Interest rate rise will curb growth in Newfoundland and Labrador

Lana Payne
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David Dodge is giving the countrys economists plenty to debate, theorize about and generally argue over. They are in hypothetical heaven.

But its not just the economists who should be juiced up about the Bank of Canadas monetary policy and Dodges unfortunate and futile attempt to put a damper on Albertas out-of-control economy.

Every Canadian ought to be concerned that the governor of the Bank of Canadas antidote for Alberta is higher interest rates for all of us.

In essence, we are paying more for housing and to get a loan because Alberta cant manage its economic development.

Albertas Klondike approach to the economy is having a nasty spillover effect on the rest of the country not to mention on the citizens of Alberta who are scrambling to find affordable housing and to cope with inadequate public services resulting from their burgeoning population.

In order to curb inflation in Alberta, Dodge raised interest rates this month and is hinting that hes likely to do so again in September.

Yet only Alberta and, to a much lesser extent, Saskatchewan have an inflation rate outside the central banks target of between one per cent and three per cent, and that is mostly because of the price of housing.

A good number of economists believe the interest rate hike will not fix the Alberta problem, and will, instead, deflate economic growth in the rest of the country, push the Canadian loonie closer to par with the American dollar and kill thousands more manufacturing jobs in the process.

Despite record low unemployment, Canada can ill afford another loss of well-paying manufacturing jobs. More than a quarter of a million of these highly productive jobs have been lost in the last five years, only to be replaced with lower-paying, more precarious ones in the service and accommodation sectors or through self-employment.

Ontario and Quebec have suffered the most, but the rest of the country has not fared that well.

Employment declined in this province over the first half of the year. In fact, according to Statistics Canada, the loss of jobs since June 2004 has been significant, dropping to 215,500 people from 221,200. The labour force those Newfoundlanders and Labradorians either working or looking for work has also shrunk over that period by 17,200 people.

It does make one wonder: if the prime minister werent from Alberta, would the federal government turn a blind eye to the manufacturing crisis that is ravishing families and communities throughout eastern Canada?

Curbing growth

Certainly, the last thing Newfoundland and Labrador needs is higher interest rates curbing economic growth and investment. On the one hand, its good that so many Newfoundlanders and Labradorians have been able to get employment in Alberta they may have been otherwise unemployed here or plying their trade for considerably less pay.

But on the other hand, supplying Albertas labour market has its share of drawbacks. We are losing young and skilled workers. We may not get them back when we need them.

You can hardly fault those who leave. For too many years, workers in this province have been severely underpaid and treated with the disposable respect that comes from having an oversupply of labour. And, in turn, working people have often fallen into the Im lucky to have a job syndrome. But that tide is turning.

As more and more people head west for work, the challenges for our province which is fast becoming the oldest population in the country are mounting. Its not just interest rates that will have a negative impact on investment and business so will a shrinking pool of skilled workers.

Of course, it doesnt speak well for the future population of this place, either.

But it may be a good time for the government to try out a few progressive social policies which may make it attractive for young families to stay here or for families to move here, away from the Alberta rat race. What our province needs is a recruitment and retention strategy for the population.

And while we certainly need to invest in programs and services that ensure the care and respect of our aging population, it is a good time to invest in those things that may alter our population decline or, at the very least, stem the bleeding.

Some examples are child care and early learning programs, state-of-the art schools (ours have been left too long to crumble away), maternity and parental leave top-ups, lump-sum payments to new parents, more flexible work environments, and affordable and accessible training for youth and especially for women so they can take advantage of the new job opportunities left by retiring baby boomers.

And, of course, we need employers dedicated to respectful workplaces and to paying people decent wages and benefits.

These could all make a difference and they could also attract business.

There is much we can do provincially. The depopulation of our province is the most serious issue we face, and it needs attention focused attention.

There is also much the federal government can do starting with a plan to stem the loss of manufacturing jobs, a plan that considers that industrial restructuring is about people and communities. But this seems unlikely, despite polls that show the prime minister is losing support.

Instead, Stephen Harper is likely to leave David Dodge alone to make the same old mistakes. He is just as unlikely to tackle Alberta for its oil-rush mentality. He is busy, after all, trying to work out a trade deal with Columbia.

This prime minister is fresh out of ideas for fixing Canadas economic challenges. Thats what happens when you think you have all the answers, and everyone else is chopped liver.

Lana Payne is a former journalist who is active in the labour movement. Her column

returns Oct. 29.

Organizations: Bank of Canadas, Statistics Canada

Geographic location: Alberta, Newfoundland and Labrador, Canada Saskatchewan Ontario Quebec Columbia

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