Innovation and Entrepreneurship in 21st Century New Brunswick

Radian6's Fredericton Headquarters: An example to be emulated.

A recent news story about New Brunswick from the Globe and Mail caught my attention (you know it's a big deal when Canada's "national" newspaper actually notices us). The story was about a successful Fredericton entrepreneur, Chris Newton, who was behind the founding of two successful New Brunswick IT companies, Radian6 and Q1 Labs.

The article refers to these success stories as: <em>"Transforming the image of New Brunswick from a have-not province dominated by pulp, petroleum and potato barons to an innovation hotbed populated by smart young techies and risk-embracing entrepreneurs."</em>

The older industrial and agriculture sectors - pulp and paper, petroleum refining, and agriculture - are important parts of New Brunswick's economic heritage. Yet even these are changing; and a new emphasis on skilled labour will demand that we reward companies that invest in R&D and worker training. We need to look ahead, seize on new opportunities in bio-technology, green sectors, and information technology. On economic development, we have to move beyond the old smokestacks approach - something that was brought home with the failure of the second oil refinery in Saint John to materialize. We also cannot just recklessly throw money around in fits of crony capitalism.

Such a forward-looking approach also means we cannot pine over past industries, such as the building of wooden ships in the 19th century, and we cannot seek to get by on nice-sounding platitudes and generalities.

The internet and new communications technologies have opened up new opportunities away from major urban centres such as Toronto, Montreal, New York City, and Boston. Through "telecommuting", employees at Radian6 in Fredericton can have meetings with colleagues in New York, Toronto, or Tokyo. These are opportunities which Chris Newton has been able to seize upon, and which our province as a whole must now act to seize upon too.

Compared to larger cities, New Brunswick offers many quality of life advantages: shorter commutes (Toronto has among the worse commutes in the world), closeness to nature, outdoor recreational activities, beautiful scenery, historic cities and towns, and of course the friendliness of New Brunswick's people.

Smaller jurisdictions such as Vermont and Fargo, North Dakota (yes, THAT Fargo), have seized upon such advantages and built strong creative and high-tech economic sectors. We need to do the same in New Brunswick.

So what needs to be done? In an earlier post I offered some thoughts on economic development. Building on these themes, it is important to invest in education and post-secondary education (which includes promoting accessibility rather than limiting it as the Alward government has done through reintroducing the parental contribution requirement for student loans).

Also, we need to explore how our post-secondary institutions can work with young entrepreneurs and local businesses to foster new economic opportunities - as, for example, Waterloo University in Waterloo, Ontario has done in fostering the growth of a strong IT-sector in that city. These same universities will be instrumental in finding ways to modernize New Brunswick's traditional industries while our Community Colleges can help upgrade our current labour force while training young New Brunswickers with the necessary skills to work and build careers in forestry and manufacturing like so many before them.

We cannot take a laissez-faire approach of relying only on tax cuts - as the New Brunswick NDP would do with its plan to abolish Business New Brunswick. BNB desperately needs reform and refocus, and the next blog post will touch on that. But the idea that we don't need to build contacts in a global economy is naive in the extreme. We must promote programs that actively encourage, mentor, and provide support to new entrepreneurs. Radian6, in its early days, recieved crucial backing from the New Brunswick Innovation Foundation. We need to build on success stories like this.

The opportunties are there - Q1 and Radian6 prove that - but we need a provincial government that recognizes and seize upon these opportunities. New Brunswick a lot of potential, we cannot afford to waste it.

RENEWAL - WHAT DOES IT MEAN TO BE A 'LIBERAL'

There is widespread talk among NB Liberals about the soon to be released renewal report. This report - and the following debates over its recommendations - will play a crucial role in charting the course for our party as we prepare for the 2014 election.

The renewal commission was formed out of concerns that, during the last government, it was clear many people who had been with us for years didn't see their liberal values reflected in some of the policy decisions made by the leadership. This included the decision to sell NB Power to Hydro Quebec despite a firm campaign promise against selling the public utility. It also included flattening the tax rate - drastically cutting taxes for the wealthy - which represented a hard-right turn that was a clear departure from the centre-left platforms of 2003 and 2006.

The Fredericton Fort Nashwaak riding association released its proposals on renewal, which highlighted the importance of policy in the renewal process. In particular, these proposals emphasized the need for the party's leadership to clearly reflect the values of its members in policy-development, something that would include engaging and listening to members rather than treating them as drones, used at election time and discarded soon after until the next election cycle.

Recommendations in the Fredericton Fort Nashwaak discussion paper included organizing the party along the lines of issues, to attract new members - and engage existing members - on concerns such as environmental conservation, poverty-reduction, and population growth.

