Throughout the New Brunswick election campaign, CBC News will be publishing essays from various people on a variety of issues concerning life in New Brunswick.
As we head to the polls on Sept. 22, we need a robust debate on how to deal with our mounting fiscal woes and grow our economy sustainably. Empty political slogans and platitudes from our political leaders will not do. This election is important to our province’s economic future and New Brunswickers should pay close attention to what politicians have to say.
Below is a rebuttal of some of the slogans that are tossed around in this election campaign that are, in my view, hindering a proper debate. The future is ours, let’s demand real answers.
'New Brunswick can’t tax its way into prosperity'
This is probably the most misleading slogan. To be sure, higher taxes rarely produce growth. But this is not the same as saying that a modest, well-designed tax increase would damage the province’s economy.
Consider the following. During the 10 years prior to the first HST cut in 2006, New Brunswick’s economy grew on average by 2.7 per cent annually. Since then, growth has averaged 0.2 per cent.
Yet, the fiscal burden on New Brunswickers (provincial and federal taxes in relation to the size of the economy) was higher from 1996 to 2006 than it has been since. If lower taxes are the magic recipe for growth, then why has it essentially stalled since the late 2000s?
The reality is that taxes have little to do with New Brunswick’s current economic lethargy. For reasons that I outline in my book, Over the Cliff?, the province has entered an “Age of Diminished Expectations” on the demographic front: we cannot realistically expect to see the economy grow in the long run at a pace anywhere near what we have witnessed over the last generation. Major labour market headwinds have dramatically cut the province’s long-term growth potential.
'Spending cuts have not worked. We still have a $500-million deficit'
Since 2010-11, provincial spending in New Brunswick has grown by less than one per cent. This is more than five times slower than during the previous decade. Had the provincial government kept spending at 2000-01 to 2010-11 levels, the annual deficit would now be well above $1 billion.
The fact is that, had New Brunswick brought the HST back to where it was prior to 2006 and instituted other modest revenue increases such as tolls on four-lane highways, the books would be now balanced.
We should not be concerned that spending moderation has not worked. It has. What we should be concerned about is that this moderation may not be sustainable without transformative changes to how the government does business. The recent spending slowdown was achieved mostly through strict wage growth moderation and attrition. While critical, wage moderation can only take us so far. We cannot freeze wages for a decade or more without serious consequences for the quality of our public services.
'We don’t need austerity — growing the economy will fix our fiscal woes'
Of course, we should relentlessly pursue all opportunities to grow our economy sustainably. This includes seriously debating the issue of shale gas exploitation, which could add hundreds of millions of dollars to provincial coffers and create thousands of jobs.
At the same time, we must maintain a healthy respect for the powerful forces that shape New Brunswick’s economy. We cannot bank on a sudden reversal of our economic fortunes to free us from our fiscal challenges.
Barring major surprises — such as the discovery of massive amounts of oil — New Brunswick will likely not be able to reverse the dramatic slowdown in growth that the Age of Diminished Expectations has already brought upon us. This conclusion may sound defeatist, but it is grounded in powerful trends, including more than a century of economic history. Assuming that we can grow our way out of our fiscal mess is a recipe for disaster.
'New Brunswick needs a major infrastructure boost to kick-start its economy'
Well-designed infrastructure spending initiatives can have a positive impact on the economy when what ails it is a cyclical downturn. New Brunswick’s economic woes are first and foremost structural in nature. The Age of Diminished Expectations is related to labour market trends that will be with us for the next two decades.
Numerous analysts have made clear that a big part of New Brunswick’s problem is that it has too much infrastructure for its size, not too little. Importing solutions that may work for countries or provinces with a fast-growing population will only add to the public debt while contributing very little to New Brunswick’s long-term economic growth. It will also translate into greater maintenance bills at a time when the province is already facing major challenges in this area.
Investments should be timed according to the actual maintenance needs of our public infrastructure, not the electoral timetables of politicians.
'Investing in education will solve our problems'
Human capital is the lifeblood of the new economy. We must continue to make sure that we provide New Brunswickers with affordable, first-rate education and training. At the same time, if all that were required to turn the province around was to boost education funding, then the problem of regional development would have been fixed a long time ago.
It may not be popular to say this, but New Brunswick’s literacy problem is likely as much a symptom of our economic weakness than a cause. As long as opportunities are lacking at home, many of our youth and highly educated people will move to find jobs and raise their families elsewhere.
Only New Brunswickers can bring about real changes
This is not an empty slogan, just a cold hard truth. Our political leaders are throwing around empty slogans because they believe they work, at least politically. If we do not change, they will be proven right. We collectively have to come to grips with the fact that the status quo is not sustainable.
Our economic reality has changed dramatically. The punch bowl is being pulled away from us. We have just entered the Age of Diminished Expectations, yet the cupboard is already bare. Currently, one out of six New Brunswickers is a senior. In twenty years, it will be almost one out of three. If we are to find the resources to meet the growing spending pressures that our ageing population will entail, we need to get our fiscal house in order now.
We need to adopt a new frame of mind, one where narrow parochial or sectorial interests are replaced with a concern for the broader public good as the ballot box question. We have grown accustomed to asking for more for our needs and those of our local communities. This may have had merit in a context where the province was spending profligately. After all, the squeaky wheel got the grease: if we did not ask for more, somebody else—another interest group, another union, another community—was likely to end up benefiting from the province’s largesse. Now is the time to refocus on the essential.
Our window of opportunity to deal with our fiscal challenges is narrowing fast. Only by raising taxes modestly now and bringing real changes to how the government does business can we avoid crippling tax hikes and devastating spending cuts in the future.
Indeed, if we wait, more drastic action will be needed to fix our fiscal woes. But the problem is that there is a point beyond which higher taxes and much less generous social programs will lead people to leave the province in droves, starting with the most mobile elements in our society: those who earn more and are better educated. Once this starts —and it is inevitable if we don’t act soon — fiscal failure will breed further failure and hurt the poor and the vulnerable the most. And looking to Ottawa to bail us out is nothing short of seriously misreading the mood of our fast-changing country.
The next election is about the kind of New Brunswick we want for the 21st century. Only by acting now can we preserve the essence of Louis Robichaud’s Equal Opportunity for All. His program was not a slogan, but true change that has brought an enduring legacy of fairness and prosperity to New Brunswick. Let’s not undo it by embracing empty political slogans.