The Bruce Report

Question: How many bureaucrats does it take to screw up New Brunswick?

Answer: Fewer.

That’s a new one, offered with my sympathies, to Craig Leonard, who could use a laugh right about now. As the province’s first minister of government services, his grim purpose will be. . .well, to cut government services in the year of living frugally.

In public office, it could be argued, all jobs are thankless. Still, some are more thankless than others, and Mr. Leonard has landed two over the past couple of years.

As Minister of Energy, he had the unenviable task of supporting industry’s relentless shale-gas-sniffing hunt through the province’s nether regions, while not appearing to dismiss residential concerns about pollution.

Now, he tackles an even thornier issue (if that’s possible): How to put out to pasture civil servants whose services are no longer required (because they can no longer be afforded) without inciting a popular uprising.

It won’t be easy.

According to Statistics Canada data released last year, New Brunswick hosts the largest public sector, per capita, of any province in the country. For every 1,000 people living here in 2008, government workers numbered 12.9. That compared with 4.4 in British Columbia, 4.9 in Ontario, 7.8 in Alberta and 9.3 in Nova Scotia.

In fact, the province’s public service has been growing explosively since 1960 – from about 3,000 employees to about 56,000 today – even as the population has increased, during that period, by only 16 per cent.

All of which suggests that a lot of people with good salaries, pensions, benefits, paid vacations and union contracts are going to be more than a little peeved if and when Leonard – and that other not-so-merry musketeer of money management, Finance Minister Blain Higgs – starts waving his sword around.

Still, something’s got to be done.

Over the past two years, the provincial government’s annual expense by function-to-total expenses have risen to $725.5 million, which comprise the fourth-largest line item in the budget (nearly nine per cent of total spending). Meanwhile, the total expenses-to-GDP gauge indicates that public outlays have actually outpaced economic growth.

Now, with an annual shortfall approaching $500 million and accumulated, long-term debt of $10 billion, New Brunswick faces a humiliatingly hard landing, courtesy of the international bond markets that finance its myriad social programs and development schemes, if it doesn’t start slashing its way back to some semblance of fiscal health, which appears to be its last, remaining option.

Oddly, though the Alward government has recognized the dimension and urgency of the problem, it has repeatedly winnowed out reasonable solutions on the revenue side of the ledger.

It refuses to publicly consider a hike in consumption taxes (HST) without first conducting an utterly unnecessary referendum on the matter (unnecessary, because we already know that most New Brunswickers would reject the proposition). Similarly, it’s determined to fix the corporate tax rate at the unsustainably low level of 10 per cent.

Into this compromised circumstance comes the new Department of Government Services with a mandate to do the next, best thing: Somehow super-shrink the size of public administration in the province before it’s too late

“That’s the whole purpose of this change, to get savings out of these areas, and those are savings that clearly will fall directly to the bottom line,” Leonard insisted last week. “Accounts payable, for example, will still have individuals or units of individuals, in different departments who are responsible for accounts payable. That clearly needs to be pulled together into one central unit.”

As always, however, the proof of the pudding is in the eating.

If this is the government’s preferred (and, for the moment, sole) tactic, how far will Leonard be permitted to go before the cacophony of predictable outrage forces the premier to step in, as is his avuncular wont, extend his mitts across the troubled waters and, once again, postpone the inevitable?

Indeed, how serious is “this change”?

Perhaps, the five deputy ministers who, the government says, have already been handed their walking papers know the answer.

Their departure saves the public coffers, maybe, $750,000.

Question: How many years will it take to finally screw up New Brunswick?

Answer: Fewer.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

Government, in the course of its daily obfuscations, is master in the exquisite art of speaking from both sides of its mouth. Every so often, though, its oral gymnastics can’t prevent its tongue from tying.

How, indeed, do we square New Brunswick Economic Development Minister Paul Robichaud’s assertion that his department is obliged to lend private companies money to set-up or expand operations in the province with his disgust over that same department’s credit-default rate of more than 20 per cent?

“It’s just not acceptable,” he told CP’s Michael Tutton, who broke the story earlier this week. “That is the reason why we’re taking some active solutions to make sure that situation will not happen again.”

Active solutions? Wouldn’t it have been easier simply to spin the results a little more agreeably?

