Category Archives: Economy

Feb 15 2016
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Culture, Economy

Breaking up the culture club

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In a budget that does little to up New Brunswick’s game in the big, wide world of economic competitiveness, the Gallant government’s decision to ‘trim’ $400,000 from ArtsNB seems malignly small-minded.

Freddy Beach’s recent talking points on the matter suggest that the move is designed to render the organization more accountable to the artists it supports by ensuring that more public money flows into the pockets of creators, and less into those of administrators.

This is the typical, chimerical argument that governments trot out whenever they decide to defend a frankly indefensible position. They get away with it for two reasons: First, the sums in question are almost too small to generate much widespread opposition; and second, who gives a fig about the arts when there are roads to build and natural resources to plunder?

But if the underlying argument is that arts and culture in New Brunswick – indeed, across Canada –comprise a shuddering economic sector, then the facts, which are easily accessible, say otherwise.

An Industry Canada monograph, updated in 2009, makes compelling points: “The cultural sector contributes $40 billion to Canada’s GDP and directly employs close to 600,000 Canadians. Cultural industries are a significant contributor to Canada’s economic growth. Examples of cultural goods include: books, newspapers, videos, compact discs, sculptures, paintings. Examples of cultural services are film production and post-production services, broadcasts, live artistic performances.

“In 2002 . . .Mining and Oil and Gas Extraction contributed only $35.4 billion. The Agriculture and Forestry industry contributed $21 billion to Canada’s GDP, approximately half that of the cultural sector. Put differently, cultural activities in 2002 amounted to a 3.8 per cent value-added contribution to Canada’s GDP.”

What’s more, between 1996 and 2001, employment in the cultural sector grew annually at 3.4 per cent, which outpaced the overall national rate. And this measurement only included “direct jobs created”, not the indirect ones generated over this period.

Statistics Canada’s 2010 report on the industry may be even more persuasive. It said, “Culture industries accounted for 3.2 per cent of the total output in Canada, reaching $99.3 billion (in that year). GDP of culture industries was $53.2 billion, contributing 3.4 per cent to Canada’s total GDP. Of which culture products accounted for $40.7 billion and other products (i.e., non-culture products), $12.5 billion.

“In 2010, the total number of jobs in Canada was 17.3 million. Culture industries accounted for 703,900 (of these), a four per cent share. This includes jobs associated with the production of culture and non-culture products.

The largest contributors to the GDP of culture industries (presented by domain) were: Audio-visual and interactive media ($13.8 billion) followed by Visual and Applied Arts  ($13.4 billion), Written and published works ($10.1 billion), and Governance, funding and professional support ($8 billion).”

Still, in the face of these facts, governments continue pandering to stereotypical perceptions of arts administrators as lazy and artists as feckless – the latter needing either abandonment (if the reigning political class is Conservative) or infantilizing (if the government of the day is avowedly Liberal).

In New Brunswick, though, the arts and culture sector play an enormously important role in shoring up the bulwarks against this province’s final socio-economic dissolution.

Apart from the GDP, job and export numbers they represent, musicians, writers, sculptors, and painters (among many others) promote the broader virtues of literacy, numeracy and critical thinking – in fact, all features of solid primary, secondary and post-secondary systems of education.

They remind us that we, all of us, are invested in both past and future.

That’s a benignly large-minded act of creation to embrace.

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Feb 12 2016
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Economy, Government, Municipal Affairs

Dear Dad: Send money soon

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Canada’s municipalities want the federal government to avoid the middlemen and send them their allowances directly and without delay.

Given that the middlemen in this instance are the nation’s provincial governments, can you blame the burgermeisters for their impudence?

The country’s tripartite system of democratic rule has been, since Confederation, both a blessing and a curse. Lately, it’s been more of the latter than the former.

Cities – big ones, in particular – have become the indisputable magnets for international and domestic migration. Simply put, these are where most people in Canada now live, work, build businesses, and care for their families; in the process, they exert enormous pressures on physical, technological, social and economic infrastructure. These burdens are now beyond the capacities of many urban areas to shoulder.

At a recent meeting with Prime Minister Justin Trudeau, several mayors made their case.

Said Calgary’s Naheed Nenshi: “Ideally, the funds should flow directly from the federal government to the municipalities. If we have to involve the provinces in another layer of authority, it’s going to slow everything down.”

