Are New Brunswick’s challenges so overwhelming that the provincial government has given up trying to solve them? Or does the province believe decisions to reverse its grim economic position and troubling social indicators should be kicked down the road?
After a recent provincial government announcement to permanently ban shale gas development and another to appeal a court ruling on liberalizing interprovincial trade, the questions must be asked.
New Brunswick is in a very difficult economic position. The jobless rate hovers at 10 percent and taxes – already among the highest in Canada – will rise again because of an unwillingness to control expenditures. The two-point HST tax grab on July 1 will cost consumers $300 million more a year.
The province’s jobs and budget outlook would be less dire were it not for New Brunswick’s precarious demographic shift. Not only is its population aging, it is also shrinking as the death rate exceeds the number of births and overall immigration levels are low.
This position would challenge any government since social programs are funded by taxpaying workers. But New Brunswick’s problem is further aggravated because young families are leaving to find employment opportunities elsewhere.
The most striking illustration of the population time bomb isn’t that New Brunswick is tied with Nova Scotia as the greyest province in Canada. Or that the number of seniors will continue to grow. It is the steady decline in the number of children in the province’s schools and what this means for population growth.
Since 2000, enrolment in schools has shrunk dramatically from 124,944 students to 99,921 in 2014 (the latest available Statistics Canada data). That’s a 20 percent drop and a loss of over 25,000 New Brunswick pupils. Nationally, the number of students has fallen across Canada by a more modest 7.8 percent.
The province might be able to better manage falling enrolment if schools were adequately preparing students for the job market. But it’s no secret that over half of the province’s population is functionally illiterate. An inability to adequately read and write means workers hit a wage ceiling and remain stuck on the sidelines of today’s knowledge economy.
New Brunswick’s difficulties could drive any policymaker (or voter) to drink, except the provincial government makes that costlier than it should be by restricting the free movement of alcohol across provincial borders.
Many New Brunswickers had hoped our government would accept Judge Ronald LeBlanc’s ruling declaring the province’s liquor prohibition on cross-border sales unconstitutional. The quickest way to stop the flow of beer from Quebec is by lowering the provincial tax on beer. Quebec imposes $2.70 in taxes on a case of 24 beer, while the tax in New Brunswick is $9.70. Instead, the province will appeal this case and defy the economic rights of N.B. residents.
Finance Minister Roger Melanson told reporters the government wants a high tax on beer because “NB Liquor is an important contributor to generating revenues for us to be able to support programs and be able to invest in the economy.” So the province’s policy to lower its deficit is to maintain barriers to trade within Canada while keeping taxes high. No wonder working families are leaving the province in record numbers.
This brings us to the province’s indefinite moratorium on hydraulic fracturing. It has been four months since an independent commission tabled a report on how to proceed. Yet the government, which says job creation is its top priority, has done little to move this file forward.
New Brunswick still has no independent regulator, it has not established a royalty regime, nor has it established regulations over wastewater and groundwater.
The natural gas companies that were creating jobs in New Brunswick have left for other jurisdictions with clear rules and a level playing field. After investing millions, SWN Resources suspended its operations a year ago and all but abandoned New Brunswick. Corridor Resources opened an office in Calgary last year to eye more promising opportunities out west, where fracking for gas resources is routine. Last week, this Halifax-based company abandoned its plans to spend $70 million in capital investments in New Brunswick. Those dollars will now create jobs elsewhere.
The province’s economic strategy favours protectionism to open markets, high taxes over competitive rates, and opposes developing our own resources. In March, Maclean’s magazine reported on our problems in a story entitled Can anything save New Brunswick Is the provincial government is even trying?
John Williamson is a former Member of Parliament and past National Director of the Canadian Taxpayers Federation.