Three Scenarios for the Economy in New Brunswick

Published in the Telegraph-Journal 27th January 2012

Many New Brunswickers get the same feeling when listening to Finance Minister Blaine Higgs explain that they must want less from the provincial government as it wrestles with record debt and deficits. They want to know what he is going to do about it and why it hasn’t happened yet. The minister appears increasingly more frustrated that not everyone subscribes to his sense of urgency over the province’s fiscal challenges, even though there appears to be a widespread recognition that the situation is untenable. Some groups, especially the health care sector and teachers’ unions, are expecting deep reductions in services which will have a significant impact on their members.

For over a year since the election, the government has been working on an economic plan without revealing very much about what the implications of this plan might be. Some have commented that the government has very little latitude over its decisions because of the gravity of the challenge, but there are three scenarios that roughly approximate the options facing New Brunswick. Each scenario leads to very different outcomes not only in the short term but for the future of the province in the long run.

The first scenario represents the least deviation from the present course. This stay-the-course option largely maintains the status quo and reflects the view that only relatively minor measures are necessary to address the economic challenges facing the province today. Supporters of this analysis claim that major alterations to institutional relationships or historic economic bargains would be destabilizing and counter-productive and favour incremental changes that maintain current benefits. Proponents of the status quo tend to be hopeful that the future trajectory of the economy will favour New Brunswick. Views of the supporters of this scenario typically include health care costs responding to technological solutions, and support consolidating for projects such as shale gas drilling because they would provide relief in the form of jobs and revenue to government.

The second scenario is a managed strategic reduction of government operations and investments providing a much more narrow range of services to the public. Conceivably this could mean less support to industry as well but the hallmark of this scenario is that it represents the recognition that New Brunswick’s future is one of inevitable decline. There are many examples in the U.S. where state governments have made decisions to manage a strategic retrenching in the face of declining industries. Pennsylvania hasn’t fully recovered from the dramatic restructuring of its steel industry and northern Maine is a shadow of its former self. In both states, governments deliberately engineered a strategic retreat of services and entitlements in areas where traditional industries had declined and where population decreases followed. This scenario is perhaps the most radical of options and even more so in locations that currently rely most on government support.

The third scenario is really the obverse of the second where government transformation, investment and direct involvement become the infrastructural foundation for the growth and revitalization of the province. One of the cardinal assumptions of the arguably most risky option is that an ambitious remaking of the province and its relationships and institutions are not restricted to economic questions but include political and social ones as well. Questions that would figure prominently in this scenario would be whether we have a vision larger than ourselves and if we can find the balance between self-interest and sacrifice required to advance an agenda that promotes and supports that vision while remembering the profound challenges involved in actual transformation.

Each of these scenarios assumes a far more widespread conversation and even heated arguments about what we want New Brunswick to be, not only today but in twenty and fifty years. One of the key success elements of this conversation will be ensuring that it involves everyone in the province.

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Filed under Economics, Government transformation

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