Added Vancouver’s Mayor Gregor Robertson: “Prime Minister Trudeau is breaking down the silos between cities, provinces, federal government and First Nations. Canada’s cities compete against cities around the world that have more jurisdiction, more tax revenue to work with. And frankly for us to compete economically, our cities need to have more resources and (a) stronger partnership with the federal government.”

Or, as Montreal’s Denis Coderre declared, “Cities are no longer just creatures of the provinces.”

Uh-huh. . .Tell that to the provinces. Here, in New Brunswick, this is exactly what the province’s three major cities are: creatures of provincial jurisdiction.

We love talking about our civic innovation, vibrant cultural amenities, dynamic entrepreneurship and “punching above our weight”. But, let’s face it, we’re still fly-weights in the arena of government funding and, with populations denuding across this province of ours, we’re not likely to land a palpable blow against the status quo anytime soon.

Still, perhaps we can learn from our more muscle-bound brethren across Canada (you know, in case we do have an even chance of someday emerging from our 98-pound-weakling cocoons).

According to a recent survey conducted by the Federation of Canadian Municipalities, “The 2016 (infrastructure poll) included a section on asset management for the first time. These questions shed light on the state of Canadian municipal asset management practices. Survey results point to varied asset management practices according to community size. For instance, 62 per cent of large municipalities, 56 per cent of medium-sized municipalities and 35 per cent of small municipalities reported having a formal asset management plan in place. All communities, particularly smaller municipalities, would benefit from increased asset management capacity.”

Read: More direct control over federal government assets specifically targeted at municipalities; fewer provincial middlemen.

In fact, the prime minister does seem cautiously optimistic about embracing a new paradigm for cities – though, by doing so, he would surely bite off a chunk of constitutional reform that would, by comparison, render a Senate makeover appear like child’s play.

“We are restarting a relationship that had been significantly neglected over the past 10 years,” Mr. Trudeau said at the mayors’ meeting. “Ensuring that we get the money flowing in a responsible and rapid way is a priority for all of us.”

If ‘Dad’ and his cabinet do manage to pull this off, of course, think of all the money that would liberate for the provinces to. . .oh, I don’t know. . .lure multinationals.

After all, middlemen never waste money.

Not ever.

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Feb 12 2016
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Business, Economy, Wealth

Circling the jobs drain

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It’s not hard to understand why politicians vying for elected office routinely proclaim the number of people they intend to put back to work, if only the great unwashed would be so kind as to hand over the keys to the garden.

After all, job creation is the lowest-hanging fruit on the vine of campaign promises.

Who, among us, doesn’t understand the importance of a fully employed, adult citizenry? More to the prosaic point, who doesn’t want steady, reliable work for himself? And who isn’t, at least once, willing to swallow whatever sweet and succulent promise a politician offers, especially if it has to do with one’s livelihood.

Still, the problem with low-hanging fruit is that, all too often, it’s past its ‘best before’ date.

New Brunswickers witnessed this during former Progressive Conservative Premier David Alward’s term in office, in which he promised to create jobs across the broad spectrum of the provincial economy, only to preside over losses approaching 4,500.

Now, perhaps, we prepare ourselves for a repeat performance by the Liberal government of Brian Gallant (different party, same story), which, according to its own Department of Finance, appears fated to watch the provincial labour market shed hundreds, perhaps even thousands, more by 2018.

The reasons are pretty straightforward, and can apply to any government in this age of perennially straitened circumstances, regardless of ideological stripe and partisan palaver.

According to the Economic Outlook 2016-2017, which accompanied the most recent New Brunswick budget, “Weaker growth at the national and global levels, challenges in the export and manufacturing sectors, slower-than-expected growth in investment and continued weakness in the labour market contributed to subdued growth in 2015. . .Real economic growth of 1.3 per cent in 2015 (is estimated), down from 1.8 per cent projected at budget last year. This estimate is consistent with the latest consensus among private sector forecasters.”

On the other hand, “Economic activity is expected to be tempered by demographic realities, private sector investment, fiscal measures and the recently announced suspension of operations at the Picadilly mine. Private sector forecasts may not reflect the latter development, which will put downward pressure on their projections.”

In fact, “Growth conditions will be further limited by PotashCorp’s announcement that it was indefinitely suspending operations at the Picadilly mine. The economic impact will be partially mitigated in the short-term by transitional measures being offered by the company. However, the effect of the suspension will continue to be felt well into 2017.”