After all, a loan-loss rate of 23 per cent, amounting to $151 million since 2005, sounds bad until you consider the corollary: A 77 per cent success rate, amounting to $502 million of big bucks well spent in the land of mountains-high debt and oceans-deep deficit?

Now, don’t we all feel better?

Of course, Robichaud can be forgiven his failure to grab the main chance afforded by clever financial public relations. He’s not a banker.

The first quarter report of a major Canadian chartered institution, for illustration, provides a perfect tutorial on how to properly speak in several tongues simultaneously, convincingly and meaninglessly.

It pegs the percentage of GIL in its overall loan portfolio (that’s “gross impaired loans” destined for write-down or discounted debt collection) at one per cent, worth  roughly $2.5 billion.

But when it determines its overall health, it uses a numerator that represents only those loans it has already factored (a much lower value than GIL) and a denominator that represents its total wealth (including the “value” of its outstanding loans, which it calls assets, not, as would be expected elsewhere on Planet Earth, liabilities).

The bottom line: Banks routinely underestimate their exposure and overestimate their security because lending money for fun and profit is what they do.

Governments do not have this luxury, which helps explain the vernacular knot into which Robichaud ties himself. Honesty compels him to concede that this business of dispensing dollars to private enterprises that may go bankrupt is inherently risky and can’t be dismissed through generally accepted accounting mumbo-jumbo. But, he insists, public officials can be more careful.

The larger question is: Should they bother?

Donald Savoie, New Brunswick’s resident economic development guru, thinks the time has come for the provincial government to get out of the money-lending industry altogether. “We have a deficit we can’t sustain,” he told Tutton. “We know that federal transfers are going to be leaner in years to come as we shift away from equalization. Some tough decisions need to be made.”

Kevin Lacey of the Canadian Taxpayers Federation agrees, if for different reasons. “Every time the government chooses the right business and creates good jobs, there’s an example where they choose poorly and lose millions of dollars,” he told this newspaper’s Craig Babstock this week. “For every win, there’s a loss.”

They’re both right. And they’re both wrong.

No competitive jurisdiction in the world can afford to wholly abandon its business subsidy programs. The global site-selection industry is built on the MAO (make-an-offer) principle, and by charting a lonely path away from this tradition, New Brunswick will only exacerbate its current fiscal woes.

The province should, more sensibly, overhaul its oversight capabilities and inject both commercial acumen and common sense into its loan management.

Why does a profitable, multi-million-dollar revenue generator deserve vast sums to create a few hundred jobs it might just as soon eliminate on an apparent whim?

Alternatively, why shouldn’t the Province use public money to support reliable, growing firms with a demonstrable commitment to job creation in New Brunswick?

These may be the only circumstances under which Government, talking from both sides of its mouth, actually makes sense.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

Nothing will replace the Stars and Stripes in the North American triangle that frames one of the largest trading blocs on Earth, and anyone who honestly believes Canada’s economic future no longer includes the United States is deluded.

Still, Stephen Harper is not addled when he says there is a whole world beyond the one joined at the 49th Parallel, which many in The Great White North perennially ignore. His recent trip to China, where he groomed relations and promoted better, freer and fairer trade by hammering out 23 deals worth $3 billion for Canadian businesses, proves his point.

In fact, since 1990, China’s GDP has risen from $350 billion (USD) to nearly $7 trillion. As the world’s second-largest economy, behind the United States, its annual growth rate has averaged 10 per cent over the past three decades.

It’s also the second-biggest by purchasing power, the largest exporter and the second-largest importer of goods on the planet. With a labour force of 780 million and new investments in infrastructure, it is becoming a true consumer society.

So, why should it surprise anyone to learn that China is one of this country’s strongest-growing trading partners?

In 2009, bilateral merchandise trade reached $50.8 billion – $11.2 billion in Canadian exports to, and $39.6 billion in imports from, China. The country is also our most important Asian export destination, and our third-largest in the world (the United States and the United Kingdom rank first and second, respectively).

And China is not the only emerging opportunity for Canadian producers.

There’s India, whose gross domestic product has spiked from $300 billion (USD) two decades ago to $1.7 trillion today. With an average, annualized growth rate of 8.5 per cent, this nation now houses the ninth-largest economy in the world, and the third-largest by purchasing power. Boasting a labour force of 487.6 million, and a comparably sized consumer base, fully a third of its adult population is employed in higher-end professional service industries.

