Professor Donald Savoie was invited recently by Brunswick Press to pen a series of articles outlining New Brunswick’s fiscal predicament and providing his remedies to the situation. Dr. Savoie is a very well-respected expert in issues pertaining to public administration and the relationships between the public service and politicians. On the other hand, he does not appear to have any particular expertise in economic development per se. While he can speak to administration and governance issues with a great deal of authority, his views on how economic development and fiscal matters are perhaps less valuable. It might have been more useful if Brunswick Press had found a group of subject experts and had them tackle those issues pertinent to their expertise (that raises the question as to why we get so little in analysis and commentary on New Brunswick issues from taxpayer-funded university staff). In any event, here is a brief rundown of his commentaries:
June 5 Fiscal Crisis Sparks Call to Action
Dr Savoie starts off well-enough; he reviews the financial issues the province faces and points out that, while the Province relies upon transfer payments for significant amount of its revenues, there is growing resentment in some parts of the country with respect to these transfers. The federal government is taking steps to slow down the growth in funds they transfer to the ‘have-not’ provinces. Add to that a stagnant economy and a significant debt, and it is clear the province is in difficulty. What to do?
As a follow-up to a previous post, I’d like to provide some more of my views on a possible re-alignment of universities in New Brunswick. Recent statements by politicians, newspaper editorials, and others have underlined the importance of research and development (R&D) to the future of the province. R&D is a source of innovative goods and services that can be exported globally and create high-wage jobs – something the province desperately needs. But how do we get more R&D investment in a province that is hard-pressed financially? In my opinion, we can get start down that road by re-designing the university system. But before we get to that, let’s look at some background information.
The Maritime Provinces Higher Education Commission (mphec.ca) provides data on student populations for all Maritime universities. Over the past decade, there has been a general downward trend in total (undergraduate and graduate) enrolment at New Brunswick universities. This trend can be seen in the chart below, where data for Université de Moncton (UDM – campuses at Moncton, Shippegan, and Edmundston combined), Mount Allison University (MTA), Saint Thomas University (STU), and the University of New Brunswick (UNB – Fredericton and Saint John campuses combined) are shown.
For the average NBer, getting a grasp on the size of some of the province’s fiscal issues and financial shenanigans can be difficult. So I am proposing that New Brunswick develop its own unique monetary denomination in order to help interpret the relative importance (in dollar terms anyways) of some of these predicaments. I’ll call this new denomination the ‘atcon’, named after a recent political and financial scandal, and I will set the value of the ‘atcon’ at $50 million dollars. Here’s a handy guide as to how the atcon can be used as a shorthand to denote the magnitude of these issues. All values are approximate.
1. Provincial debt – 140 atcons
2. NB Power debt – 100 atcons
3. Atcon scandal – 1.4 atcons
4. Atlantic Yarns – 1.6 atcons
5. Median NB family income (2010) – 0.001 atcons
Please feel free to add to this list. Send me a tweet (@nbdatapoints) or an email (email@example.com) and I will add your contribution.
“We will find efficiences and cut waste”
During election campaigns, political parties make various promises to the electorate. They seldom tell us where the money to fund the programs will come from, and, to be fair, when economies are growing quickly and tax revenue is flowing in, money might very well be available. These days, however, regional economies are not so robust and new dollars to fund new promises are hard to come by. Federal and provincial tax cuts in recent years have further reduced available revenue. Consequently, the new mantra is to make the promises and then state that funding will come from ‘finding efficiencies’ or cutting ‘waste’. It is rare for politicians to admit that certain taxes might have to be raised in order to fund their campaign promises.
Canadians expect to receive similar services from governments, regardless of which province they live in. Provincial governments have to find the revenue to meet those voter expectations. There is not much point in claiming we can eliminate a large number of those services and thus make large expenditure cuts – if you feel that way, you might find it more productive to go bark at the moon. As I showed in a previous post, when we adjust spending for inflation, non-healthcare government spending in New Brunswick has been fairly flat since the early 90s. Since then, the major contributor to rising spending has been growth in health care costs. That does not mean that new non-health programs have not been launched – it just means that they have been funded either by taking money from other programs or via debt financing. So it comes as no surprise that when Messrs Alward and Higgs promise to make spending cuts but not service cuts, they have a hard time doing so. Most of the ‘efficiencies’ have already been found over the past decade. That does not mean more can’t be found, but it can become increasingly difficult to do so.