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Thought Leadership

2008


"Now's the time for a prosperity agenda for Atlantic Canada"

This article was published in Progress Magazine on August 28, 2008.
Written by Frank McKenna.

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Each province in Atlantic Canada must punch above its weight to ensure its economic well-being. And in recent years they’ve been doing a pretty good job. The region boasts a good standard of living and a great quality of life.

But attracting new investments, employers and people to the region is a constant battle. The playing field is getting much larger thanks to globalization. Increasingly each province competes among heavy-weight nations like the United States, the world’s largest economy; or China, India, Brazil and Russia, some of its fastest growing ones.

If we want to sustain our winning ways, we can no longer act as four distinct players. It’s time to call on our four provincial governments to develop a prosperity agenda for Atlantic Canada; one that will increase our prospects in the modern economy, and reduce impediments to grow our local champions.

Let’s have the lowest business tax rate in Canada. The rationale is simple: low cost jurisdictions attract new investments, which in turn, creates more jobs and ultimately greater revenues for government to invest back into public programs. This approach has been embraced by some of the world’s most progressive societies like Sweden and Finland, with impressive results.

Atlantic Canada can build upon its previous success at harmonizing the federal and provincial sales taxes to remain an attractive low cost jurisdiction. Each province can raise the Harmonized Sales Tax by two percent, essentially “filling in” Ottawa’s reductions in the GST. New revenues generated from this consumption tax would be offset by reductions in corporate and personal income taxes. New Brunswick has already expressed interest in such a move. I’d encourage others to join in to ensure each province remains on equal footing.

Let’s be the destination of choice for skilled workforce. Attracting our fair share of immigrants will be critical in this regard. That’s because new Canadians come with diverse ideas and talents, along with an energy and ambition to succeed.

Few countries accept more immigrants than Canada, but this provides little direct benefit to our region. Indeed, while eight percent of Canada’s total population resides here, we attract about one percent of new Canadians. That’s not acceptable, given the fact that our population is both aging and declining. Unchecked, there will be 25 percent fewer students graduating from our high schools in 10 years. How can we fuel our economy when our most important pool of resources is dwindling?

A related issue is education. Post secondary schools can act as a magnet, attracting highly desirable individuals from Canada and abroad to the region. Moreover a cluster of learning institutions – with an emphasis on research and development -- can help generate new economic opportunities.

Atlantic Canada already has a distinct advantage in this regard. The challenge is to build upon its existing strengths as a knowledge centre. Our provincial governments should consider how a collection of disparate schools in the US northeast transformed into the prestigious Ivy League brand, and in turn, became an academic centre of gravity, and international research hub. Similar strategies could be applied in Atlantic Canada, resulting in greater cachet for those who study, work and invest in our local institutions.

Let’s eliminate barriers that impede economic growth. It’s beyond me why each Canadian province has a securities regulator. These unnecessary expenses hit our small and medium size companies especially hard. It also makes it much more difficult for them to access new markets. Our four provincial governments could reduce costs and complexity if they eliminated their regulatory bodies.

Atlantic Canada is also constrained by imaginary walls that prevent a free flow of trade, labour and ideas across our provincial boundaries. Its reached such absurd levels that a Times & Transcript editorial lamented: “If we could reliably dam the rivers and bifurcate the air at our invisible borders, I'm certain somebody, somewhere in the region would be doing it.”

As far as I can see, the only thing these kinds of barriers protect us from is opportunity. At a Premiers’ meeting this summer, we saw some movement made on a pan-Canadian approach to tear down trade barriers. But as the trade and labour mobility agreement between Alberta and BC has shown, there’s no need to wait for consensus among 13 jurisdictions to create a new economic marketplace. Let’s just get on with creating a free trade zone within Atlantic Canada.

There are many other areas where we must band together. In these pages, I’ve supported an Atlantic Gateway strategy that involves a single port with multiple facilities across the region. We should also consider combining our provincial pension funds, a move that would help place us at the centre of more large-scale investment opportunities. Regional tourism campaigns would also be a compelling and efficient way to market Atlantic Canada abroad.

Competition for new investments, employers and people is fierce and formidable. Success requires our region to bulk up and build muscle. That can only be done if we act as a single contender in the economic arena. A prosperity agenda for Atlantic Canada will build upon our strengths, and ensure we are best equipped to sustain our winning ways.

 

Executive Headshot :  Frank McKenna
Frank McKenna
Deputy Chair
TD Bank Group

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