HALIFAX, N.S. July 5, 2016/ Troy Media/ – New Brunswick is in a tough economic position. Taxes are heavy, unemployment is high and people are leaving to find opportunity elsewhere.
Unfortunately, the province has embraced policies – a mix of deficit spending, subsidies for hand-picked businesses as well as high taxes on families and businesses – which it says will fuel growth and job creation but are leading to a worsening economic position.
Recently the Conference Board of Canada sharply downgraded its assessment of New Brunswick by predicting a recession is likely this year. At one time the Board had thought the province’s economy would grow in 2016 by 1.6 per cent, which is decent but hardly robust. It now believes the economy will instead shrink by 0.4 per cent.
This darkening assessment of New Brunswick’s economic wellbeing is shared by forecasters at the Royal Bank, which predicts the province will “shed” jobs in 2016 and 2017. The Conference Board puts the number of job losses at around 3,000 this year. This is in addition to the 3,400 jobs lost over the past two years.
It is time for a reassessment of New Brunswick’s policy direction. The Gallant government is currently preparing its new Jobs Plan but unfortunately, according to a draft of the plan obtained by the Telegraph-Journal, the new plan looks a lot like the old plan – more “spending on privately owned and managed economic infrastructure,” Translated, that means fatter subsidies for businesses.
The government is also proposing to establish an in-house think tank and hire more “experts” to provide advice to its ministers. But there’s no need for taxpayers to fund a think tank. The province already employs professional civil servants in the Department of Finance to offer advice to the premier and finance minister. There are also numerous independent think tanks in Atlantic Canada ready and willing to offer their advice to help solve New Brunswick problems should cabinet want fresh opinions.
Rather than continuing its failed corporate welfare policy or establishing a think-tank, the government must change its policy direction; otherwise it will prove Albert Einstein was right when he said the definition of insanity is doing the same thing over and over again but expecting a different result.
Successful economies elsewhere in Canada and around the world already offer us a direction forward. They keep taxes low or lower them if they are too high in order to attract businesses, investors and skilled workers. They control spending if government is too large or spending excessively on bureaucracy or is involved in areas it should not be, such as corporate welfare. They provide business with a level, predictable playing field, or improve the business environment when excessive regulations and taxes make it difficult to successfully operate a business or grow a small business into a larger one. (There are other necessary ingredients to growth, including an educated workforce and trade liberalization, but I’ll focus on the tax and regulatory burden in this column.)
Unfortunately, these policy prescriptions appear to be of little concern to the New Brunswick government.
Public policy decisions matter. It is why some parts of Canada create jobs and are more prosperous than others. It is also why some provinces – like Saskatchewan – go from economic laggards to leaders.
The question we need to ask is why wouldn’t these policies work in New Brunswick? We certainly couldn’t be any worse off trying them out.
John Williamson is Vice President of Research at the [popup url=”http://www.aims.ca” height=”1000″ width=”1000″ scrollbars=”1″]Atlantic Institute for Market Studies (AIMS)[/popup].
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