Tag Archives: Atlantic Business Magazine

Lessons on budgeting from across the Strait

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What could little Prince Edward Island teach only slightly larger New Brunswick about managing public public finances?

Don’t ask Wes Sheridan, P.E.I.’s garrulous finance minister, who actually hails from Moncton. These days, he likes to keep his discourse civil and stick close to his political happy place.

And why not? With a track record like his, the belly laughs just keep coming.

If all goes as expected, Canada’s smallest member of Confederation (population, 145,000; geographic area, the size of two Swiss cantons), will be deficit-free, possibly in surplus, sometime in the next fiscal year (2015-2016),

Compare this with the recent, annual fiscal performances of the other Atlantic provinces, and you might appreciate the dimension of Mr. Sheridan’s merriment.

Nova Scotia’s 2014-2015 deficit forecast is $274.5 million; New Brunswick’s is $387 million; and Newfoundland and Labrador’s is $538 million.

P.E.I., on the other hand, is looking at $3.6-million worth of black ink next fiscal year. That’s after running shortfalls of $56 million and $40 million, respectively, over the past two years.

According to Mr. Sheridan, it all comes down to sound planning and winsome leadership. “You have to have full buy-in,” he told me recently. “You have to have a premier who is willing to do this. You have to have ministers who are playing along. We’ve also had greet buy-in from our deputy (minister) group here. It has been a very positive experience.”

Moreover, he said, “From the beginning, we had a plan. We had balanced (budgets) in 2006-2007 and 2007-2008. As the economic downturn hit, all jurisdictions, including the federal government, went into deficit in order to try to stimulate their economies. And it worked.”

In fact, he added, “It worked in spades here on the Island. We didn’t actually suffer a recession on Prince Edward Island. Through the stimulation that we applied mostly through our capital budget and a number of different program measures, we were actually able to increase the number of jobs by about 4,500. We were able to keep our province above the recession. We were the only jurisdiction in North America to do that. But the plan also called on us to get back to a balanced budget, and that’s what we’re up to.”

Of course, not everyone is a true believer. People like Don Desserud, professor of political science at the University of Prince Edward Island, and those at the helm of the Greater Charlottetown Chamber of Commerce, are justifiably worried about the province’s long-term debt, which has, according to some calculations, jumped from $1.3-billion to $2.1-billion, an increase of 61 per cent, over the past seven years.

Annual deficits during this period, expressed as percentages of the increase in net debt, have risen from 11.4 per cent in 2008 to 49 per cent today. And, as the province’s gross domestic product has grown (in line with Mr. Sheridan’s claims) from $4.6 billion in 2007 to $5.5 billion, the net debt as a percentage of GDP has risen from 28.4 per cent in 2007 to the current 33.4 per cent.

Said Mr. Dessurd in an interview recently: “I am not suggesting that they (government members) are insincere. But as far as the public is concerned, every government for the past 30 years has been promising that they are going to balance the budget. It’s a claim that’s already devoid of meaning. This is simply a matter of whether they are going to bring in more money than they spend on a yearly basis. But the real point is that the debt is not getting smaller, it’s getting larger. The problem is looming so large, people almost greet it with a shrug. This is not an issue that makes or breaks governments.”

If any province understands the truth of this assertion, it should be New Brunswick. Here, we don’t even dream of surpluses, which seem almost absurdly remote.

Still, even if P.E.I.’s fiscal health be only fleeting, it stands as a welcome inspiration to the rest of us in this region who might one day dare to imagine that government solvency is a lesson that can actually be taught.

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Municipal miracle 2.0 *

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The price of prosperity is, as Ben Champoux might say, eternal vigilance; which tends to explain why the trim, energetic chief executive officer of Enterprise Greater Moncton sits in his office in the city’s downtown core pouring over audio files from a recent blue-chip conference on the municipal region’s commercial future.

There is much to review: Twenty-eight hours of taped discussions among participants to 14 sectoral plenaries. “There is no way we are going to wait another 20 years to do an economic summit,” he says without a hint of weariness. “In the meantime, we need to know what specific initiatives will help us keep the momentum going right now. How do we keep the channels of communication open?”

It’s fair to say that keeping the channels of communications open was the overriding preoccupation of the 2014 Greater Moncton Economic Summit, themed “One Region, one Vision”, which convened at the warm oasis of the city’s Delta Beausejour Hotel on the frigid night, morning and afternoon of January 16 and 17. There, 340 heavy hitters, representing all socio-economic segments of the Moncton-Riverview-Dieppe tri-city area (population: 138,000) gathered to ponder their fortunes together if not, explicitly, to avert catastrophe.