Add to this boiling cauldron of trouble New Brunswick’s rapidly aging population and low birth rate and you have the perfect recipe for moribund economic conditions and, at best, stagnant job prospects. Or, as the finance department’s report observes, “Looking ahead to 2017, external demand and further government capital spending will drive economic activity. However, an aging workforce, overall population decline and weak private sector investment will curb growth.”

Naturally, all this translates into job losses, not growth.

Indeed, evidence of deep-rooted rot in the province’s economic garden has been extant for several years. And, except for specifically dunderheaded moves by certain elected officials, none of it is actually any individual’s or even government’s fault.

It’s a product of decades of short-sighted policy, calcified programming, and uncompetitive and complacent private-sector players. And, don’t underestimate the effects of rolling, increasingly deep recessions on resource-based, export-oriented jurisdictions, such as New Brunswick’s.

Despite their proclamations, politicians don’t create employment in the private economy.

But when they fail to deliver the fruits of their campaign promises – jobs – perhaps it’s only right that they should lose their own.

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Feb 03 2016
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Economy, Government, Politics

Our feet of clay in a cold place

The hole we're in

The hole we’re in

If hell freezes over in New Brunswick, it doesn’t actually solidify until Canada Day 2016, when the sun warms us just enough to let us know that we owe, we owe, and, so, off to work we continue to go.

July 1st is when the Brian Gallant government has decided to impose a two-percentage-point bump in the harmonized sales tax – from 13 to 15 per cent. His second budget makes his reasoning clear. As Finance Minister Roger Melanson explained in his speech on Tuesday, “When we completed our review of the books, it was clear that there would be no way to lay the foundation we need without an HST increase or significant cuts to education and health care. . .New Brunswickers made it clear that they do not want deep cuts in education or health care.”

For years, here, raising the HST has been a bedevilling proposition for every political party. Only more controversial has been a full-court embrace of shale gas development and highway tolls. Times have changed.

In this budget, the Grits have neatly embraced the fiscal fix that former Prime Minister Paul Martin imposed in 1991 to balance the federal books at that time. Indeed, rip a page from the old Red Book, and you will find the 33-year-old Mr. Gallant holding the hands of the old, Grit guard.

Still, he’s not wrong; he’s just late. And so were his federal predecessors, when Ottawa’s brain trusts dropped the federal (GST) portion of the HST one point to six per cent, and again in 2008 to five per cent, leaving N.B.’s HST at 13 per cent.

Consider where this province might be today had successive provincial governments – those under Messrs. Shawn Graham, David Alward, and Gallant – possessed the political courage to hike the HST two points back then and applied its proceeds to economic diversification, innovation and . . .oh yes. . .the humungous, horrific deficit and debt we now so cheerfully enjoy.

Why, just for fun, we might even conduct a work-back of lost revenues, lost opportunities and truly myopic public policy and service.

The Gallant government now claims that its hike to the provincial portion of the HST will net a total of some $300 million over the last nine months of the current fiscal year. Had it introduced such a measure when it rode into office back in 2014, it would now have in the bank a total of $800 million with which to cover New Brunswick’s pernicious and perennial deficit and chomp a commanding chunk out of its multi-billion-dollar long-term debt. What’s more, through appropriate tax rebates to middle- and low-income earners it would have done so with nary an argument.

Now, had former premier David Alward pursued a similar course while he was in Freddy Beach, those savings, today, might actually amount to a budgetary surplus.

As it is, despite the Gallant government’s efforts to balance the books, the annual deficit in New Brunswick this fiscal year is likely to amount to something close to $300 million, as the long-term debt rises to $13.4 billion. That’s nearly $18,000 for every man, woman and child of less than 750,000 benighted, underemployed, anxious souls in this province.

Higher consumption taxes were never the way out of this mess; they were, in the minds of thoughtful people, a means to an end, the point of a spear. That end remains building a more durable, innovative, productive economy without having to constantly check the balance in the public bank account.

Will we do this now, before our hell truly freezes over?

Feb 01 2016
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Economy, Employment, Energy, Government, Politics

The palaver over pipelines

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In fact, he does looks like the kind of fellow who could tell the nation’s provinces, leading mayors and other assorted high-profile camera moths to, in effect, knock it off – and even get away with it.

On his worst day, New Brunswick MP and Government House Leader Dominic LeBlanc presents and comports himself like Hollywood’s latest incarnation of an emerging mafia Don – though, an uncharacteristically friendly version of the cinematic phenotype.

