N.B. Can’t ‘Bury its Head’ While Other Provinces Compete for Industry
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
When governments decide to heavily support and favour specific industries, it’s often called “industrial policy.” Government provides this support through things like tax breaks, cash, low- or no-interest loans, blocking competition, favourable legislation, or favourable government procurement.
We seem to be entering a new age of industrial policy, particularly but not exclusively related to the greening of the economy.
This week the feds and the Quebec government announced hundreds of millions of dollars in support for a new hydrogen project in that province; it’s green because it uses biomass to create the energy needed to produce the hydrogen.
We have talked about this before: electric vehicles, the supply chain, possibly mining, certainly all efforts to green the grid, all lined up for huge subsidies and support. The federal government here is in large part just trying to respond to the massive incentives now offered in the United States.
Regardless of where you are emotionally or intellectually on this, it is an issue that must be discussed. New Brunswick can’t just bury its head in the sand while other governments dole out hundreds and hundreds of millions. Or, it can bury its head, but then it won’t be able to play ball.
Which is my problem with industrial policy in general.
When the Canadian government and multiple provinces decided to attract Hollywood – and poured billions in subsidies – New Brunswick decided not to play ball.
When we decided to build a massive auto manufacturing sector through subsidies and protection under NAFTA, New Brunswick got nothing.
When we played industrial policy with the aerospace sector – New Brunswick got basically zip.
Quebec decided a few decades ago to pour massive subsidies into the pharma sector. We did not.
There are more examples.
Again, I am not even sure we should be playing in some of these big, supported industries. But as we look to the future, we will stay on the sidelines again?
Michelin just got another $100 million for a modest expansion to its operations in Nova Scotia – so this isn’t just a large province issue.
If governments are investing hundreds of millions in green hydrogen projects in other provinces, will we see that investment here? If governments are pumping out cash for SMR development, will we see that here? If there are large-scale cash and subsidies put into the EV supply chain, including mineral mining, will we see the ribbon cutting here?
As I have written elsewhere, New Brunswick is consistently at the bottom of the list of provinces for government subsidies (all levels of government combined). The chart below is for 2019 but I have looked at the data going back years.
I’m not making the case for a massive increase in subsidies, but I am saying we need to understand what is happening elsewhere and have an important conversation about how we should respond in the best interest of New Brunswick taxpayers.
Because we may lead the country in the lowest subsidies to industry, but I can tell you we are at or near the top of the provincial table for EI usage, equalization payments, CPP/OAS/supplement payments.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact our editor, Trevor Nichols: [email protected].