With CETA comes needed regulatory reform

(Photo: Wikimedia)

Editor’s note: we welcome Ed Hollett to the Straight Talk blog. Ed has been hired as AIMS Senior Fellow based in St. John’s, and will be a regular contributor to this space.


By Ed Hollett, AIMS Senior Fellow

In 2012, the fishing industry in Newfoundland and Labrador sold about $119 million worth of fish and other seafood to the European market. The provincial fishing industry was worth about $1 billion that year. Both of those numbers are dwarfed in comparison with the $25 billion European fisheries market.

Newfoundland and Labrador’s share of that big market was so small because of European tariffs. They added 25 percent to the cost of direct fish imports from Canada and up to 20 percent on shellfish.

The Comprehensive Economic and Trade Agreement (CETA) will eliminate those tariffs. This is the principal value of the European trade agreement to the fishing industry throughout Atlantic Canada.

The agreement gives the Canadian industry fair access to a lucrative market. CETA brings opportunity, including the chance to improve the fishing industry.

The cost of social engineering

For Newfoundland and Labrador, CETA will also mean the elimination of Minimum Processing Requirements, or MPRs. It will also increase pressure to eliminate other restrictions that have kept the fishery from developing into a modern, prosperous enterprise for everyone involved.

MPRs set minimum levels of processing that must be done on every species before product can be shipped to market. They are designed solely to keep work in fish plants in rural Newfoundland and Labrador. They have worked very well, in that respect. In 2015, there were twice as many workers processing fish in Newfoundland and Labrador compared to Nova Scotia. But the catch is a great disparity in earnings between workers in these provinces

The value of fish landings has generally been higher in Nova Scotia (2016: $1.6 billion) than Newfoundland and Labrador (2016: $1.4 billion). With MPRs, more plant workers in Newfoundland and Labrador have to share a similar- or smaller-sized pie of earnings. A 2008 study by the Department of Fisheries and Oceans demonstrated the impact of policies like MPRs. Plant workers in Newfoundland and Labrador earned about half as much as their Nova Scotia counterparts and about one-third less than the regional average for plant workers. Self-employed fish harvesters were actually in a worse position in comparison to their Nova Scotia counterparts or the regional average.

NL1(Source: DFO)

By mandating an oversupply of labour, MPRs artificially suppress wages. This helps to explain the difference between the earnings of processing workers in Nova Scotia and Newfoundland and Labrador.

More importantly for economic growth, MPRs told processors what to produce regardless of what customers were looking for and regardless of the value of the final product in the market. Processing restrictions hindered processors from finding ways to process landings for species such as yellowtail flounder that couldn’t be processed economically in Newfoundland and Labrador. The same restrictions also forced the provincial government to spend money prosecuting companies for trying to meet market demand or issuing exemption after exemption to the unworkable processing rules.

The problem of harmful restrictions is not confined to Newfoundland and Labrador. In 2015, for instance, federal license restrictions prevented New Brunswick crab harvesters from selling their catch to a company in Newfoundland and Labrador, even though the company was offering a better price than New Brunswick plants.

CETA brings Atlantic Canadians access to a new market for their fish and other products and services. It also brings the opportunity to get rid of ideas that simply don’t work any more, if they ever worked at all.


Examination of public sector in Western Canada remains necessary

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By Marco Navarro-Génie, President and CEO

The paper AIMS published last week with the Frontier Centre for Public Policy looked again at public sector workers in Canadian provinces, excluding the federal public service.  The new work placed an emphasis on Western Provinces;  the first one focused on the Atlantic region.

The type of reaction to the “Western” data paper in the Winnipeg Free Press caught my attention.  David Camfield, an associate professor of labour studies and sociology at the University of Manitoba was quick to dismiss the paper as a kind of fake news.  He charged that the paper was looking for troubles where there are none, and suggested the authors of the study thought the public sector workers are unimportant.  None of those comments had evidentiary bases in the paper.

