The Managed Decline of the Rural Economy

Published in the Telegraph-Journal 9th March 2012

In 2003, a major Ontario government report produced by its Panel on the Role of Government concluded that much of rural Canada is economically unsustainable, that “it is futile to try to artificially sustain rural industry, that population decline is inevitable, and that the government should abandon regional development programs.” Instead, the panel concluded, the government needs to make tough decisions that involve focusing on retraining young people in economically nonviable areas who are willing to move away from their communities as part of a rural restructuring. The implication of this strategy is an eventual abandonment of much of rural Ontario.

The study underscored that hard choices will need to be made about the future of most communities in the periphery that cannot be made self-sustaining, economically, socially or fiscally. “The provincial government cannot provide subsidies to everyone everywhere in the province,” the study stated, “Nor can all small communities survive, and provide a reasonable minimum level of services and jobs, within a climate of population and economic decline.”

The study reviewed the reasons that these communities on the periphery were doomed to be perpetual welfare dependants. They possess a rapidly aging population that tends to decline as young people leave. They have few industries and almost none that are self-sustaining; weak labour markets and little ability to attract educated labour, entrepreneurs or immigrants. As for the purported panaceas for rural areas, including programs to bring high-speed connectivity to rural Canada, the study deemed them all but worthless as economic development tools, and is highly critical of other government bodies for raising false expectations about rural areas’ viability.

The panel’s solution was the managed decline and retreat from communities that cannot survive unaided. “The province should phase out regional economic development programs, such as the provision of subsidies and tax incentives to businesses, which risk promoting permanent government-induced dependency,” the panel stated. “The province, in co-operation with the federal government, should consider providing appropriate transitional arrangements, such as those aimed at retraining for those willing to pursue opportunities beyond their home community.”

The panel concluded that the future of the province lies in its urban centres but that future won’t allow the government to be all things to all people, adding that “if the government were to commit to [the report’s] priorities, it will only be able to implement them if it is prepared to make a number of wrenching decisions.”

The real question for society, in 2003 and today, is how to compassionately and effectively manage the decline of rural areas. The panel suggested doing so slowly and incrementally, by “maintaining basic services for the mostly older, less mobile rural residents who wish to stay in their home communities.” Simultaneously, it would cut off subsidies designed to develop the rural economy, encourage the young and mobile to leave, and even “walk away from government’s traditional responsibility to provide public services in future northern settlements.”

How much of this study could apply to New Brunswick today? The people of this province are beginning to recognize that they need to face difficult trade-offs in a number of areas, including support for economically unsustainable communities. These communities exist in northern New Brunswick, the Acadian Peninsula and throughout the province the farther one gets from the main cities in the south. The future for many of these communities is bleak. While government restructuring, fiscal reforms and working smarter are important, these measures will not be enough to prevent the continued need for massive and unsustainable cash transfers.

In 2003, the Panel on the Role of Government had, as part of its mandate, the task of determining for government “what and how it should start doing, stop doing, or keep doing either on its own or in partnership with others.” On one element of what the government should stop doing, the panel opened a door in 2003 to a critical dialogue across Canada that we have avoided for too long.


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Filed under economic development, Government transformation, New Brunswick, Social contract

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