“The whole point of the summit was to be proactive,” Champoux explains. “Greater Moncton has been on the upswing for many years. But we just can’t rest on our laurels. In this sense, alone, we were just blown away by the community. We had leaders from every walk of life – business, politics, education, culture – demonstrating the maturity and wisdom to say, ‘Let’s not wait until we are against the wall; let’s come together and celebrate our success and, most importantly, let’s redefine who we are today where we want to be 20-25 years from now and figure out how are we going to get there.’”

Aldéa Landry concurs. She’s a Moncton lawyer and businesswoman and a former cabinet minister and deputy premier of New Brunswick in the Liberal government of Frank McKenna. A summit participant and presenter, she thinks the timing of the event was sublimely strategic. “Change happens so fast, if you don’t move forward, you are vulnerable,” she says. “I think that the more we do this sort of thing in a serene manner, the better able we are to avoid a crisis. We are further ahead. If you wait for a crisis, you have to do a lot of crisis management. We don’t have to do that now. We can build with fewer day-to-day pressures to make things happen right away.”

Still, Greater Moncton had to learn its lesson the hard way.

The first summit of this kind convened 25 years ago when the extended municipality faced the sort of wretched economic woes that now routinely topple mid-sized cities across North America. As Moncton Mayor George LeBlanc outlined in his message to the “One Region, One Vision” conference, “In the late 80s, Moncton was at a crossroads. Significant employers and industry had left town, jobs were lost and windows were boarded up.”

Specifically, in the 1980s, Greater Moncton lost its raison d’etre when the Canadian National Railway shuttered its locomotive shops, effectively ending more than a century of steady economic growth. The 1989 summit, called as an emergency meeting to literally re-conjure the local economy, began the arduous process of establishing new commercial edifices and diversifying the labour market. A followup convention five years later sealed the deal – a wholly made-in-Moncton series of solutions that relied, crucially, on private-sector engagement.

As LeBlanc writes, “Greater Moncton came together and reinvented itself. That effort began what became known as the Moncton Miracle – the resurgence of a community that became a leader in economic development and growth.”

It’s still a leader in New Brunswick. As the province struggles overall with mounting annual deficits, longterm debt, stubbornly high unemployment in rural areas, and a virtually stagnant GDP, Greater Moncton is the one indisputably bright spot.

With a 9.7 per cent growth rate between 2006 and 2011, the City of Moncton is the fifth-fastest growing Census Metropolitan Area in the country. Its annual unemployment rate is one of the lowest in the Atlantic region and substantially below the national average.

Over the past three decades, the population of Dieppe has more than quadrupled (up by more than 25 per cent since 2006, alone). Meanwhile, Riverview has enjoyed a 20 per cent hike in its population  since 1986.

Indeed, Moncton, Riverview and Dieppe display all the metrics of eminently livable, dynamic centers: Booming, yet still affordable, housing markets, comparatively low unemployment rates, comparatively high participation rates, robust retail sectors and plentiful recreational and cultural amenities.

For these reasons and others, a recurring theme at the “One Region, One Vision” Summit was securing Greater Moncton’s position as an economic engine not merely for the immediate urban region but for the entire province. Don Mills, chairman and chief executive officer of Corporate Research Associates and conference presenter, thinks the fit is perfect. During his lengthy address on the Atlantic economy and Greater Moncton’s role, he pointed enthusiastically to the city’s resiliency.

“Moncton should be the model for many, many communities across the region,” he says. “Too many are looking for someone else to solve their problems. They are always looking especially to the federal government or the provincial government instead of taking on the responsibility themselves. . .That’s what the Moncton example shows. . .Here is a community that has been prepared to deal with the issues and try to come up with its own solutions.”

None of which is to suggest that Greater Moncton doesn’t face challenges. Employment growth is beginning to slow, a reflection, to some extent, of systemically soft conditions in the province’s export sector. Other issues that arose during the summit’s working sessions included: A growing skills shortage for high-wage jobs; inadequate appreciation within the community of the competitive advantages of its bilingual workforce; and the perception of foot-dragging on plans to rejuvenate the downtown core with a multi-use events centre, a facility that Moncton economic development consultant David Campbell has estimated could annually attract between 317,000 and 396,000 people and generate between $12 and $15 million in spending.

For Ben Champoux and others behind the summit, knowing the challenges is just as important as appreciating the opportunities. “The work for Enterprise Greater Moncton starts today,” he says. “The summit really came from a wind of change in the community. There will be a report that summarizes the essence of the Summit. It’s about gathering all the information to see where we are, what we need to do and how we can proceed together.”

For now, at any rate, it’s back to work. After all, those audio files full of good ideas and brave, new notions won’t transcribe themselves.

* This piece originally appeared in Atlantic Business Magazine‘s March/April issue

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