Premier Holt and New Brunswick's economic development focus

I listened to Premier Holt’s speech last night in Saint John where she outlined some components of an economic development plan for the province. At least she summarized six big opportunities that her government is pursuing. Full disclosure here I am not particularly unbiased because I have known and worked with the Premier for 15 years - although I am not consulting on any issue or opportunity now and have not been engaged in any way.

I recall these opportunities from memory as I listened to the speech online but didn’t write things down. If I mixed it up let me know.

Housing - she wants New Brunswick to building housing for the country. Specifically, factory-built housing components that are quickly assembled on site. Theoretically these houses can be built fast and can be shipped by ocean, rail and even road -although that last one has some geographic constraints. I have been pushing for this for several years. When I first looked at it New Brunswick was already generating a larger share of its GDP from modular fabrication than any other province. The problem now is that multiple provinces are pursuing this opportunity so we will be in full on competition. However, with freer trade and a head start hopefully we can get traction. Also, this should go way beyond residential housing. We have expertise in this province in the larger stuff, too. Purge Atcon from your memory and get on with it. If we even got a solid share of the national market it could be worth hundreds of millions in GDP each year.

Defense - again, one that makes a lot of sense - but is heavily politicized. We have the largest CFB in the country by geographic area and we have - the last time I looked -the smallest or second smallest defense industry relative to GDP in the country (excluding direct government spending). For Canada to reach 2% of GDP will require substantial investment - capital and operational - and if NB got a representative share of that increase it would be a major boost to our GDP. In my calculation that would be about a $300 million annual GDP contribution in New Brunswick not considering indirect or induced effects. There will be massive political pressure to put that investment elsewhere in Canada.

Minerals - Yes. Mining contributed over $1.1 billion to provincial GDP in the late 1990s (many of you were alive and kicking) -or nearly 5% of provincial GDP. Getting back to that level would add $1.7 billion to annual provincial GDP before indirect and induced effects. It would make mining the largest export sector in the province.

Energy - She wants to use energy as an economic development driver. Available and reasonably priced energy has always been part of New Brunswick’s value proposition dating back at least to the 1920s when hydroelectricity was used to power sawmills. If you look at what is being proposed for Belledune there is a template for what is possible. Wind turbines as far as the eye can see. Nuclear power living up to the potential first conceived here in the 1970s. Giddy up. I could easily see $500 million to a billion added to annual GDP from this.

Trade (and energy) corridors - sure -just remember my admonishment that there will be winners and losers from freeing up trade within Canada. We need to focus on the areas where we can win.

Art and culture - I think this one is a bit of a passion play for the Premier. I don’t disagree with the economic importance of arts and culture and there will be certain areas were we should put our focus but it is a heavily government subsidized sector. One of the challenges is that Statistics Canada rolls an awful lot into the definition of culture including heritage and libraries, advertising, architecture, design, newspapers, broadcasting, education and training (culture) and everything related to sports along with what people normally think of when they hear the word culture (performing arts, visual arts, music, etc.). So if we think we can growth the GDP contribution from culture well above the current $600M, where is the growth potential? Newspapers? Advertising? Libraries? Broadcasting? Unlikely on all fronts. Broadcasting along contributes $110 million to provincial GDP but unless CTV or CBC starts to do more here it is unlikely we will see growth in GDP from that source.

Look at performing arts, film production, music, visual arts, etc. for opportunities but they only account for relatively small share of culture GDP. To double the GDP contribution from the areas of culture that hold realistic potential for growth would likely require tens of millions in new subsidies each year from government.

Overall, I like the direction. I would prefer to see agriculture, aquaculture and food production in the mix. I think that food and beverage could also hold potential for several hundred million in annual GDP growth.

Also, the IT sector should be a focus (including data centres). There will be tens of billions of GDP growth somewhere in Canada in the coming years and why not New Brunswick?

Of course this will require a serious boost in the talent pipeline. All of these opportunities hinge on an available workforce. There are other industry-specific value proposition considerations but on the whole I see this as an exciting set of opportunities.

In fact, my back of the napkin calculations suggest we could get annual GDP growth back to 2.5%-3% per year if much of the opportunities listed above are developed.

We haven’t seen that since the early 2000s.

That would be a great legacy for any Premier.