ,
Dec 17 2013
Leave a comment
Business, Economy, Energy, Environment, Oil and Gas, Politics

The political art of fomenting depression

DSC_0224

What’s perplexing about the David Alward government’s decision to spend a few thousand taxpayer bucks on TV ads showing New Brunswickers mourning the state of their province’s economy is not that it reflects poorly on our lawmakers’ vision of the future.

What’s perplexing is that our lawmakers seem to believe it reflects well on their own political fortunes.

Less than a year before the general election, the Tories are bringing up the rear in popular opinion. Poll after poll suggests that if the ballot were held today, they’d lose to Brian Gallant’s Liberals by a wide margin.

This somehow impels the big brains who occupy the small offices reserved for government communications to remind New Brunswickers in convincing fashion, and just before the holidays, that the past three-plus years in office have been an unmitigated disaster for the Progressive Conservatives.

The ads show various men and women, who are presumably en route to the oil-black and money-green pastures of western Canada, hanging out on tarmacks and in airport departure lounges, their brows appropriately furrowed.

“I’ve been going for four years,” says one.

“We haven’t got enough opportunities here, we have to go do it out west,” says another.

Finally, up pops the kicker, accompanied by a stern-sounding VoiceOver: “This message is brought to you by the Government of New Brunswick.”

Now, we witness the game, if untried, Mr. Gallant mumbling under his breath and, indeed, over it: “Thank you, Mr. Alward, you just made my day.”

Of course, in the local media, he sounds more like this:

“New Brunswickers don’t need an ad to tell them that there aren’t enough jobs in New Brunswick. This is an ad that is virtually discouraging people to stay and invest in New Brunswick. It’s even demoralizing.”

To which, Premier Alward retorts, “Every day there are families that are living with separation and we believe there are good options long term to see our economy be stronger, our province be stronger, and our people be able to decide to be here and build their communities here. . .It’s a message to all New Brunswickers that we need to be saying yes to allow development to take place.”

Well. . .no, actually.

It is a message to all New Brunswickers that they are at death’s doorstep, and that their only salvation is via the kool aid of shale gas development, which may or not be true. (It’s too early to know anything with certainty).

What I do know, from my years in the marketing communications and advertising industry (I call them my “lucrative” epoch), is that scaring the bejesus out of people is guaranteed to produce only one, durable response: shoot the messenger.

Again, Mr. Alward, Mr. Gallant thanks you.

What’s intriguing about all of this is just how unnecessary it is.

The Alward government holds all the cards in the shale gas industry deck. Its regulations for development are, purportedly, the toughest in North America. It has the benefit of knowing all the best and worst practices. It even has a scientific panel, convened to guide its decisions (though only The Almighty knows when this efficacious advice will be forthcoming).

What’s more, its foes on this file are, though vocal, largely in the minority.

If it truly wants to win the hearts and minds of the majority, why doesn’t it produce ads that speak directly to the issue – spots that fight the fictions swirling around shale gas with facts?

Why not emphasize the positive attributes of an industry that, properly regulated, could help transform the province’s economy – thanks to the money it will generate for public coffers – into an incubator of commercially viable innovations in sectors not specifically related to resource extraction?

Those who argue that the provincial government has no business using public dollars to promote its economic agenda are, among other things, on the wrong side of history. Governments do this sort of thing all the time. In fact, we expect it of them, especially when they don’t do it. What is tourism, except a giant public-sector promotion campaign?

This Tory reign has staked its mandate on transforming the New Brunswick economy through its responsible stewardship of natural resources. Its most recent ad campaign, however, indicates that it has not yet learned how best communicate this otherwise clear and simple message.

Meanwhile, as goes its mandate, so goes any chance New Brunswick has of seizing its future for its now-departing citizens.

Tagged ,
← Older posts
Newer posts →