Investment will drive opportunities: economist

Josh Pennell
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Newfoundland and Labrador may have plenty of wealth under the ground but that doesn’t necessarily translate into money in the pocket.

Jason Clemens of the Fraser Institute speaks about the competitiveness of the province at the NL Employers’ Council conference on Thursday. — Photo by Josh Pennell/The Telegram

Newfoundland and Labrador may have plenty of wealth under the ground but that doesn’t necessarily translate into money in the pocket.

So says Jason Clemens, economist and executive vice-president of the Fraser Institute. Clemens was a guest speaker on Thursday at the Employers’ Council conference in St. John’s.

“Competitiveness is what’s going to drive investment. If you’re not competitive on taxation, if you’re not competitive on labour regulation, if you’re not competitive in terms of skilled labour or just labour, you’re not going to attract investment,” he said.

Clemens wasn’t just speaking about outside investment, but that coming from within the province and country, as well.

“That investment is what creates opportunities. It’s what creates jobs,” he said. “Competitiveness and the investment it can attract is what lays the foundation for a successful economy.”

According to the numbers Clemens presented, this province has the largest natural resource sector in the country — Alberta, Saskatchewan being the two other big provinces in that regard.

However, there is a low rate of investment in oil and gas and mineral extraction in this province compared to Alberta and Saskatchewan, said Clemens.

“It tells me you probably have a couple of big projects in the oil and gas sector that are driving ancillary activity.”

That will likely come as a surprise to few. What may be more surprising is that although the expectations for economic growth in this province are strong — above the national average, in fact — that doesn’t translate into labour growth.

“After spending a few weeks looking at the data for Newfoundland and Labrador, I would be pretty concerned about your labour market and your ability to create jobs, sustain jobs, and encourage people to participate in the labour market,” Clemens said.

He didn’t have much good to say about the percentage of the province’s gross domestic product (GDP) that’s made up of government spending, either. Thirty per cent was the optimal number he gave for government spending GDP, but this province came in closer to 50 per cent when all three levels of government spending were added up.

“Think about the taxes you have to pay to finance government at 50 per cent of the GDP when the data is telling us you’re not getting higher rates of economic growth from that. You’re not getting more social progress for that.”

Clemens’ talk drove toward the message the province should not take wealth in the ground to automatically mean wealth for the people. He said the way for a region as rich in natural resources as this province to attract investors is through competitive policy and that competitive policy allows this place to build a calling card that will bring investment.

“That to me is the challenge for competitiveness,” he said.

He gave the example of agreeable taxes being the calling card for investors in Ireland. Other regions have laws that bring investors around or labour regulations.

What the calling card will be has to suit the province he added, but also has to set it apart from others.

Organizations: Fraser Institute

Geographic location: Newfoundland and Labrador, Alberta, Saskatchewan Ireland

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Recent comments

  • P F Murphy
    November 17, 2013 - 08:22

    Clemens of the right-wing Fraser Institute talks of taxation, labour regulation and labour's skill set, but he doesn't take the chance to look in the mirror and examine our entrepreneurs. I believe their lack of competence, education and skills are the major causes of Canada's lack of competitiveness. Having money, no taxes and workers in slave-like regulations under your thumb will never overcome the lack of our entrepreneurs' competence. Their inabilities will always defeat money, lack of taxes and skilled, energetic workers. Unfortunately there are no regulations to be enforced on those who have a bit of money, but who have no skills, no knowledge and, in many cases, apparently lack the ability to read and comprehend. It would be best if the Fraser Institute would examine its members and their qualifications to engage in business and impose conditions and supervision on the many who require it.