There’s Latin America, particularly Brazil, where GDP has grown from $462 billion (UDS) to $2 trillion (averaging five per cent a year) since 1990. It is the world’s seventh-largest economy and eight-largest by purchasing power. With a labour force of 100 million, nearly two thirds of the adult population are employed in white collar jobs serving the aerospace, electronics, textiles, agri-foods and food processing industries.

According to federal government sources, since 2004, Canadian trade with India has increased by more than 70 per cent. In 2009, our exports to that country totalled $2.1 billion (CDN); imports amounted to some $2 billion.

As for Brazil, two-way trade reached $5.3 billion (CDN) in 2008, making that nation Canada’s second- largest market in Latin America. Accumulated Canadian investments in Brazil were estimated at $9.2 billion in 2008-09.

Meanwhile, Canada and India are currently negotiating a Comprehensive Economic Partnership Agreement (CEPA), which should be ratified in 2013. India dubbed 2012 as the “Year of India in Canada” as a means to promote business, cultural and political relations between the two countries.

None of which threatens the preeminent position the Red, White and Blue enjoys in our economic affections. After all, $1.6 billion worth of goods and services cross the international border every day. In 2009, this country’s exports of goods and services to the U.S. were valued at almost $306.6 billion. Imports of goods and services in that year from the American market were worth $286.2 billion. About eight million jobs in the United States depend on trade with Canada.

But the federal government’s attempts to solidify relations with fast-growing markets in the formerly Third World stand as some of its more sensible, if under-appreciated, foreign policy initiatives.

They promote Canada as a truly international player and serve notice to our cousins south of the border that if our economic futures are conjoined, they are not constrained.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

Allow one of the world’s leading climatologists to be clear: He still thinks we’re all stupid.

To be precise, Dr. Andrew Weaver of the University of Victoria tells CTV that we – meaning human beings, in general – are “greedy and selfish” when we should be “positioning ourselves now for the time when it does run out.”

The “it” to which he refers is oil and it’s been the bane of his existence since long before he shared the 2007 Nobel Peace Prize with other members of the Intergovernmental Panel on Climate Change and former U.S. Vice-President Al Gore for their efforts to, in the words of the awards committee, “build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change.”

Only, now, oil tasks him for an entirely different, and unexpected, reason. Black gold, it seems, is not the culprit he once believed it was. In fact, the Alberta tar sands development is not nearly the carbon emitter he and virtually every major environmentalist in the world have claimed it is.

Perhaps most vexing to such a respected authority and fierce opponent of fossil-fuel use, is that his own research seems to prove those inconvenient truths.

“I was surprised by the results of our analysis,” Weaver told The Canadian Press on Monday, in reference to a study he recently completed with graduate student Neil Stewart. “We’ve heard a lot about how if we burn all the oil in the tar sands, it’s going to lead to this, that and the other. We thought, ‘Well, let’s take a look at this. What is the warming potential of this area?’ and the numbers are what they are.”

According to Weaver’s and Stewart’s research, if all 170 billion barrels of commercially viable oil-sands crude is excavated, its production and subsequent use might raise global temperatures by between 0.02 and 0.05 degrees centigrade in about 100 years. If, somehow, all 1.8 trillion barrels of estimated reserves managed to spill into markets, the warming effect might measure 0.33 degrees.

These are not insignificant numbers, but they come pretty close, compared with previous estimates of oil’s contribution to global warming. And, apart from anything else, they do suggest that science can be a harsh mistress even to those who embrace it to inform their view of the world.

Still, Weaver points out his research says nothing about the other deleterious effects of tar sands development – air and water pollution and the consequent social disruption in local communities.

In fact, his findings erect another sturdy platform for new alarms. “We’re running out of oil,” he says. “We’re not running out of coal, not running out of natural gas. The warming from these other resources is very large. The bottom line from a global warming perspective as a society (is) we’ll live or die by the use of coal.”

If, for example, developed and emerging nations switched to a coal-based energy profile, global temperatures could conceivably increase by as much as 15 degrees. (Albeit, this would require a concerted, if unlikely, multinational effort to burn up all of the Earth’s recoverable reserves in a geologically infinitesimal period).

Yet, the use of coal – which is cheaper, more reliable and more abundant than just about any other renewable and non-renewable energy source – is rising. According to an analysis by BP, worldwide consumption jumped by nearly eight per cent in 2010, led my China (up 10 per cent) and India (11 per cent).

