by Rod Allen
As a
ppeared on page A1

“Please sir, I want some more,” says poor little Oliver Twist to mean old Mr. Bumble the Beadle.

But if Oliver gets a soup-ladle upside the head for his troubles must New Brunswickers necessarily expect the same when, cap and self-sufficiency agenda in hand, we approach Mr. Harper the Bumble of all Canada for a $500 million gob of gruel?

Premier Shawn Graham hasn’t said when he expects to ask Ottawa for the money, but some – including federal Finance Minister Jim Flaherty – are already implying the outcome won’t be any more satisfactory for the premier than it was for young Twist.

Earlier this week the premier’s Task Force on Self Sufficiency released its 91 recommendations, which include the building of a $1 billion fund to pay for some of the programs that are intended to make New Brunswick a self-sufficient province by the year 2026.

Even the concept of ‘self sufficiency’ itself remains somewhat elusive.

Task force co-chairman Francis McGuire says, for example, that self-sufficiency means New Brunswickers will be both more numerous (by 100,000 people) and wealthier (through higher wages) by 2026. But on the other hand he also acknowledges that New Brunswick might still be accepting transfer payments from Ottawa that year.

As for the self-sufficiency fund, its raises questions about self sufficiency two different ways.

The province wants its government agencies such as NB Liquor to raise half of the fund through the bond market, but that still increases the provincial debt by $500 million and ultimately taxpayers will have to cover that extra debt.

That might make settling in the province a tougher sell for those extra 100,000 prospective New Brunswickers.

Secondly, how does asking Ottawa for a raise in our allowance make us more ‘self sufficient’ anyway?’

Good question, says Charles Cirtwill of the Atlantic Institute for Market Studies in Halifax, and if McGuire can’t answer it he’d better have the people skills of a character from Atlantic Canada’s own literary tradition, rather than wimpy little Oliver.

But besides fancy talk, ‘Sam Slick’ had better have something to sell.

“If New Brunswick is seriously taking about self-sufficiency,” asks Cirtwill rhetorically, “are they really saying ‘just give us $500 million now and we’ll go home and 20 years from now equalization will be gone?’

“There doesn’t appear to have been sufficient thought given to the quid pro quo here; what’s in this for the federal government?”

Cirtwill said AIMS has encountered some interesting trends in its studies of the federal equalization system, finding among other things a relationship between the ‘transfer payments’ the program doles out to the provinces and the ‘debt service’ set down in each provincial budget.

“If you take out the debt service charges (interest and scheduled principal payments on your debt) from those budgets, you find they can actually cover their operations (what you pay for services such as health care and education) so you don’t need those transfer payments.”

If you shift the emphasis away from debt service and make it about “debt swap” instead, you take, say, 10 per cent of your equalization payment and put it right on the provincial debt instead of operations.

There are two key conditions – matching funds and a cap on borrowing.

That means firstly that whatever Ottawa puts on the debt through equalization the province matches with its own revenues until the debt is down to zero and equalization is finished. Secondly, that the province can’t just go out and get another credit card because its debt is going down.

Naturally there would be provisions for the unforeseen, such as a natural disaster, but a province would have to agree to an annual limit on how much it can borrow while paying the debt to zero.

It sounds a lot like the way the International Monetary Fund deals with cash-strapped countries and would not be palatable to all, acknowledges Cirtwill, but it’s better than a proposal that Ottawa is unlikely to even consider.

“If this is a serious agenda for self-sufficiency, the federal government has a responsibility to ask for some form of guarantee from the province that it will, in fact, achieve this. You have to be ready to show ‘this is what we’re going to do to save money for federal taxpayers,’ and you also have to be prepared to pay a penalty if you don’t achieve it.”

McGuire hasn’t spoken of any guarantees, but does say he has something to sell. Part of the function of a self-sufficiency fund would be to pay for new government systems such as ‘e-health,’ central, comprehensive record keeping that the Liberal government believes can not only save millions, but make millions by developing the fledgling technology and selling it to other jurisdictions.

“I think your health minister (Moncton North MLA Michael Murphy) has the better idea,” says Cirtwill. “Rather than government going into business, you’re better off getting the private sector involved. Let them take the risk, and the reward.

“I like that better, and not just because Murphy was elected and McGuire wasn’t.”