SHUFFLING THE DECK CHAIRS OF ECONOMIC DEVELOPMENT

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By Kevin Lacey
 
Here we go again with another shuffle of government-led economic development in New Brunswick.
 
Premier Brian Gallant’s new government announced it will follow through on an election promise to kill Invest NB – an economic development agency that the Tories created three years ago. In its place, the government will set up a brand new crown corporation called Opportunities New Brunswick along with a new internal government committee known as the New Brunswick Job Board.
 
This is not the first time a new government has come in and moved around the pieces of economic development to come up with a new magic formula for creating jobs. Given what the Liberals have said so far, it’s not apparent what is different about this agency and why we should expect any different result.
 
Opportunities NB will have a private sector board of directors similar to what Invest NB had. The Liberal platform says it will focus on high-wage jobs in target sectors. Similarly, the previous Tory government said they would focus on economic development in six “priority strategic” sectors.
 
Government-led economic development has been well funded. Last year, the Department of Economic Development cost taxpayers around $140 million, with a further $17.6 million for Invest NB. These expenditures are roughly equivalent to a point of the provincial portion of the HST each and every year. On top of the spending by the provincial government, the federal government pumps in $235 million for the Atlantic Canada Opportunities Agency (though not all of that goes to New Brunswick), and there are also local economic development organizations that are scattered across the province.
 
Despite all of the money being poured into “economic development,” we still have one of the highest unemployment rates in all of Canada, a huge public debt and taxes that are above the national average.
 
Almost every politician running for office is desperate to promise jobs. Given our economic situation, who can blame them?
 
New numbers from Statistics Canada show a distressing trend. New Brunswick’s performance has been abysmal and not just in recent memory but now going back many years. In the past 10 years, New Brunswick has created just 1,200 net new jobs. Right now, about 36,000 New Brunswickers are looking for work. New Brunswick’s 9.3 per cent unemployment rate is higher than either of our Maritime neighbours in Prince Edward Island (9.2 per cent) and Nova Scotia (8.6 per cent) and far above the national unemployment rate of 6.5 per cent.
 
Politics is the enemy of any government-led economic development strategy. The reality is that those who are the best connected and have influence over public office holders and government officials are often the recipients of government cash. Meanwhile, government strategies are funded through tax dollars taken from businesses that have no need for the government. Worse yet, economic development often works against the goals that it is striving to achieve. What new business wants to come to New Brunswick to compete with an existing business if those existing businesses have the backing of the government?
 
If we want to create jobs, then New Brunswick needs to create an environment where businesses can make money without handouts from government. That means a tax regime that reduces business costs and makes New Brunswick an attractive place to locate a business, reducing the regulatory burden and creating a highly educated, hard-working, work force that businesses will want to hire. In addition, the province needs to embrace new industries like those in the natural resource sector. So far, the new government has decided not to.
 
More government-led regional development schemes are the wrong way to go. It is time to chart a new path without them.
 
 
 
Kevin Lacey is the Atlantic Director with the Canadian Taxpayers Federation. You can find more information at Taxpayer.com
 
 
 
 
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