Oil, then, is merely the gateway drug to far more harmful forms of fossil-fuel addiction, when it should be the methadone we use to transition ourselves, our societies and economies into healthy, sustainable states of earthly bliss.

Or so says Weaver, who wants governments to seriously explore ways to shift consumer demand away from hydrocarbons.

That they are not because we are not interested in, or sufficiently concerned about, our continuing ability to inhabit the planet only supports his central hypothesis, which his research does not yet disprove.

We are all still stupid.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

As New Brunswick Finance Minister Blaine Higgs darts around the province, collecting scraps of wisdom and morsels of advice on how to slay the twin-headed hydra of public debt and deficit, he may want to ponder awhile on Ontario’s comparably heroic journey.

There, economist Don Drummond – a former federal senior bureaucrat – has just handed down his edicts for a happier, healthier, more prosperous, and more virtuous future in Canada’s most populous province.

Like all commandments, they’re easier said than done. But for sheer tough-mindedness, they are unsurpassed anywhere in the country, which is why, of course, few of them are likely to survive government scrutiny.

“Dear Premier McGuinty,” the chairman of the Commission on the Reform of Ontario’s Public Services writes in his opening letter, “action must begin very soon. The deficit is expected to be $16 billion this year. By 2017-18, it will almost double – and the debt will climb to more than half of gross domestic product – if the status quo is left in place. At a time when the news is full of stories of countries around the world that have failed the fiscal test and slid into the ditch, to the enormous detriment of their citizens, Ontario must be different. It must be the best.”

He then proceeds to explain, in painful detail, how the “Yours to Discover” province has been sliding into the ditch for years – with health care, elementary and secondary education, post-secondary education, social programs, employment and training services, immigration, support to business, infrastructure, energy, the environment, and labour relations.

Indeed, with 362 recommendations, he leaves nothing off the table.

Health? “Remove perverse incentives . . . fee-for-service compensation model. . .that undermine the quality and efficiency of care.”

Education? “The growth rate in the budget over the term from 2010-11 to 2017-18 must be constrained to one per cent per year.”

Social programs? “Hold growth in spending to 0.5 per cent per year. . .Reduce excess capacity in the youth justice system through closures of facilities.”

Employment and training services? “Streamline clients requiring modest intervention to low-cost, self-serve resources as efficiently as possible.”

Support to business? “Sunset all current refundable corporate income tax (CIT) credits in 2012-13 as part of the government’s expenditure review.”

Energy? “Eliminate the Ontario Clean Energy Benefit as quickly as possible. . . Consolidate 80 local distribution companies to create economies of scale.”

This is tough love, made tougher by the knowledge that Ontario has been sleepwalking, like many jurisdictions, towards a day, not so far away, when the systemic inefficiencies of its public services will make its debt too heavy a burden to bear.

Says Drummond: “Ontario should become the first government to relentlessly pursue quality and efficiency in public services. It is often argued that governments cannot do this because they lack the discipline imposed by a bottom-line profit imperative and shareholders to hold them to it. But the Ontario government has over 13 million shareholders who do not want their government to run deficits and believe they already pay enough taxes. That should be incentive enough.”

There’s something both refreshing and familiar about all of this. And Drummond’s  points resonate well in New Brunswick.

According to the Atlantic Provinces Economic Council’s latest fiscal update, New Brunswick’s November 2011 budget analysis “displays a $97-million increase in the 2011/2012 deficit. . .to $546 million. Projected revenues dipped $37 million, in large part due to a $50-million decline in personal income taxes.”

Meanwhile, government expenses have increased by nearly $60 million over budget thanks to a $44-million rise in the cost of pension plans and employee benefits, “as well as $9 million more for the prescription drug program and $10 million more for income assistance. Net debt will top $10.3 billion at the end of 2011/2012, or 34 per cent of GDP.”

In size and demographic composition, New Brunswick and Ontario are markedly dissimilar. But their fiscals problems, and the reasons for them, are stunningly alike.

So, then, are the solutions?

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

The expression of triumphant relief Alberta Premier Alison Redford bestowed upon the cameras last week – as her Progressive Conservative government tabled that province’s most profligate budget in a generation – said all that needed to be said about the new state of the Canadian union:

Forsooth, pale denizens of less generously endowed regions of the Great White North, behold invictus rising from the brambles of Wild Rose Country, a mighty empire built with thick, black gold.

