Open letter to PM Carney

First, let me congratulate you on your victory. In these turbulent times Canadians are looking for serious and sober leadership and many believe you have those qualities.

I know you have a lot in your inbox but I want to make the case that you should have regional economic development on your agenda. In your previous roles as the Governor of the Bank of England and the BoC, you focused mainly on the national economy. Macro focus makes sense in those roles. Micro makes sense, however, in your new political role.

Around the advanced world we are seeing the indignation of places that were ‘left behind’. This is not only in the U.S. (e.g. Appalachia) but also the UK (level up) and elsewhere in Europe. Weakening regional economies and increasingly frustrated regional populations are driving nationalism, anti-trade, anti-immigration and even anti-liberal sentiments.

Canada has mostly been spared these deepening regional differences between the haves and the have-not places. In fact, in Canada, it is the richest places (e.g. Alberta) that are feeling the most aggrieved these days.

I believe this is because we haven’t seen the kinds of economic dislocation that have been seen in the north of England or Appalachia. In Canada, the richest province has a GDP per capita 65% higher than the poorest (Alberta vs. Nova Scotia). In the UK, greater London has a GDP per capita 241% higher than in north east England. In the United States, New York state has a GDP per capita 221% higher than in Mississippi.

Along with less dislocation in the private sector, Canada’s social safety net, federal to provincial transfers to support the cost of public services and relative ease of population mobility, among other issues, has limited the ‘left behind’ sentiment in places like Atlantic Canada, northern Ontario, etc.

But we are at a critical time in our history. The decisions made by federal and provincial governments in the next few years will either strengthen national cohesion or drive us further apart. This is why, along with everything else including President Trump, you must keep regional issues on your radar.

One reason is demographics. Your predecessor took heat for broadening the approach to immigration from the ‘points-based’ system that let in the best and brightest from around the world to programs such as the Atlantic Immigration Program which were focused mainly on bringing in folks with in-demand skills.

The economists will not tell you that the so-called points based system was deeply biased against places like Atlantic Canada. In Ontario, in some years over half of the permanent residents admitted were not based on ‘points’ they were coming as family class, refugees, or those on work permits. Since Atlantic Canada didn’t have much family class immigration or privately sponsored refugees (many/most were low or semi-skilled) we were at a disadvantage and we actually saw companies closing operations here and opening in Brampton because they could get workers there at lower wages. Trucking companies were hiring more truckers in the Toronto area because there were far more available there than in Atlantic Canada.

So an immigration system based both on attracting in-demand skills and the ‘best and brightest’ is a better approach.

My fear is that your plan to throttle permanent resident admissions and international student attraction will throttle our population growth, workforce and ultimately economic potential.

Please reconsider and come up with an immigration plan this is based on the aspirations of the individual provinces and territories.

Five or 10 years of workforce decline and the related economic impacts could lead to the rise of J.D. Vances in this region.

Another reason is the lack of natural resources development. Newfoundland and Labrador are well ahead on this but New Brunswick and Nova Scotia need to do far more and they need federal government support. Take the example of aquaculture. While the federally funded Ocean Supercluster was calling for a massive expansion of aquaculture to meet the 2035 goals, your government was literally at the same time curtailing aquaculture off the west coast. We have the longest coastline in the world and one of the lowest GDP per km from ocean industries of any advanced economy. It makes no sense.

We have substantial critical minerals in the ground. This could be a backbone driver of economic development for the next 20-30 years but it needs a focused approach from all three levels of government.

Not everything is about cash. Your predecessor seemed to think the solution to every problem could be solved with a cheque. Intelligent economic development is about a much wider range of issues from aligning federal/provincial regulatory processes to a smarter approach to research to strategic investments in infrastructure and better promotion of our country and its region to attract investment. Having highly qualified and ambitious economic developers from coast-to-coast is also key.

Another reason is the potential negative effects of interprovincial trade. I’m a fan of making it easier to do business between provinces but it is clear there will be winners and losers when the barriers come down. The focus should be on each province looking to leverage what it is good at to build more interprovincial exports even as it loses local markets to interprovincial imports. It seems to me the fact that Nova Scotia has the largest interprovincial trade deficit and the lowest GDP per capita is not a coincidence.

Another reason is federal investment in research and innovation. You will hear from many that Canada should focus its research into a few universities and places. In order to compete we can’t afford to sprinkle R&D dollars around the country, they will say. The top 7 universities in the country already attract more sponsored research income than the next 43 universities combined. The University of Manitoba, located in a province with only slightly more population than New Brunswick, attracts 3 times as much sponsored research income as all New Brunswick universities combined. The federal government spends 2.7 times as much on R&D in Ontario than in New Brunswick, relative to population size. I’m not saying there needs to be parity but R&D is fundamental to addressing productivity issues and driving new innovation.

The last reason I’ll raise here is national infrastructure. Historically, grand national infrastructure ambitions mostly left this region out. We still are not connected to the rest of Canada by a four-lane highway - although this should be finally finished by later this decade. The national rail system has been withering away in Atlantic Canada. Bypassing Atlantic Canada with massive federal investment in the St. Lawrence Seaway still sticks in the craw of many (including me). As you consider national energy infrastructure and other ambitious national infrastructure projects, keep Atlantic Canada in the window.

This letter covers Atlantic Canada. I urge you to build your national agenda reflecting the regional differences of population, industrial base, infrastructure and core assets.

Good luck.