I would encourage you to read the Fredericton Fort Nashwaak renewal paper and don't worry, it is a quick read at nine pages. Party renewal is an essential step moving forward if the Liberal Party is to be a viable force in 2014, one that can stave off a challenge on the left from a newly confident NDP while offering a clear contrast to the closed-door operations and muted caucus of the Progressive Conservatives.

Our party needs to seriously re-think how to engage members, and what being a 'Liberal' really means.

Newfoundland, Ontario, and Lessons for NB Liberals

I cannot say I am an expert on the politics of Newfoundland and Labrador, but one story struck me, one that shows that province's Liberals in third place, badly trailing the second place NDP and first place Progressive Conservatives. This holds a warning that New Brunswick's Liberals must heed, we cannot be complacent.

www.globeandmail.com

In the last provincial election, our party lacked a clear narrative, being all over the place ideologically and on policy. We lost badly, but at least retained official opposition. Next time we may not be so lucky, especially with an NDP aggressively looking to replace our party as the centre-left alternative.

This brings me to my second example, Ontario. Earlier this summer, many commentators were ready to write political obituraries for Dalton McGuinty, a premier no one has accused of having charisma or likeability. However, McGuinty, who initially badly trailed that province's Progressive Conservatives and had to fend off a strong challenge from the NDP, made an election that seemed a foregone conclusion against him highly competitive. He ultimately won on election day and while still one seat short of a majority – pending recounts – it is still an impressive result given earlier predictions of impending electoral doom.

It is also an impressive results given the electoral collapse of the federal Liberals only a few months earlier.

What is behind this amazing political comeback? McGuinty's Liberals had a strong narrative for their election. The Ontario Liberals offered a clear progressive agenda on the environment and education - outflanking the NDP while also providing a clear contrast to the Progressive Conservatives. At the same time, they tied this into an economic development agenda - green jobs, investment in education for a skilled workforce - understanding that the best social program is a good well-paying job.

Also, McGuinty’s campaign platform was not just words, he had been implementing these progressive policies – on the education and environment – in government.  McGuinty shows that a familiar face, even one with perceived baggage, can win if he projects competence, consistent values...and of course, the right ideas.

McGuinty's Liberals offer an example the New Brunswick Liberals must follow if we are to survive as a viable political force, or else the party of Robichaud and McKenna may be consigned to the dust bin of history.

ATTENTION LIBERALS....SENATE REFORM IS NOT OUR ISSUE

So as soon as I suggested that Premier Alward's economic approach was stuck in the 1970's, the man shows a determination to prove me wrong. The premier has now identified the business of electing senators is his top priority.  This clearly shows that the premier can update his thinking, because Senate reform is an issue from the early 1990s.  For some, this would be nostalgia; for the Alward Conservatives, this is actually progress.

www.globeandmail.com

Some commentators have suggested that the Premier's new agenda means that Liberals need to scurry over to this new topic and be prepared to debate this agenda. Some Liberals have joined in.  But I'm here to tell you, as Prince said, there's something else.

First of all, before New Brunswick joins in full-throated support of Stephen Harper's old Reform agenda for federalism, let's remember WHY conservatives love Senate Reform.

Forget the old canard about regional representation.  In different times, when politicians worked more across the aisles in Ottawa, having twenty-four senators instead of ten MP's may have mattered. Today, in the partisan circus in Ottawa, federal politicians are a function of their party’s central command, supporting and spouting the lines from their leaders. The quality and independent thought of our representative’s matter. The number of seats that can swing and decide who becomes Prime Minister may affect platforms. But anyone who thinks senators would form post-partisan regional blocs to defend the same issues regardless of political stripe is dreaming in technicolour. 

The real reason conservatives want a second elected chamber is because it will render the national government even more ponderous and dysfunctional, which is a good thing if, like Stephen Harper, you want a national government whose entire agenda consists of national defense and locking up young offenders. Watching President Obama's mandate to create a national health care plan for a nation that had millions without health coverage is instructive -- if you want to slow down the creation of national social programs and new shared endeavors, you'll love having two elected chambers squabbling over every step forward. 

It's rational for conservatives to want divided government.  It's crazy for Liberals and progressives. And for New Brunswickers, it is irrational.  New Brunswick benefits from having national standards in social programs. In a decentralized Canada, wealthier provinces can use their advantage to slash taxes and start a race to the bottom where New Brunswick will lose. Having a minimum safety net that every province has to maintain keeps social programs safe, and a weak national government can't do that. Sometimes, putting New Brunswick first also means putting Canada first. 

But, of course, the best way to deal with Premier Alward's sudden passion for constitutional minutiae is to let him have it. In a province where unemployment has never been lower than the day before he took office, where too many kids still struggle to read and too many parents are trapped in poverty, and where our Premier says things are so dire that we simply have to let environmental concerns go, families are not going to reward politicians who want to return to a debating society on Canadian federalism.