In fact, no other public official in the country has more reasons to smile, these days, as the balance of economic, and to some extent political, power shifts from east to west. And while the capable Ms. Redford may speculate, from time to time, about the importance of renewable energy, it’s hardly a fit topic for discussion in the gilded board rooms of Calgary’s oil barons.

Not when, Statistics Canada assures, hundreds-of-thousands of people have poured into the province over the past five years in hot pursuit of $150,000-a-year jobs driving heavy loaders in Fort McMurray.

Not when the Prime Minister of Canada declares he has signed 23 economic agreements with China, worth something like $3 billion, that will exclusively benefit natural resource extractors, and their suppliers, in western Canada.

And certainly not when Alberta is projecting annual revenues in excess of $45 billion by 2015, thanks to nearly $16-billion in forecasted largess from tar sands development, production and exports.

In such circumstances, what would a newly enriched governor of a formerly impoverished prefecture do except spend like there’s no tomorrow: billions of dollars on education, health care, social services, infrastructure, R&D, and the bloated bureaucracy required to fulfill the promises?

Still, as Redford counts her money, others muse about eggs in one basket.

“Those are huge numbers,” Scott Hennig of the Canadian Taxpayers Federation told the Globe and Mail. “The economy’s going to have to be very hot for those numbers to come true, and they’re well above what the private sector’s forecasting.”

Others question the Alberta government’s commodity costing premises, which rely on a hefty increase in both crude and gas prices almost immediately. But, as Alan Knowles of Haywood Securities told the Calgary Herald, “The expectation within the oilpatch is we are not going to see strengthening gas prices until the end of the year. There’s no reason for prices to move off the current level for the next quarter at least. There’s just a lot of gas in the system.”

All of which may only confirm that if the rich are different, they are not immune to the same flights of fancy and unjustified brio that occasionally afflict the rest of us.

Alberta’s economic success is inarguable. It may even be stunning. But it isn’t impregnable, as it depends on the ancient, primary business of capturing a non-renewable (that is, exhaustible) resource and selling it to markets whose unpredictable forces no government controls.

Former Alberta Premier Peter Lougheed understood this when he established the province’s Heritage Fund in the 1970s as a means to save billions for the inevitable rainy day. Banking on future returns, however, Redford’s budget actually draws down this nest egg (now worth about $15 billion) to pay the bills, without tackling an annual deficit of nearly $1 billion. Today’s boom times, it seems, will secure all the tomorrows.

If this sounds familiar, it should.

New Brunswick resembles Alberta only in the degree to which its governments have perceived growth as a permanent, if sometimes intermittent, feature of economic conditions and, therefore, fiscal salvation.

This province’s Premier David Alward continues to insist that while spending cuts are necessary here, taxes increases are avoidable. In the end, all will be well once “the economy” recovers its health.

What this particular economy looks like is anyone’s guess, but the safe money bets on policy makers who are more likely to imagine an Alberta-style monolith (shale gas, perhaps?), than structure a more diversified, resilient portfolio of industries, to save their reputations and broaden their electoral options.

In this regard, alone, the new state of the Canadian union is pretty much the same as it ever was.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

The man of La Mancha now tilts at the sails he first hoisted. But, where Spain – the birthplace of the fictional, windmill-hating Don Quixote – has virtually abandoned an industry it once dominated, others are rushing to pick up the slackened halyard.

That’s the news, at any rate, from the World Wind Energy Association (WWEA), which reports that the global market for wind turbines set a new record last year, bringing the planet’s capacity from this energy source to 239 Gigawatt, enough to supply three per cent of total electrical demand.

That may not sound like much to oil-addicted westerners whose commitment to clean energy has been, at times, as intermittent as the wind, itself. But emerging nations are far from shy about incorporating such “marginal” technologies into their power portfolios. And the trend tells a compelling tale.

Since 2009, China has supplanted the United States as the world’s leading wind generator of electricity. The former has added nearly 40 GW of capacity to its grid, compared with the latter’s 12. And though Germany and Spain rank third and fourth, respectively, India is nibbling at their heels with 16 GW of commercial resource in play, a circumstance that prompts the WWEA to sound notes of both congratulations and concern.

