Atlantic Insight

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Atlantic Insight, by southeast New Brunswick's W.E.(Bill) Belliveau who analyzes and comments on matters of public policy and the social and economic decisions taken, by all levels of government from local to global. Atlantic Insight Blog is a commentary on current affairs and changes in the marketplaces and/or in the business world. The impact of policy, decisions and changes are explored for their impact on the citizens of Atlantic Canada. You are invited to add your comments.

Sunday, November 05, 2006

NB's Future: The Vision Argument for Self Sufficiency and Beyond

So what do we write about this weekend?

There are so many things that are going on and deserve comment –
  • the U.S. mid-term elections, the report by British economist Sir Nicholas Stern on greenhouse gas emissions versus Canada’s “Clean Air Act”,
  • catastrophic events in Iraq, Canada’s role in Afghanistan,
  • the population crisis in New Brunswick,
  • ownership of the Beaverbrook art collection,
  • the pending financial crisis at NB Power,
  • Shawn Graham’s meeting with Steven Harper,
  • Michael Ignatieff’s embrace of Quebec-nationhood,
  • prospects for the Saint John energy-hub,
  • the Federal Liberal leadership race,
  • Harper’s (Finance Minister, James M. Flaherty) “income-splitting” announcement for seniors and his parallel trashing of corporate income trusts,
  • source rebates on New Brunswick’s provincial sales tax on home-heating costs,
  • former Premier Lord’s job prospects or whatever.

The issue most important to Canada and to New Brunswick is leadership.

In respect to Canada, leadership is about this Country’s role in the world, its management of the national economy, its fight against global warming, its fiscal relationships with the provinces and significantly, its relationship with Quebec.

The issue most important to New Brunswick is economic development and self-sufficiency.

How do we become economically self-sufficient? How do we grow our economy?

The new Liberal Government has identified energy as a wealth-creator. There is no doubt that energy is a high-demand commodity, particularly in the United States but wealth-creation is fashioned by export and export is dependent on a combination of demand, price and transportation.

Electricity exports are bottlenecked by transmission deficiencies in the United States. Gas exports are contingent on pipeline capacity to and within the United States. Refined oil products (including gasoline) flow freely in response to demand and ground transportation capacity.

A few months ago, the Lord Government masked an increase in electricity prices by capping a proposed 11.6% rate increase by NB Power at 8% and promising a rebate of New Brunswick’s 8% sales tax on home heating fuels.

Good short-term politics perhaps, but bad economics and bad behavior in a world faced with the impact of global warming, encouraged by greenhouse gas emissions.

The Liberals promised in the recent election to replace the home-heating/electricity tax rebate with a source deduction. They should deliver on that promise, if it’s possible but remind folks that former Premier Lord’s promise of rebate was misleading and irresponsible.

The rebate (source-deducted or claimed) should be a one year only rebate. We cannot afford it long term. Lord did not promise it long-term. More significantly, price subsidization discourages conservation and that is a mistake.

NB Power is responsible for generating and distributing electricity in New Brunswick. It should be compensated for that service on a cost-recovery basis (including the cost of capital replacement and new investment). So long as NB Power is government-owned, it should not be expected to earn a profit except as required to generate replacement and/or expansion capital.

That said, NB Power like other electric utilities is a generator of greenhouse gases. It burns coal, oil and natural gas to generate electricity. As Sir Nicholas Stern, David Suzuki, Al Gore and hundreds of others around the world have warned, greenhouse gases contribute to global warming and that spells potential disaster for the planet.

Capping and masking the true cost of electricity in New Brunswick does a disservice to the province, to its citizens, to the country and to the world because it discourages people from conserving and/or from seeking cleaner fuels.

I’m not insensitive to the pains of higher cost but I know that price influences demand and that higher prices will reduce demand for electricity. We need policies in this province that recognize the balance between cost, affordability and economic growth.

We need policies and programs that encourage personal and corporate investments in energy-saving initiatives. To reach the balance between cost and affordability, we may need interim support programs to bridge the gap between reality and goal.

Energy is one part of the equation; Premier Graham has challenged us with a twenty year self-sufficiency goal.
  • We need to understand what it is that will make us self-sufficient.
  • We need to understand what we need to do to become self-sufficient.
  • We need to know what it is that we need from the federal government and outside investors to help us on the road to self-sufficiency.

We need to hedge our demands for “equalization” with investments in self-sufficiency initiatives.

We need to leverage the notion of “fiscal imbalance” between provinces and the federal government to produce more investment in economic development.

For example, capital invested in extension of the Fundy Trail could create a new and enhanced tourist attraction that would bring new eco-tourists to the province.

Investments in international air service could bring new visitors to the province. Consolidation of inter-provincial air service in Moncton could improve service to the province and bring new investors to this region. Investment in manufacturing ventures like automobile parts (Magna as an example) could bring new jobs to the province.

Frank McKenna focused on soft (by that I mean non-physical) jobs in the communications and tech industries. He was hugely successful. IBM, Microsoft, Boeing, Airbus, Ford, GM, Daimler-Chrysler, Volkswagen, Toyota, Honda, Michelin and tons of other world-brand manufacturers offer a different kind of potential because they produce labour intensive, knowledge-based, semi-physical jobs, much like the energy sector. Let’s go after them.

To my knowledge, there is no economy in the world that survives solely on the basis of intellectual property and/or service jobs.

There is no reason we can’t be self-sufficient. The only excuse we have for failure is ourselves and that’s not good enough.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com

posted by Bill Belliveau @ 5:06 PM

1 Comments:

At 7:54 AM, Anonymous Anonymous said...

There is a lot of sense being made here. I agree on the energy position and also on the Fundy trail conclusions.
Does nobody in government see the potential of the trail to eco tourism? Why was a huge donation to the trail refused by the Graham government recently?
These are questions that need to be answered.

 

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