Report: Only British Columbia ranks worse in national assessment over the past 25 years, by the C.D. Howe Institute says

New Brunswick is the runner up for slowest labour productivity growth in the country, according to a report released by the C.D. Howe Institute on Thursday.

The commentary, titled ‘Lagging Behind: Productivity and the Good Fortune of Canadian Provinces,’ looked at Canada’s productivity over the last 25 years. It found British Columbia had the slowest productivity growth in Canada, followed by New Brunswick. The weight drowning productivity, said the report’s author, Serge Coulombe, is both provinces’ “anemic” accumulation of physical capital.

“It is the worst aspect of New Brunswick’s performance,” said Coulombe, a professor of economics at the University of Ottawa. Discounting New Brunswick’s dismal capital accumulation growth, coming at 0.10 per cent a year, the province would have ranked in the middle of the pack, he said.

Although New Brunswick had a thirty-year period of high productivity where it caught up to the rest of the country, the professor said, since 1980 we have fallen behind again. In 2009, New Brunswick had a productivity rate 25 per cent lower than the national average, Coulombe said.

One factor slowing growth is a heavily-seasonal natural resource sector. Coulombe said New Brunswick ranked last in terms of productivity in the natural resource sector. Unlike Newfoundland, he said, New Brunswick is not “lucky” when it comes to the products it has to deliver.

The low grade doesn’t come as a surprise, said Charles Cirtwill, president of the Atlantic Institute for Market Studies.

“Productivity growth translates into wealth,” he said. “It’s disconcerting,” the president said of the low results. “It isn’t putting us in a good place to move forward.”

Cirtwill criticized the “sacred cows” of regionally differentiated unemployment and equalization transfers for slowing the province down.

By subsidizing seasonal sectors, Cirtwill said, “We are essentially trapping literally generations of New Brunswickers in seasonal positions.”

“The painful reality is that up until the tax cuts that were put in place by the last government, New Brunswick was among the least attractive places to invest in the country,” Cirtwill said. But he warned tax cuts are not a magic cure.

“If you have a 40-year history of being a bad place to do business, you can’t really turn that around in four or five years,” he said.

Chad Peters of Enterprise Greater Moncton is more optimistic.

“We have to put more emphasis on our technologies, our processes, our operations,” he said. “We see a need to work smarter.”

After years of raking in business on the low Canadian dollar, Peters says industry is now realizing that they have to make investments to stay competitive.

“That low dollar compensated for not having to make a lot of investments in productivity because we were still able to make a profit,” he said.

The future is in technology and knowledge intensive industries, Peters said. “There’s a lot of smart people in the province,” he said. “If we can harvest that brainpower, then we can offset the fact that we don’t have offshore oil reserves like Newfoundland.”

Coulombe agrees. “When you don’t have oil,” he said, “you have to really invest in education to be outstanding.”