Not that there’s anything wrong with that. I quite like his latest declaration to the press about the most recent, and utterly mindless, fracas over pipelines in this increasingly God-forsaken land of ours.

In the aftermath of some 80 mayors from Quebec, and that province’s premier, declaring their opposition to the proposed Energy East pipeline traversing their respective territories en route to tidewater facilities in Saint John, Mr. LeBlanc had this to say to local newspaper reporters this week:

“We’re prepared to deal with the tough issues and recognize that the (federal) government has an important responsibility to help get natural resources to market. The whole country has benefitted from the Alberta resource economy, so I think it would be helpful that everybody lower the tone, allow the regulatory and review process to run its course and then the government will have to make a difficult decision.”

He’s not kidding.

Gosh, what shall we do with all that Alberta oil and gas? Truck it just so that poor roads and driver inattention may slam it into a government-built tourism kiosk somewhere outside of Thunder Bay? Rail it just so that poor tracks and conductor inattention conspire to blow up another small town in the middle of Great White North Country?

Or shall we finally recognize that as long as we need fossil fuels to power our domestic and export economies, the safest, cleanest delivery system is still the lowly pipeline – properly built, scrupulously regulated and strenuously monitored by officials of the Departments of Natural Resources and those of Environment Canada?

Still, even the logical choice is fraught with political peril. And Mr. LeBlanc knows this perhaps better than anyone outside the Prime Minister’s Office.

Any delay in the construction and activation of eastern and western pipelines automatically aggravates the Conservative west, whose political agents in Ottawa are prepared to make hay with their talking points about the hegemony of the Liberal east.

Conversely, anything other than rigorous, proof-providing research showing that pipelines are, indeed, the safest technologies currently available for transporting evidently toxic materials over long distances is sure to inflame the environmental lobby and their confederates at the municipal level of government.

Tough issues, indeed, with which the federal government seems determined to deal. Ultimately, Mr. LeBlanc says, it’s Ottawa’s choice to make. And that choice, he insists, “will be based on the information that comes from the robust independent review (underway). It won’t be based on someone’s news conference. I’ve always thought that the government decision should be based on evidence, on science, on environmental analysis, on expert opinion.”

Of course, I take one issue with this declaration: It already is.

According to a recent piece in the Financial Times, “Moving oil and gas by pipeline was 4.5 times safer than moving the same volume the same distance by rail in the decade ended in 2013 in Canada, according to a new study by the Fraser Institute public policy think-tank.”

By all means, Mr. LeBlanc, complete your analysis, ensure that it is correct and then let’s get this oil flowing in the safest, most economically expedient means possible.

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Feb 01 2016
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Economy, Politics

For whom the road tolls

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“Popular” is not exactly the word that leaps to mind when talking about toll roads and tax hikes, but if you’re contemplating steps to render both as facts of life for New Brunswickers, a little spin goes a long way.

So it was earlier this week when the provincial minister of the Gallant government’s strategic review, Victor Boudreau, and Finance Minister Roger Melanson, very nearly spilled the beans, observing that of all the options for eliminating the provincial deficit they’ve presented to the public, the most “popular” were tolling roads and raising the HST.

Of course, neither Liberal MLA spoke directly to either issue in advance of next week’s budget, preferring, instead, to issue vague assessments of the vox populi’s current mood on the twin subjects of spending cuts and revenue raising.

Mr. Boudreau: “There has been a lot of work being done over the last number of months. I do think you’re going to see something that is going to, at the end of the day, address the fiscal challenge we are facing as a province, but doing it while maintaining. . .balance.. . .New Brunswickers have made it clear they don’t want to see deep cuts to health care and education.”

He also allowed that the debate over toll roads has been the most interesting component of the consultations: “A lot of people want tolls, but very few people want to pay for them.”

There you have it, ladies and gentlemen: This province’s existential problem in a nutshell. We New Brunswickers want to lasso the moon; we just don’t want to buy the rope.

In this, of course, we’re no different than anyone else. Still, our unique set of economic circumstances insists that we adopt a colder-eyed approach to solving our shared problems than ever before.

When Mr. Gallant began his review of government spending months ago, he declared that everything was on the table – on both the expenditure and revenue side of the ledger.

If that’s true, then next week’s budget should reveal a dramatically reduced (in both size and cost) civil service, with those savings redirected into strategies and programs that are likely to grow the economy and create jobs and, in so doing, goose tax revenues to public coffers.