Camfield did introduce substance to his criticism by addressing the issue of scales, which dictates that smaller provinces (in population) tend to be at a disadvantage.  This is true to some extent, and the observation is valid. But the critique is less effective because the measure we use (number of public servants per one thousand people) goes some distance to account for scale.

The data, in addition, show that other smaller provinces with similar profiles have fewer public sector workers per thousand residents than Manitoba.  The worst case in Atlantic Canada, Newfoundland and Labrador, has half the population of Manitoba. Newfoundland’s population is extended over a very large territory, yet Newfoundland has 101 public sector workers per thousand versus the 111 in Manitoba.

Manitoba is more densely populated (Newfoundland and Labrador has 1.31 inhabitants per square kilometer; Manitoba has 2.03).  Should it take 10 more public servants per thousand paid by provincial residents to deliver services in Manitoba than it does in Newfoundland and Labrador?

Manitobans ought to ask why it is that their provincial and municipal governments need so many public servants. 111 public servants per thousand drawing pay from the provincial taxpayer in Manitoba represent 28 more per thousand than the national average, or 34 per cent more over all.  Manitobans need to ask if the services they receive are 34 per cent better than those of the average Canadian. Are they 34 per cent better than in New Brunswick?

New Brunswick offers an instructive comparison with Manitoba.  While Manitoba has a notable French-speaking population (4 per cent), New Brunswick (and its relatively-high rural population) is officially bilingual (and 32 per cent francophone). It offers many public services in French, significantly increasing their delivery costs and often duplicating them.  Yet, New Brunswick is below the national average with 81 civil servants per thousand.

Our call for a thorough examination of the public sector’s size in Manitoba and Saskatchewan remains necessary.

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Population growth hopeful sign for NS reserves


By Joseph Quesnel, AIMS Fellow

Some new Census data from Statistics Canada about Nova Scotia may hold opportunity and promise for the province’s Indigenous communities.

The first release of data from the 2016 census is showing more evidence of a population exodus from the province towards other provinces. According to a Chronicle-Herald news story, Nova Scotia showed an overall population growth rate of 0.2 per cent, which translated into just 2,000 new residents. The Atlantic province’s rate was much lower than the national rate of five per cent growth. New Brunswick was even lower as it decreased by 0.5 per cent. PEI only increased by 1.9 per cent and Newfoundland and Labrador only increased by one per cent.

However, the lower population growth is not uniform across Nova Scotia. Although some rural regions showed some decline, there were other rural areas that did not. In particular, many First Nations in Nova Scotia showed increases much higher than the provincial average. For example, Membertou First Nation, an Indigenous community in Cape Breton, enjoyed an 11.3 per cent growth rate. This compares to the province of Cape Breton which saw a decrease of 3.2 per cent over the same period.

Eskasoni First Nation, the largest Indigenous community in Nova Scotia, experienced 3.4 per cent population growth. This is not unlike most other Indigenous communities across Canada, where the youth population is booming, much higher than in other non-Aboriginal communities.

Clearly, younger First Nations in Nova Scotia are attached to their communities and families. Policy makers must be taking advantage of this booming younger demographic within Nova Scotia reserves. Those young people are going to need jobs and opportunities.

Perhaps some inspiration can be drawn from other regions of Canada. Just recently, the CBC reported that a trade school for First Nation students just opened in Thunder Bay, Ontario. Many of those students will come from isolated Northern reserves with few opportunities, beyond band jobs. Education officials and First Nation leaders have often had to deal with funding and jurisdictional issues related to Indigenous schooling, mainly because it is a federal responsibility. One student in the CBC piece mentioned how he wanted to be the first qualified mechanic on his reserve. The piece also questions why there are any impediments to young community members learning how to start their own hair dressing business or bakery.

Opening trade schools and programs for First Nation students in Nova Scotia and all over Atlantic Canada would provide opportunities for the growing population of young people, many of whom are not necessarily interested in college or university. It would also create an entrepreneurial spirit that is needed on so many reserves.

See also: AIMS President Marco Navarro-Génie quoted in the Globe and Mail recently about census data and Atlantic Canadian demographics. Link here.