Editorial: Low productivity at heart of imbalance

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New Brunswick’s population is growing, a good thing. But so is our trade deficit, as exports become a smaller and smaller share of our provincial income, according to economists interviewed by Brunswick News this week.

Even if a trade deficit is not in-and-of-itself a problem – i.e. imports aren’t bad for consumers, if trade produces lower prices – it’s still an indicator something is amiss with the productive engine. Especially when our economic growth is now almost solely the result of population growth, not our manufacturing export sector.

Not that immigration is a bad thing. Without new workers, New Brunswick would risk becoming so aged that demand for health care and old-age transfers would outstrip supply – the demographic “cliff” we were warned about not long ago.

A trade deficit, meanwhile, reflects the broader Canadian trend of sluggish productivity. Our national GDP per hour worked is behind Italy, France, the U.S., and almost all of our peers.

This slide is due to the hollowing out and aging of our industrial base.

Federal decisions contribute to the continuing decline in Canadian manufacturing and resource development. But we can still take local action. Here in New Brunswick, we must be more aggressive with policy to spur investment in equipment and workforce development.

Population growth provides the workforce, but not the needed increase in per-worker output. To achieve the latter, businesses need to see the possibility of a good return on their investment here: not just in our people, but also in machinery, land, research and development.

The provincial government can do its part by trimming tax rates whenever possible, eliminating red tape and duplication wherever possible, and making the public service as lean as possible. We have much potential to develop energy, minerals, agriculture and manufacturing.

International students and interprovincial migration aren’t the problem, nor is it wrong to import goods and services. We need to focus on production, and productivity, and make New Brunswick a place where businesses can grow.