But let’s not kid ourselves. We are well past the point where even the most efficiently run government and bureaucracy can pull our fat from the fire. This is not an overnight proposition. It will take years of lean, mean management in the public sector to keep the ship of state of a steady keel.

In the meantime, emergency measures are urgently, if lamentably, necessary. And that means tolls and taxes, neither of which, incidentally, need be especially onerous.

Virtually every economist I’ve consulted over the years stipulates that taxes on consumption are eminently more efficient and fundamentally fairer than levies on income. What’s more, those who subsist below a certain standard of living ought to receive rebates equal to their HST outlays.

Indeed, if all provinces along the East Coast actually harmonized again their harmonized sales taxes into one 15 per cent regime for all, as Nova Scotia Premier Stephen McNeil suggests they do, the unfair competitive pressures on the private sector would melt.

Tolls are somewhat more difficult to administer and collect than taxes without undermining the monetary value of the exercise, itself. But it can be done, and to great effect, as it is in other jurisdictions across North America.

Think of taxes and roadway fees as temporary measures that, nonetheless, toll for thee.

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Jan 27 2016
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Economy, Employment, Wealth

The dread pirate “Wagegapper”

We could sell the snow. There's plenty of that

We could sell the snow. There’s plenty of that

Pity the poor rich man. In this economy, he just can’t catch a break. Oh sure his castle continues to glisten in the rising sun. His moat is pristine and his crocodiles are well fed. But can he actually accumulate money. . .you know, the way he used to?

According to a Bloomberg/HuffPost Canada post this past August 8, “The stock market rout gripping the world last week and today is bad news for just about anyone who uses money, but when the value of assets collapses, it’s the richest who lose the most.

“Take, for instance, Facebook founder Mark Zuckerberg, who lost $1.9 billion U.S. in a day’s trading on Friday; or Amazon co-founder Jeff Bezos, who was down $1.8 billion; or famed investor and Berkshire Hathaway head Warren Buffett, who lost $1.7 billion. And that was all last Friday – before Monday’s even wilder ride on the stock market.

“According to the Bloomberg Billionaires Index, the world’s richest 400 people lost $182 billion in wealth last week. It was the largest drop ever seen in the index, but it only launched last September. The recent drop in stock markets around the world means the world’s 400 wealthiest people have in total lost money this year, with their combined net worth at $3.98 trillion, down $75 billion from the start of the year.”
Under the circumstances, we in the Atlantic Maritimes should count ourselves lucky. We have managed to avoid such calamitous outcomes concerning money, as we don’t have any.

According to Environics Analytics two years ago, the median family income in New Brunswick was just about $57,300 – the second lowest in Canada, just ahead of Prince Edward Island. Since then, the numbers for both provinces have dropped by more than seven per cent (about the rate the central bank has reduced the cost of borrowing for businesses and consumers).

Meanwhile, unemployment in this region has spiked as wages have fallen. In fact, the Atlantic region has become a jurisdiction of “wagegappers”.

In economic terms, that simply means the more desperate an individual is for work to pay his or her bills, the more likely those with money will prey on his or her fears. This calculus drives down the cost of labour, and the vicious cycle of downward spirals ensues, further separating the moats of the rich from the slush puddles of the working poor (a class we once called bourgeois).

It’s not like we oughtn’t to have seen any of this coming. Back in 2013, Christine Saulnier and Jason Edwards of the Canadian Centre for Policy Alternatives had this to say in a widely circulated opinion piece:

“Statistics Canada released new data on high income trends in Canada with nary a mention of the Atlantic Provinces. From a Canadian comparative perspective, the data told a story that was more striking for most of the rest of the country and in particular, Alberta, Ontario, B.C. and Quebec where 92 per cent of the top 1 per cent of tax filers are found, with only 3.4 per cent in Atlantic Canada. These data reveal that the Atlantic Provinces are all significantly less equal today than they were in 1982. The trends are. . .not surprising.”

Indeed they were not, and they are not today in this region, where the income gap between the rich and the poor has widened.

Pity the wealthy for their losses of late? Absolutely.

After all, they may soon join the club around the burning barrel beyond the moat in the deep, dark woods along with the rest of us.

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Jan 27 2016
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Business, Economy

New Brunswick’s Picadilly’s circus

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It came, it saw, it conquered; and now it leaves with practically no notice, but with some apologies.

