N.B. premier must address trade deficit: ex chief economist 

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New Brunswick premier-designate Susan Holt’s pledge to improve the province’s decaying economy needs to start by addressing a growing trade deficit that’s ballooned to billions of dollars, says the province’s former chief economist.

It’s not a pretty picture, said David Campbell, who authored a recent report on the state of the province’s export economy that said the value of imports coming into the province exceeded exports by more than $8 billion in 2022.

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That trade imbalance is the highest it’s been in more than four decades and coincides with years of economic decline. Private-sector growth has averaged only 0.5 per cent growth over the past 17 years, down from 3.3 per cent during the previous 10 years.

“We’ve got to get the export economy rolling again,” Campbell said. “The more money that flows out if you’re not offsetting it with exports, you’re just weakening your economic potential as a jurisdiction. That’s the real issue.”

Holt and the Liberals cruised to a majority government in New Brunswick on Monday, bringing an end to six years of Conservative rule under Blaine Higgs, but she has a lot to deal with.

The province is heavily reliant on federal government transfers, which account for 39 per cent of its budget. The province’s gross domestic product per capita was a bit less than 78 per cent of the national average, according to a report last year by the Parliamentary Budget Officer (PBO), which predicts New Brunswick’s economy will trail the rest of Canada for years to come.

That’s why bolstering the export economy is vital, Campbell said. There’s plenty of opportunity, but it requires the province to invest more in industries that can compete globally, such as aquaculture, energy, automation and mining.

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“Twenty-five years ago, mining represented six per cent of the province’s GDP; now it’s represents less than one-half of one per cent,” he said. “There’s almost no mining at all left in New Brunswick, but there’s lots of manganese, tungsten and copper reserves. You have to actually have to go out and till the soil and create an environment where it makes sense for businesses to come in.”

Creating that environment includes competitive tax incentives and an easy path for employers to recruit specialized workers from outside the country, Campbell said.

Provinces that run a trade surplus every year, such as Alberta, Saskatchewan and Ontario, also tend to outperform others in economic growth. Alberta has the largest trade surplus, exceeding $30 billion per year, and also the highest GDP per capita in the country by a wide margin, Campbell’s report said.

But he isn’t convinced the economy is high on Holt’s list of priorities. He said Holt seldom talked about the economy while on the campaign trail, but he thinks that was because it’s not a major concern for most New Brunswickers right now.

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The province has an aging population and relatively low unemployment, so economic development took a back seat to issues such as health care, housing and affordability.

But Holt comes into office with a wealth of business background. She and Campbell worked together as economic advisers to former Liberal premier Brian Gallant, and she’s a former IT executive as well as a former chief executive of both the Fredericton Chamber of Commerce and New Brunswick Business Council.

“She understands the economy probably as well, if not better, than any other incoming premier in recent history,” Campbell said.

According to Holt’s election platform, she plans to focus investment on the energy, technology, agriculture and manufacturing sectors. She also promised to improve trade by diversifying its international markets.

Campbell, though, said he is in wait-and-see mode. He said there’s another reason why Holt and the Liberals need to be focused on the economy: they owe it to the country since New Brunswick relies more on federal equalization payments than any other province.

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“It’s our largest source of revenue,” he said. “If you’ve got an opportunity to grow your economy and chip away at that, you should try to do it. One of the things that should be implied in the whole equalization formula is that each province will have a good faith effort to develop their economy.”

The status quo, he said, can’t be an option.

“If we just sit back and say, ‘Well, we’re old, we’re kind of comfortable here and we’re not going to drill for minerals, we’re not going to put up wind turbines and we’re not going to build highrise buildings because we’re just not interested and the money just keeps flowing in from Ottawa,’ it doesn’t seem like a very fair deal.”

• Email: arankin@postmedia.com

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