Atlantic Institute for Policy Research Highlights
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A version of this opinion piece was published in the Telegraph Journal on February 5, 2019

Last Thursday’s State of the Province speech delivered by Premier Blaine Higgs has the potential to be an identifiable turning point for the province. It was more “call to action” than the ideological vision statements we’ve come to expect. The overarching theme of the speech was a stated commitment to growth led by the private sector. The tone was urgent and the listed goals are measurable and achievable.

Liberal leader Kevin Vickers came out in support of the main points of the speech and appropriately identified his own focus as holding the government accountable for achieving the goals. One can only hope this suggests an end to the toxic effects of changing directions with each change of government. Three consecutive mandates of pivots have had us spinning in place.

The speech was not without a harsh dose of reality. The Premier reminded us that New Brunswick is now Canada’s biggest per capita recipient of federal equalization, making us the country’s poorest province. And that’s not okay. It’s also not okay that public sector investment has now grown to equal the size of private sector investment.

Boosting the economy through government spending has failed

Reality also infused the Premier’s plan for how and what government can do to reverse New Brunswick’s fortunes. Premier Higgs promises that government will focus on growing the economy by creating the policies and conditions for the private sector to drive that growth rather than government spending and borrowing.

The Premier is on solid ground with this shift. We’ve had a decade of unprecedented public sector spending, investment, and borrowing that has got us: a) deep in debt; b) highly taxed and c) more reliant on federal government and the rest of Canada to pay for what we need and want.

Isn’t the definition of insanity doing the same thing over and over again and expecting a different result? Public sector spending has not succeeded in boosting our economy and looks to be crowding out private sector investment. A focus on the more reliable, sustainable, and healthy source of growth—the private sector—is the right move.

GDP growth targets are achievable

Premier Higgs growth targets of 2% annually (we’ve been hovering at just under 1%) aren’t particularly ambitious but they are achievable. Meeting those targets would represent important gains for the province, putting us at least on par with the current GDP growth rate for Canada overall.

The Premier’s plan calls for increased exports and population growth to drive GDP growth. The Premier recognized in his speech that manufacturing is a long-standing strength of the province and going forward, the goal will be to build on that strength.

I happen to agree with him on that. New Brunswick’s historically strong manufacturing sector has not been a policy focus since the 1960s. Recent economic development strategies have focused on establishing new sectors or attracting greenfield investments. Many seemed to have felt that this focus did not address the potential to grow exports, jobs and GDP with the companies that are already here and building on that strength with the right conditions and policies has the potential to have an immediate impact that accumulates into sizeable momentum for the economy.

Population targets are stretch but achievable

The Premier called for New Brunswick’s population to reach 1 million by 2040. The province will ask Ottawa for the capacity to bring in 10,000 immigrants per year and will work to increase the retention of immigrants and repatriation of expat New Brunswickers.

Averaging a 1.6 percent increase in population per year will be a stretch from our current near zero population growth rate. But we need only look to Saskatchewan to see that it can be done. They achieved a similar increase in its population size in just 10 years with an export-led strategy. And that was enough to reverse the aging of the population.

Private sector investment needs to return to pre-2008 levels

Since 2008, New Brunswick has had around $1.50 in private investment for every dollar of public investment. This is below the 2 to 1 private/public investment ratio in Nova Scotia and Canada overall since 2008. Prior to 2008 levels, the private sector invested $2.50 for every public dollar invested. Returning to those levels would be a boon. Closing the current gap with Nova Scotia is the bare minimum target.

The province will need infrastructure investments to make sure local producers and exporters are competitive and can get their goods to market. But that doesn’t mean government has to build it or finance it—in fact, it’s questionable whether we could, given the state of our finances. The private sector has historically been the major builder and owner of infrastructure assets other than roads, water and sewer. New Brunswickers will have to be open minded about how we will get these investments done.

The ONB shift to economic gardening

The biggest headlines were generated by the announced revamp of Opportunities New Brunswick (ONB) to focus more on growing what’s already here than attracting what isn’t. ONB’s new direction appears to be more about supporting and enabling businesses to grow through red tape navigation, business concierge type services and a responsibility for ensuring workforce supply to support business needs.

While the speech referenced a move away from subsidies—or incentives—for business investment in New Brunswick, I would hazard that’s more of an aspirational goal than a reality. As Stephen Lund, the out-going CEO of ONB has correctly reminded me on several occasions, there is no country, state or province that does not use subsidies and incentives to attract business investment. To ignore that competitive reality would add the province’s challenges with growth.

NB’s economy needs accountability and consistency from all sides of the house

Accountability means whoever is in charge (or in government) will measure progress toward the stated growth goals and evaluate whether policies, actions and decisions are helping the province meet those goals. That means the Province will have to cease doing things that are not useful for meeting those goals and do more of the things that are useful.

You don’t have to wait to be told how we’re doing. You can follow along from home. The Government of New Brunswick Finance and Treasury Board has already developed and Economic Dashboard where we can see what is happening with key economic indicators. You can find that site at https://www.gnb.ca/FTB-FCT/?lang=en&_ga=2.138934707.1836041195.1580825915-1145587988.1526581206 .

If that website address is too difficult to remember, then you can also go to www.BoostNB.com where UNB students have annually updated a number of economic indicators and evaluated them with respect to progress toward meeting growth goals for the province.

Failure to progress in achieving the stated goals and targets is a reason to change government. But it’s not a reason to abandon the goals and targets themselves, nor the principle that private sector should drive the economy. If Premier Higgs manages to establish long-term goals and objectives that survive a change of government, that may ultimately be his finest achievement.