“A strong increase in  wind power utilization can be observed especially in markets like China, India, Brazil and Mexico,” the organization wrote in a statement last week. “This opens new windows for further growth. . .On the other hand, several of the European markets showed stagnation or even decrease. . .We call especially on the government of Spain to revise its recent suspension of the support schemes and continue its leadership role in wind power deployment.”

That call is more likely to remain unanswered, at least for now.

The paradox of renewables is their dependence on less expensive, dirtier sources of energy to fuel the technology-producing industries that generate them. Historically, only mature, industrialized nations, like those belonging to the European Union and NAFTA, have possessed the economic wherewithal and consequent track record of commercial achievement to sustain the necessary level of investment.

The financial collapse of 2008 and consequent rolling debt crises, however, have leveled the playing field. As the West’s gross domestic product tanked, the East’s leapt ahead. Now, BRIC (Brazil, Russia, india and China) has both the appetite for exotic energy alternatives and the bank balance to pay for them.

And, thanks to the formerly wealthy world’s decades-long process of continuous innovation, the cost of this technology is actually dropping, a fact which suggests that, soon, wind power development may not exceed the means of even the poorest nations.

In fact, this is already occurring in places like Thailand and the African country of Burkina Faso, where University of Moncton professor and renewables advocate Yves Gagnon has collaborated on comprehensively mapping wind speeds, frequencies and reliability.

“Burkina Faso is one of the poorest nations on Earth, with a per capita gross domestic product of only $1,200,” he told me recently. “There is a direct link between poverty and energy. This country has very low electrification rates – maybe 164 Megawatt (MW) of installed power from diesel-powered generators and four hydro dams to serve a population of 14 million. Energy is one of keys to growth, and if we can show the potential of renewables, then we’re creating the environment for clean, rather than dirty, development in the long run.”

The point should not be lost on policy makers and legislators in New Brunswick, where world-class breezes are a matter of record. (Gagnon produced the region’s first wind map, to various degrees of acclaim, in 2007).

Currently, the province generates only 500 of its total 4,678 MW of electrical capacity through two renewables (294 from wind and 206 from biomass). In 2009-10, NB Power deployed the following fuel mix to meet the rest of its in-province energy requirements: Bulk purchases from other jurisdictions, 27 per cent; coal, 25 per cent; hydro, 17 per cent; oil, 16 per cent; and natural gas, 12 per cent.

Still, as the costs associated with refurbishing the Point Lepreau nuclear station and the Mactaquac dam threaten to impoverish a generation, the least quixotic of all approaches to meeting our future power needs may well be in the wind.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

Tiny Okotoks, Alberta, may enjoy the incongruous distinction of being the nation’s fastest-growing “metropolis” (43 per cent between 2006 and 201, according to the latest census released Wednesday), but it’s Moncton that wins the prize for sheer audacity.

Statistics Canada reports that despite its lack of natural resources, English-language universities, and major manufacturing operations, the Hub City is, officially, Atlantic Canada’s most rapidly agglomerating urban centre, and New Brunswick’s largest.

In fact, with a resident growth rate of 9.7 per cent since 2006, Moncton (population: 138,644) easily outpaced Saint John (4.4 per cent to 127,761), Fredericton (9.3 per cent), Halifax (4.7 per cent to 390,328), Charlottetown (8.7 per cent to 64,487), and St. John’s (8.8 per cent to 196,966).

The double-digit expansion of what ought to be considered Alberta hamlets (Okotoks‘ population is a mere 24,511) is easily explained by their proximity to oil-rich cities, such as Calgary.

Moncton’s stellar performance, however, is a tad more complicated; it represents a broader trend that now seems inexorable across the country.

Canada is becoming if not predominantly urban then certainly urban-dependent. And nowhere is this phenomenon more pronounced than it is, ironically, along the lightly peopled, traditionally rural East Coast, where the populations of smaller communities, such as Miramichi, Edmundston, New Glasgow and Cape Breton have declined by between 1.1 and 2.5 per cent over the past five years.

Moncton’s allure – its schools, jobs and cultural amenities – is sufficient to pluck increasingly young and ambitious workers from the hinterland of northern New Brunswick just as its affecting quality of life and economic opportunities continue to attract newcomers from around the world.

All of which raises serious questions for policy makers and legislators as they grapple with deep annual deficits and even deeper levels of public debt in this and every other province of the region.

