Decade of feeble growth has New Brunswick eyeing a P.E.I.-style fix

Premier Blaine Higgs has given his new government the task of energizing New Brunswick's stubbornly weak economy and although little attempted recently by previous governments has produced significant results, a rolling economy next door offers some hope of solutions for have-not provinces.

In Tuesday's throne speech and in interviews afterward, Higgs made it clear economic growth will be his key priority, convinced that the province's success at containing the COVID-19 virus can also be harnessed to grow jobs and wealth.

"It's demonstrated how good New Brunswick can be, and I think everyone is seeing that and feeling it," Higgs said. "And that optimism I want to be able to capture and move into other categories of not accepting status quo but challenging status quo."

But economic growth has been an elusive goal in New Brunswick in recent years, tripping up a succession of well-meaning governments

Last week, Statistics Canada reported its latest estimates show New Brunswick's economy grew by 1.2 per cent in 2019.  It was the slowest growth in any province east of Manitoba, and the tenth year in a row New Brunswick's economy has expanded at a rate below the national average. 

In those 10 years, Canada's economy has grown by 24.5 per cent. That's compared to just 6.8 per cent in New Brunswick, which had the least growth in the country and was the only province not to reach double digits.

Several thousand metres across the Northumberland Strait, however, it has been a completely different decade.

Prince Edward Island's economy has grown 25.2 per cent over the last 10 years, slightly more than Canada's with growth rates in each of the last five years all above the national average.

In 2019 alone, its economy expanded by 5.1 per cent, four times faster than New Brunswick's and the highest increase among all provinces in Canada

Cory Renner, an economist with the Conference Board of Canada, said a number of  issues differentiate New Brunswick from Prince Edward Island. But the most significant factor in their divergent fortunes is P.E.I.'s success at attracting immigrants and growing its population.

"The biggest thing that actually explains the growth differentials is that P.E.I. has had a very successful immigration program, said Renner.

"P.E.I. has had well above average population growth over the last few years, and that good population growth goes back for about a decade. So as you bring in more people, you know, the economy grows, they spend money. And then when you have people, you also attract investment."

Prince Edward Island adopted aggressive population growth targets early in the 2000s and has welcomed 19,285 immigrants since 2010, triple the per capita amount that has come to New Brunswick.

Not all have stayed in P.E.I.,  but those who did helped the island grow its population by 13 per cent in 10 years, triggering significant new investments in residential construction and growth in employment and consumer demand. 

The influx has also helped plug gaps in Prince Edward Island's labour market. 

New Brunswick's population has increased just four per cent during the same period – and that is the key difference between the two provinces, Renner said.

"The biggest thing that's happening in New Brunswick is almost the flip side of what's happening in P.E.I.  We're just seeing really stagnant population growth," he said.

"New Brunswick has had among the worst investment performance in the country over the last 10 years, while Prince Edward Island is one of the best. It's really the weak population growth and weak investment in New Brunswick that is hurting it and in P.E.I., it's the opposite that's benefiting from it. So it's really about population growth."  

New Brunswick has increased its recruitment of immigrants in recent years.  In 2019, a modern record of 6,000 immigrants came to New Brunswick. But that's still half the per capita amount arriving in P.E.I., which continues to grow at a faster rate.

New Brunswick has not directly said it intends to copy Prince Edward Island to grow its economy, but during Tuesday's throne speech it was clear that immigration, population growth and the investment they bring will be central to the Higgs plan.

"With increasing private sector investment, increasing productivity, diversifying and growing exports, and increasing immigration and repatriation," the speech said, "New Brunswick will create the foundation for economic recovery and growth which will culminate in an increase in GDP."