Monday, October 3, 2011

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.


  1. While I like you post, I would suggest one great way for the province to save money would be to do away with MLA pensions. Or base them on the amount of time served, so a four year term, would get you something like $2000/year for a pension. I'm sure that would put lots of money back in the government coffers.

  2. Pretty good post right up until the end.

    Skills aren't the issue. Companies don't leave - or fail to come to - NB because of worker skills. That idea shows up in op-eds, but not in news reports of actual business closures. And our 'under-skilled' workers had no trouble finding jobs when they went west.

    Also, though 'large government bureaucracies have failed to solve stubborn social problems' thus far, we might choose to reform or revitalize these bodies. They are, at least, answerable to the body of elected members. Business groups and non-profits (who only sometimes can be characterized 'community') are independent actors. Do we really want to roll back to a pre-Louis R. era when the churches and counties managed social spending? Here's an idea: let's get businesses to do the work of businesses (smart investing, marketing to multiple markets, managing for the long term, employing people, purchasing goods and services from their neighbours). And, yes, let's have non-profits - real ones, not the Irving-universities-Brunswick-news PR machine - work with government via modest proposals featuring clear objectives, accountability and evaluations.

  3. Good points Kelly,

    One thing I would suggest is that we do away with trying to create redundant infrastructure in every little "city" we have in New Brunswick. Every ICT organization in NB wants to set up an IT hub in their backyard, in the hopes of generating a culture of ICT/startups so that we can grow on the success of Radian6, Q1Labs, etc. The issue with this is that you would end up spreading your resources all over the province to ensure that everyone is happy, and developing the culture is second. If you want to develop a strong startup/ICT culture, bring all of the people together in one community, one cluster. If you have a successful startup in the US you move to San Francisco. If you have a startup or want to start one in NB it seems that we stay where we are and ask for the resources come to us.

    If you are going to invest in infrastructure you damn well better make sure that you are achieving economies of scale, otherwise you are wasting your money.