To what extent should governments invest in small towns and their resident, often failing, industries when the exodus to the larger centers of population is a documented fact of life in 21st Century? If the purpose of public services is to furnish people with the programs they need to survive where they live and work, shouldn’t those services now concentrate in the cities?

In fact, these are questions for all levels of government to answer.

Ottawa’s recent experiment with economic stimulus funding attempted to distribute development money fairly and equitably without much regard to the demographic transformation underway. That’s one reason why underpopulated communities across the Atlantic region possess one more rink, splash pad or soccer field than they can use.

New Brunswick’s efforts to resuscitate industrial leadership in the rural north is, while laudable, deflecting attention (and money) from the real loci of self-sustaining prosperity: Saint John, Fredericton and, of course, Moncton.

Indeed, the sorry and steadily crumbling state of municipal infrastructure is not merely a challenge for the Atlantic region.

According to a Canada West Foundation report not long ago, “Urban infrastructure has become a serious issue. The combined infrastructure deficit of the six big western Canadian cities (Vancouver, Edmonton, Calgary, Saskatoon, Regina, and Winnipeg) for the 2003 fiscal year totalled $564 million, which is a conservative estimate. On a per capita basis, Winnipeg had the largest annual infrastructure deficit ($298), followed by Edmonton ($188), Regina ($167), Calgary ($150), Saskatoon ($147) and Vancouver ($87).”

Meanwhile, the group declared, “Estimates of the total municipal infrastructure debt in Canada have been as high as $57 billion. Estimates of the infrastructure debt for all governments in Canada (federal, provincial, territorial, and municipal) could be as high as $125 to $130 billion.”

And the problem has only deepened over the past five years of census taking.

As New Brunswick’s elected officials scramble to reset the button on the province’s economic future, they’d be wise to start where, increasingly, the real action and opportunities are: The metropolis.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

The nostalgic yearning for hard times is the sort of spiritual pornography that appeals only to those among us who’ve never had to scrub a toilet for a blue plate special in the greasy spoon that was once the fine dining room of the world’s economy.

There’s nothing instructive or ennobling about wretched poverty, unless, of course, you happen to be a celebrated professor of doom, whose tenure in the public eye depends on your ability to wax bittersweetly about a past that’s best left interred.

And so, it’s no great surprise as the planet lurches from one debt crisis to another, the vocabulary of destitution is making a comeback in the charmed antechambers of academia where, also predictably, incomes remain high.

“The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into a second Great Depression,” New York University economist and talking head Nouriel Roubini recently wrote in Business Day. “Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability and eventually the rise of authoritarian regimes and the Second World War. The best way to avoid repeating such a sequence is bold and aggressive global policy action now.”

He may be right, of course, but the sub-text of happy self-fulfillment in his prophesies is unmistakable. After all, it whispers breathily, wouldn’t all of us we be better off for having spent a few agonizing years on the breadline?

Well, not all of us, perhaps. Not Roubini’s partner in gloom, Harvard historian Niall Ferguson, who merely predicts a “slight” depression in the years ahead.

According to a Reuters analysis published in October, he told poo-bahs of an international private bank that western governments “may have stopped another ‘Great’ depression but not a depression and what for many was the most profound lesson of economic history may turn out to be wrong.”

Meanwhile, other worthy prognosticators are dredging up a word, dripping in deja vu, from the 1970s to depict the shape of things to come: stagflation.

Explains Stanford University professor Ronald McKinnon in a Wall Street Journal commentary: “(It means) persistent high inflation combined with high unemployment and stagnant demand in a country’s economy. The term was coined by British politician Iain Mcleod in a speech to Parliament in 1965.”

In fact, no less an influential body than Moody’s bond rating service has already applied the portmanteau, with almost sentimental fondness, to Atlantic Canada’s economy. “Persistently high unemployment has encouraged outmigration and discouraged investment, limiting long-term growth prospects,” reports Mark Hopkins, a Canadian economist with the organization, in a recent dispatch. “As a result (the region) faces an increasing threat of stagflation, with rates of unemployment and inflation among the highest in the country.”

Again, he and the others have a point. But that point becomes blunted when their dire warnings suggest that our problems are intractable, not solvable – that we are not only doomed to repeat history; we deserve what we get.

Such useless self-indulgence is all the more irritating for its provenance: men who, it is almost certain, will never face the appalling dislocation their various books of revelations promise for everyone else.

