Tag Archives: New Brunswick economy

Jan 27 2016
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Business, Democracy, Energy, Oil and Gas, Politics

Running on empty in New Brunswick

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We become what we think we are.

If we believe that we are weak, uneducated and profligate, the chances that we will lie down, refuse to crack a book, and spend whatever money the state sends us to load up on Kraft Dinner and past Christmases’ chocolate treats rise precipitously.

If, on the other hand, we are convinced that we are strong, innovative and prudent, the odds of our crafting a real future for our neighbours and ourselves – one we build with reason, critical thinking, social deliberation, and daily service – improve significantly.

New Brunswick sits uncomfortably somewhere between those two poles of conscience.

On the one hand, in this province we are gorgeously engaged, generous and rational. On the other, we are thicker than a sack of hammers at the bottom of the Petitcodiac River.

We, for example, continue to muck and moil over the possibilities of a shale gas industry in this province even though we know that market forces, combined with our own government’s foot-dragging, have effectively shut the door on that avenue of commercial enterprise.

With the price of Texas crude spluttering just below $32 a barrel, the entire oil and gas industry in Canada is in suspended animation (if not actual free-fall). Now, there is almost no point in imagining a future in which we control the uses to which we put our indigenous fossil fuels (if we ever have).

Still, as Adam Huras of the Saint John Telegraph-Journal reported earlier this month, New Brunswick Energy Minister Donald Arseneault thinks “the 12-year lows facing natural gas prices could buy the province more time to get the industry right – that’s of course if the province decides to go in that direction.”

Says Mr. Arseneault: “In terms of lifting – or not – the moratorium (on shale gas development), even if there is down time, it gives people more time to get better educated with the issues. . .and it will give government more time to review the report submitted to us by no later than March 31.”

He refers, specifically, to the research his department has commissioned from a three-person panel on the environmental, social and economic efficacy of hydraulic fracturing in the province. The question now becomes: Is he kidding?

He’s right in one sense. What, exactly, is the rush? Given the industry’s pricing structures these days, we have all the time in the world to, effectively, decide not to decide, which is, after all, what this provincial government has desperately desired for this fractious issue since the beginning of its mandate.

Again, we become what we think we are. If we believe that we are, by nature, cautious and conservative, then we will rejoice in every opportunity that removes risk from the process of democratic decision-making.

Sure, let’s take this whole shale-gas thing and give it a good look-see. It’s not as if the issue matters much these days. The market has bottomed out; exploration companies are no longer testing, drilling or producing; and as for public debate, well, all is quiet on the eastern front of environmental protest.

Still, what if we applied that standard to every other challenge the province faces?

Should “wait-and-see” become the new motto we teach our children as we ask them to find their personal and professional bliss elsewhere in Canada or the world?

Should we “be” in this place or merely sleep in it?

Are we timorous or bold and forthcoming?

It’s a decision we choose for ourselves, and it always has been.

In the end, we become what we think we are.

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Jan 23 2014
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Economy, Oil and Gas

The stiff upper lip to success

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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.

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Dec 29 2013
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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.

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