In the New Brunswick Legislature, there's a beautiful room upstairs where committees meet. Sharp-eyed observers will notice an old speaker's chair at the back. It's there because that room used to be our Provincial Senate, which was a second chamber. While New Brunswick is a bilingual province of diverse regions, I can think of no time when any serious person has suggested that the common good in jobs, schools or public safety would be immediately improved if we restored the New Brunswick Senate. We haven't missed it, and neither would Canada. To borrow a tongue-in-cheek quote from John Crosbie, a Triple E Senate isn't as good an idea as a Triple A Senate.... arthritic, alcoholic and abolished. 

Come on, Liberals.  We have a solid history and the right ideas for the future on jobs, education, and social progress. Falling in the polls, David Alward has every reason to distract New Brunswickers from these issues. Let's just make sure he doesn't distract us.

No, Premier. Fracking ISN'T The Only Way To Create Jobs

Premier Alward's recent comment that his government can only deal with poverty if gas fracking moves forward is not encouraging. Besides reinforcing the government's dubious choice to speed up fracking and slow down poverty reduction, it suggests that the Premier doesn't understand how modern economies work.

The things that Mr. Alward's government says it can't afford -- improving schools, raising literacy rates and lifting people from poverty to work -- are not things we do once the economy grows. They are actually HOW we help the economy to grow.

Mr. Alward is trapped in 1970's thinking -- that investment and jobs simply come to the place where it is cheapest to do business. In this model, if he slashes wages, cuts taxes for those already doing well, and short circuits environmental regulations, jobs will come.

Trouble is, going into the modern economic marketplace with that old philosophy is like heading to the club in a Nehru jacket and bellbottoms. You're telling the world that you didn't notice the last 40 years happening.

Today, with capital and information so mobile, low cost jurisdictions are places like China, India and emerging South American economies. They do cheap like we never can...and never should. To fight them on cheap is to choose only to manage New Brunswick's economic decline.

The jobs we're competing for go where there are people with the skills to work smart and learn quickly, and where there are markets for their products. - We're a small market with under a million people, and too many are sidelined by poverty, illiteracy, or a lack of access to post-secondary education. In a world where people and skills are the new currency, we need more of both.

Spurred by competition from emerging African economies, the countries that do cheap today are spending and working to get smart, too. Right now, we get the jobs they lack the skills to do. If they catch us on smart and stay cheap, we've got trouble.

The Alward approach -- cutting back on education and retraining, threatening more interprovincial trade barriers that keep our companies out of big markets, and making low wages an economic development tool -- is one that will make us easier prey in the new economy. If the Premier believes that skills and investment can wait until after the economy improves, he'll be waiting like sad Miss Havisham for the groom who never arrives.

Liberals can't just scream "more economic development" at the government. Here's six concrete suggestions to turn around a year of lost ground and stagnant job growth.

Fund people, not politics. The Premier has found money for political gimmicks like funding redundant courthouses and vehicle registration reminders...then says we can't afford better schools. Here's a non-partisan offer....roll back all the Graham government's tax cuts for those of us making over $100K per year, and put all the new revenue towards funding poverty reduction and access to college and university so that we can have a goal of having the most skilled, literate workforce by 2020.

Invest in growth sectors. Work with municipal governments to allow targeted regional tax credits in areas where a region has a competitive advantage. From ecotourism in the north to green manufacturing clusters in the Fredericton-Moncton corridor, we need to empower the regions where we have a headstart on the world in the sectors that are creating jobs.

Front-end tax cuts to improve access to capital. Competitive corporate tax rates are a must, but low rates alone only help your business once you have profits -- and many start-ups have trouble getting capital. Allowing companies to use future tax cuts for front-end capital (if approved by a private sector board like InvestNB) can help emerging companies survive to create jobs.

Be first in R&D. If we want green job clusters, we need the brand of having the most aggressive tax treatment of research and development. Let's work with industry to design a credit that allows the highest write-off of R&D expenditures and allows deferral of credits forward to a company's profitable years.

Create a Rural Entrepreneurship Institute. Too often, new businesspeople in rural areas lack the mentorship and help finding angel investors that all entrepreneurs need. We can challenge our private sector leaders to design networks that erase this competitive disadvantage for our rural communities.

Empower communities to win the skills race. A lost opportunity of the Non-Profit Secretariat was it only added a little money to the existing way non-profits work, I stead of rethinking their role. In areas where large government bureaucracies have failed to solve stubborn social problems, like illiteracy and homelessness, let's use UK Prime Minister Cameron's model of entrepreneurial government to allow local partnerships of community groups to bid for government funding to tackle these tough, community problems.

We don't have to sit around hoping the world will be kind. New Brunswick can win on jobs and growth -- if we have the courage to think of ourselves as competing not the cheapest, but the smartest place to do business.