Mark Fracchia told a packed news conference in Fredericton last week that he was utterly bereft: “This is just a very sad day for all of us. Most of all to the people who have given us so many years of loyal service, for the community of Sussex, for the province generally and certainly for all of us at PotashCorp.”

Mr. Fracchia, the honcho of the Saskatchewan resource company’s New Brunswick operations, was subdued as he announced the indefinite suspension of the conglomerate’s Sussex-based Picadilly facility built scant years ago at a cost of $2 billion.

Of course, the bottom line spins a slightly different tale: Through this move, the international conglomerate saves $50 million this year and as much as $135 million the following in capital spending, according to a CBC report.

Meanwhile, 430 people in rural New Brunswick lose the salaries they once used to pay for food, rent, mortgages, and their kids’ education.

Care to wager who, in this particular situation, is more devastated?

To be sure, PotashCorp. is promising to relocate at least 100 of these disenfranchised workers out west to work in its Elysian Fields. (Gee, folks, just what we need in a province that exports its talent as readily as it does its lobster). And, Mr. Fracchia, does appear genuine when he declares, “We had high hopes for Picadilly and my heart goes out to all the people who have worked so very hard for so long.”

Still, the rotten-egg-stench surrounding this full-scale route is as malodourous as it is familiar in this neck of the southern tundra.

To begin with, why weren’t people who worked for the company and live in the surrounding communities informed of its intentions? Local political representatives said that they were, in effect, gob-smacked by last week’s announcement.

But were provincial government officials also astonished by the pull-out of such an important employer at a time when they were assiduously pursuing their elected bosses’ agenda to build 5,000 new jobs in the province?

How likely is it that none of this reached the highest levels of political attention at cabinet well before the Christmas break?

Then, there are the stated reasons for the move, some of which simply don’t pass any sort of smell test. According to the CBC, Mr. Fracchia insisted “the New Brunswick (Picadilly) mine was the most expensive of its operations because of the geology in the province.” He also said “the decision had more to do with global market forces and (that) there was little the provincial government could have done to help the corporation.”

If this quote is accurate, then the obvious question is: Which is it?

Is the problem related to the “geology” of the province? In that case, why did a supremely successfully exploration and development company, with worldwide operations and the best scientific and engineering advice available to it at the drop of an email, throw two billion bucks into what, it must have known, years ago, would eventually become a losing proposition?

Or is the problem a function of “global market forces” – that is, low commodity prices, which are afflicting almost all resource-extraction industries? Again, though, companies of PotashCorp’s size, reach and sophistication know when to, in effect, hold ‘em and when to fold ‘em.

Was the unavailability of shale gas in New Brunswick a factor?

Gosh, does the sun rise in the east?

Or does it merely set with no notice, but merely apologies?

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Jan 27 2016
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Economy, Employment

Here we go again

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A sense of déjà vu, every once in a while, is thrilling, even titillating.

It’s as if you’ve been afforded another rare glimpse behind a barely familiar curtain where you once saw steam-punk-demi-gods, masquerading as policy makers, market traders, Bay Street bankers, and other assorted auguries decide how much money you’ll make and how long you’ll live to spend it.

But when the same, old horse entrails insist on coming round the corner once again. . .well, it all just gets so very, depressingly boring.

Hello 2016. Do you remember 2008?

Here, according the online People History, is what was preoccupying us eight years ago:

“Property prices continue to fall on both sides of the Atlantic in Europe and America causing hardship to many homeowners, and problems for financial institutions . . . Bank of America is to take over the country’s biggest mortgage lender, Countrywide Financial, which (is) rumored to be close to bankruptcy. . . Citigroup, the (United States’) largest bank, joins a number of other financial institutions and reported a fourth-quarter loss of $9.83 billion. . . President (George W.) Bush and (Congressional) House leaders agree to a $150 billion stimulus package, including rebates for most tax filers of up to $600 for individuals. . . President Bush signs the $700 billion bailout package bill . . .The Emergency Economic Stabilization Act is signed into law.”

Here, according to many others, and me, is what is preoccupying us now in the breaking days of the 16th year of the 21st century:

Property prices continue to fall across the Great White North, causing desperate, overextended homeowners to sell their stories (and, thereby, avert certain bankruptcy) to HGTV reality-show producers.

Commodity prices continue to plummet, transforming Canada into a great, vacant wasteland of missed opportunity and once-promising technological innovation (though, still, a marvellous overland runway for Maritimers suddenly heading back home as every Alberta oil and gas derrick shudders to shutter).

