On its November 8 editorial page, The Guardian commended the Legislative Assembly’s Standing Committee on Social Development for addressing the question of how young entrepreneurs could be encouraged to stay on the Island.
The Guardian and the Committee are correct to be concerned over this issue.
As has been the case for decades, Prince Edward Island’s unemployment rate remains much higher than the national average and exceeds that of all other provinces save Newfoundland and Labrador. As a general matter, policy choices that encourage entrepreneurship and investment and in turn lead to the creation of wealth and expanded employment opportunities are to be welcomed.
Looking more specifically at young entrepreneurs, Statistics Canada projects that the proportion of the Island’s population aged 65 and older – the demographic group who consumes the largest amounts of public services, particularly health care, and who pays relatively low levels of taxes, having retired from the workforce – will almost double over the next 25 years, growing from 14 percent today to 26 percent by 2031. Every young person lost to better opportunities in western or central Canada represents one fewer Island taxpayer to shoulder the burden of supporting an aging population.
While the Committee’s recognition of the looming problem is encouraging, there are worrying signs that its search for a solution will focus on the same old approaches to “economic development” that have failed consistently for longer than today’s young entrepreneurs have been alive.
One concern is the list of things in which the Committee members take an interest. The transcript of the Committee’s October 24 meeting on this matter contains frequent references to grants and loans (and which of these two is to be preferred to the other) and concerns are expressed that not all entrepreneurs are eligible for some form of taxpayer-funded assistance. This stands the very notion of an “entrepreneur” on its head. To be fair, the Committee members also focus attention on education, training, and mentoring and this is a positive sign, but one hopes that young Islanders will not be taught that the definition of an entrepreneur is someone who can successfully pry taxpayer dollars out of myriad overlapping subsidy programs.
However, an even greater concern is the list of issues that do not appear on the Committee’s radar.
If you were an entrepreneur or an investor, what issues would be most important to you in determining where to make your home and place your money?
You likely would be concerned with the competitiveness of corporate, personal, and sales tax rates. You would want to ensure a ready supply of well-educated workers and you would be attracted by regulations that create a flexible labour market. High-quality infrastructure, such as the roads that would take your goods to market, would be important. Furthermore, you would want to be confident that your own hard work and effort would not be undermined by a government that hands out cash willy-nilly to competing firms who cannot match your entrepreneurial vision, the quality of your products and services, and the efficiency of your operations.
If the Committee wants proof that a focus on basic economic fundamentals will do far more to promote entrepreneurship and investment than a mish-mash of cash handouts, it need only look to Ireland. For many years Irish governments followed a policy of subsidizing businesses, and despite these efforts the Irish economy remained among the poorest in Europe and thousands of young Irish men and women left for better opportunities in other parts of the world. But in the late 1980s the government performed an about-face: subsidies and red-tape were cut, taxes were lowered, and government spending was refocused on basics such as education and physical infrastructure. The result? The Irish economy is now one of the strongest in the world – per capita GDP is now higher than Canada’s – and expatriates are returning in droves.
Given its beautiful green scenery and the Celtic roots of so many of its residents, Prince Edward Island has long held a strong affinity with Ireland. Let us hope that the Irish example will inspire the Island’s policy-makers and lead them to choices that will ensure a bright future for its youth.Ian Munro is the incoming Director of Research for the Atlantic Institute for Market Studies. He was born and raised in Charlottetown.