Most people in this part of the world know what they are up against. And slowly, inexorably, they’re beginning to comprehend the hard choices their governments must surely make to avoid a European-style economic meltdown.

The City of Saint John has slashed its annual spending by $9 million. The cuts affect almost every department, including previously untouchable ones, such as fire and police. There’s nothing nostalgically nourishing about this – just lamentably necessary.

The Government of New Brunswick is set to bring down what some expect will be the toughest budget in more than a generation. Prince Edward Island Premier Robert Ghiz is preparing to follow suit.

We don’t yearn for hard times of a bygone era to guide us. We’re too busy dealing with our own.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.

In the titanic struggle to rescue New Brunswick from the rubble of fiscal collapse, the casualties begin to mount. Among the first, it seems, is coherence.

Late last year, Premier David Alward chastised his political counterparts in Ottawa for unilaterally setting the funding formula for health transfers to the provinces. This, he said, was “unacceptable” in that the “proposal” materialized “with no dialogue, no consultation.”

It was, of course, the safest of all possible positions to assume, given his and his government’s once promising, now toothless, commitment to involving New Brunswickers in the mechanics of public administration.

After all, four of six principles Alward’s party espouse ceremoniously bow to the largely meaningless sentiment of inclusion, encapsulated thusly: “It should not be difficult for people to engage with their government. . .We need to do more to put people at the heart of decision-making in this province.”

Still, one wonders what brand of consultation was on display in October when Horizon Health Network – one of two such authorities in the province – declared it would cut jobs, reschedule surgeries, and reduce hours of operations at its rural centers without ever feeling impelled to engage “people” in its decision.

“Perhaps there might have been some co-operative ways that we could have worked together in making the hours work for both of us in some way,” McAdam Mayor Frank Carrol complained. “But there was no discussion.”

Regardless, Alward appeared sanguine. “We’ve challenged both health authorities to look within their budgets to see how they can find savings,” he said. “Horizon. . .has gone forward. . .and they are working through those (decisions), ultimately, with communities.”

Actually, its not. But why let a little conundrum stand in the way of public policy?

Similarly, last week, the Province announced it will no longer guarantee business loans to companies that could, at some point, fail – a strategy that makes about as much sense as denying insurance to an individual because he might, at some point, stop breathing. And yet, said Finance Minister Blaine Higgs, “We don’t want to be a bank. But if we are forced to be a bank we should act like one.”

So, then, was it acting like a bank when, on the same day, it extended a $7.5-million loan guarantee to Twin Rivers Paper Company of Edmundston, a firm that blossomed from the wreckage of Fraser Papers?

Certainly, there’s no evidence that Twin Rivers is in any danger of shuttering and throwing 400 people out of work. Indeed, said Business New Brunswick spokesman Bruce Macfarlane, “A new term loan (is) part of an overall financing package . . .for working capital purposes to hep preserve New Brunswick jobs.”

But, surely, the pertinent point is that a government that talks out of both sides of its mouth – in this case, one that embraces consultation and financial conservatism in theory, only to repudiate them in practice – is difficult to trust. Hypocrisy in a time of hunger isn’t much of a governing principle.

The question of consistency tasks elected leaders daily. The gulf between what they say they cherish and what they do is the chasm into which public sympathy plummets, and never more broadly than during periods of great trouble.

Candor, alone, can’t bridge this canyon. But, at least, it won’t erode the precipices. And, given New Brunswick’s enormous challenges – unsustainable deficits and debt, a dwindling and aging population and tax base, moribund economic growth, an underperforming tech sector, a plethora of low-paying jobs, and the escalating cost of government services – straight talk must become the lingua franca of the age.

The power of consultation to direct tough policy is, at best, limited. So, stop pretending that electors are happy partners with the elected. The latter expect (or should expect) the former to solve problems. If we don’t like the solutions, we can revisit our relationship at the ballot box. In the meantime, get on with it.

Should governments secure loans to private businesses? As no one’s crystal ball is pellucid enough to predict either solvency or bankruptcy, the answer is simply binary: yes or no. Pick one. Again, get on with it.

Let’s have some coherence before the rubble of New Brunswick’s finances claims the worst casualty of all: the truth.

Alec Bruce is a Moncton-based writer on politics, economics and current affairs. Check out his other blog here at Atlantic Business Magazine (ABMOnline): The Uneasy Chair.