Of course, the banking sector in this most frigid reach of the North American continent remains strong, proud and free, even as just about every other segment of the economy is wondering where and how to boil its next egg.

Finally, Canada’s self-appointed national rag reports that Ottawa intends to “fast-track stimulus spending” over the next few months because, as one confidential government source disclosed for the Globe and Mail’s front-page story, “The (economic and fiscal) situation has deteriorated since our (election) platform last July.”

Really? No kidding, Sherlock.

This is déjà vu all over again.

It’s an undercurrent that New Brunswickers know only too well. Boom, bust, boom, bust, boom and bust again. It might as well be the market tempo that prompts our nervously tapping feet.

Bank of Canada Governor Stephen Poloz calls it an “undercurrent that will last for several years. It typically takes three or five years to adjust to a significant shift in your terms of trade, which is what we’re going through.”

In important respects, though, we are “going through” something much different than we have in the past.

In the past, a rise in commodity prices and foreign exchange rates compensated for a drop in manufactures and related exporting. Now, in this country and at this time, we face a general malaise in all engines of the economy.

Fortunately, we Maritimers know how to jump that particular shark as long as we remember how to use the lessons of history to avoid making mistakes in the future: Stay lean, nimble, innovative and fundamentally entrepreneurial.

Let’s keep our sense of déjà vu hopefully fresh.

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Jan 26 2016
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Business, Economy, Government, Politics

Debt does not become us

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Is New Brunswick officially a black hole?

In cosmology, the phenomenon generally refers to a gravity well that’s so dense, so impenetrable that not even photons escape its event horizon.

Here’s what Canada’s national debt clock says about our particular partner in Confederation: $12.8 billion in arrears to domestic and international creditors, which translates into more than $17,000 for every man, woman and child in New Brunswick. (Add that to your mortgages John and Jane Doe if, that is, you’re lucky enough to have them).

The right-leaning Fraser Institute likes to portray this province as one of Canada’s weaker sisters. I, in turn, like to portray the Fraser Institute as a bunch of fatuous blowhards. But, alas, not this time. This time, they appear to be right on the money, which they keep in their big, fat billfolds.

Still, consider their latest analysis: “The growth in government debt over the past eight years reversed a positive trend from the mid-1990s to late-2000s when Canada’s federal and provincial governments made considerable progress in reducing their debt burdens. After a period of debt reduction, combined federal and provincial debt reached a low of $833.8 billion in 2007/08.

“However, the economic recession in 2008/09, combined with the significant increases in government spending that took place in 2009/10, meant that every government fell into deficit in either 2008/09 or 2009/10. This started Canada’s governments down their current path of persistent deficits and growing debt. The trend has largely persisted since then and will likely continue in 2015/16 through the upcoming round of federal and provincial budgets.

“Total debt in 2015/16 is estimated to be just shy of $1.3 trillion. This growth in combined federal and provincial debt has not been limited to just a few jurisdictions. The federal and every provincial government increased their debt levels between 2007/08 and 2015/16.”

In New Brunswick, for example, the provincial government now pays $685 million a year to service its long-term debt. That’s money that does not go to improve and expand health care, public education, city streets, and cultural venues. It’s a giant’s share of a shrinking pie that does not feed the poor, educate the illiterate, invest in private-sector innovation, bolster entrepreneurial diversity, or keep our universities and colleges vibrant, relevant places where our children might purchase a real sense of hope in this region.

In fact, we’ve all been circling the drain for some time in this province. So have Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. We’ve all been living on borrowed time and money. It’s merely a cold comfort to be reminded that so has the rest of the country.

“Canadian governments (including local governments) collectively spent an estimated $60.8 billion on interest payments in 2014/15,” the Fraser Institute’s analysis concludes. “That works out to 8.1 per cent of their total revenue that year. To put the amount spent on interest payments in perspective, it is more than what is spent on pension benefits through the Canada and Quebec Pension Plans ($50.9 billion), and approximately equal to Canada’s total public spending on primary and secondary education ($62.2 billion, as of 2012/13, the last year for which we have finalized data).”

Ouch, indeed!

Of course, New Brunswick has a way out of this black hole, this gravity well. Embrace, for once, the idea of community. Reject the partisan bickering that keeps good notions on the lonely blueprints of policy wonks.

Recognize that New Brunswick must prepare for a new event horizon, where imagination escapes pessimism at the speed of optimism every time.

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