Begging for more dependency

Whatever Premier Shawn Graham and his Liberal team may imagine the process of economic development to be, "courting" private sector growth through low corporate taxes is not one of them.

With the present deficit in Fredericton, Finance Minister Victor Boudreau demonstrated (in his last budget) that he was in no mood to cut revenues, in fact, he chose to shift the burden over to low income earners and small business instead. Now I won't get into a long diatribe about the last budget as everyone knows where I stand on the moves made by Boudreau, so I won't discuss it any further.

However, much more disturbing than those moves [i.e. regressive tax hikes] last March was today's article in the Telegraph Journal titled "Courting Club Fed" which suggests New Brunswickers aren't getting their fair share of the federal government pie.

Hence the concern here is that our province needs to "court" (or as many say "relocate") more government agencies [units]. For instance, the federal Public Works department's superannuation division in Shediac, ACOA headquarters in Moncton and Veterans Affairs in Charlottetown are all examples of government agencies which have been moved out of the nations capital to benefit local communities.

Nothing new here, this is an ethos which has been strongly supported by many federal and provincial Liberals for decades, not to mention, it was even written as a policy proposal by Liberal senior advisor and academic Donald Savoie in his book Visiting Grandchildren. And who could blame these folks for cozying up to this policy since the pattern of government relocation has always favoured partisan Liberal ridings for centuries in this province; Shediac, Miramichi and Moncton to name a few. Moreover, I'm sure many people are old enough to recall the days of the "Cod Father" Romeo Leblanc who made a living off of using government units as a means to sway votes. Don't get me wrong, I'm sure a few individuals have benefitted from these relocations, but that's not the point here. Using the public sector as a tool to leverage more political capital (and votes) does nothing for our overall economic self-sufficiency. It actually makes regions more dependent on government and, in turn, taxes become higher and innovation dwindles even further in areas of slow growth as a result. But that debate is for another day.

More to the point, it's interesting to note that the centrepiece of the TJ article, from Rob Linke's point of view, was based around a statement made by then Public Works Minister Scott Brison wherein he quoted the Bluenoser from a speech he made in Sydney, NS back in 2004 in which he said:

"there is simply no compelling reason anymore to keep the majority of public servants in the Ottawa-Gatineau area."

Unfortunately, what Link failed to mention was that Brison was obviously touting the Liberal "talking points" in 2004 as a return favour to Paul Martin for quickly promoting him to cabinet after he crossed the floor from the conservatives. In other words, as a newcomer to an unfamiliar party, I'm certain Brison felt compelled not to rock the boat with his true conservative ideologies. Former ideologies that went against regional development agencies such as ACOA in Moncton. Let's take a look at how he felt a few years before he made that statement in Sydney, NS, shall we. From the Halifax Daily News in February of that year, Brison said:

“I’m an Atlantic Canadian MP who had the guts to say ACOA isn’t working for Atlantic Canada, and getting rid of it and replacing it with dramatic tax reform for Atlantic Canada."

In that piece, Brison also made reference to the amount that ACOA spent in Atlantic Canada, in that, it was roughly equivalent to the amount that Ottawa collects in the region in corporate income taxes alone. In other words, as former AIMS president Brian Lee Crowley explains:

"We know what that means: the federal government takes money from private companies that have proven themselves successful in investing money and putting people to work in sustainable jobs. It takes the money, and spends a major share of it on an expensive bureaucracy employing hundreds of highly paid civil servants. Under pressure from the Atlantic government caucus of the day, they then distribute that money. Unsurprisingly, they do so so as to maximise the political rather than the economic benefits."

Not only does this prove that Brison position changed upon entering the Liberal party, it also proves that the party he defected to isn't interesting in changing this failed approach which does very little for longterm economic growth, as well, it acts as an inhibitor for better and more sustainable private sector positions. Crowley adds:

If you took 350 barrels (not pork barrels, of course — they’d be salt cod barrels, or perhaps today oil barrels, but that’s an aside), anyway, if you take 350 non-pork barrels, put $1-million in each one and then plunked them down in towns and villages across Atlantic Canada, and let people help themselves, economic activity would be “generated”. Jobs would be “created” because people would spend the money on groceries and house repairs and new cars. Tax revenues would be generated as governments took their share of all those transactions. But the economic activity isn’t real — it only lasts as long as the barrels keep coming.

So the only way to judge the value of ACOA or FedNor or Western Diversification, then, is to look at what these agencies choose to do with our money compared to what we would do with it ourselves if we were allowed to keep it. Not only would we spend it differently, but we would avoid all the costly direct and indirect distortions that taxation imposes. Ireland chose the tax cut route. (and was very successfull economically for doing so)

So there is no question in my mind, if the New Brunswick Liberals want to "court" another ACOA to the province as an answer to all our economic woes, they had better think again, especially since ACOA has not created any new economic activity in this region for years. It merely substitutes private sector activity with public sector activity (which Liberal partisans use for their political advantage) instead of lowering taxes for all New Brunswickers and creating a more level and competitive playing field where citizens can choose to spend and invest their money where they please. I don't know about you, but I trust people over politicians any day of the week, especially when it comes to my money.