Far from being a new approach to regional economic development in Newfoundland and Labrador, Kathy Dunderdale's announcement of new funding on Friday, March 18, 2005 continued the program contained in the 1992 Strategic Economic Plan (SEP), as modified by the Tobin and Grimes administrations up to 2003.
The SEP was a genuinely strategic document. It contained specific action items for each of the departments with economic responsibilities, including fisheries, tourism and environment. The SEP reorganized the old development department into a new department called Industry, Trade and Technology and focused attention away from resource exploitation and onto non-resource-based enterprises. This stood in sharp contrast to the Peckford administration's heavy emphasis on oil and gas and related spin-off manufacturing like petrochemical plants, a theme that re-appeared almost 20 years later as Chapter 2 of the Williams campaign Blue Book.
More importantly, though, the SEP document contained a broad philosophy that underpinned government's subsequent approach. In future, government's role would be one of creating an overall environment in which individual private-sector entrepreneurship would be the engine powering economic growth. The SEP highlighted the needed for improved productivity throughout the economy and on being competitive globally based on local strengths. It spoke of the need for innovation and on an educational system that fostered individual entrepreneurship and adaptability.
The SEP also called for the creation of economic zones, originally 15 and later expanded to 20 with political agitation from the old rural development movement. The zones would serve two major purposes. For government, the zones gave a basic planning framework so that the provincial government could ensure that each area had the necessary infrastructure to support the second purpose: economic initiatives based on regional plans developed by local boards.
Through the zones, the Economic Recovery Commission (ERC) and Enterprise Newfoundland and Labrador (ENL), government's approach to economic development would be decentralized and placed in the hands of local representatives. Overall, the goal was to ensure that there was economic activity within each zone such that one could live in one community and find lasting employment within easy driving distance. That phrase found its way in one form or another into all sorts of government documents, public comments and news releases.
The new Tobin administration abolished the ERC. It absorbed ENL and its five regional offices into the development department, which was itself renamed several times. Eventually a business investment corporation was started, a pale shadow of ENL, and new investment programs were created to give financial aid to qualifying businesses.
The investment corporation has been retained under the newly announced plan and the funding programs created under Tobin and Grimes after the death of ENL have been sweetened with new cash by the Williams administration. The names may have changed but the fundamental concepts remain the same.
The number of boards has apparently also been reduced from the current 20 to nine. This change appears to owe much to an inverse of the logic of Spinal Tap's amplifiers. "We have made progress; there are now nine boards" as one may well expect to see in a government media talking point on the Dunderdale announcement. The number of boards is less important, though. The goal of the nine new boards is identical in every respect to the original zone boards created under the Wells administrations SEP. [ Challenge and Change: a strategic economic plan for Newfoundland and Labrador, (St. John's: Government of Newfoundland and Labrador, 1992), pp. 16-18. Sadly this is not available online.)
In the new budget expected on Monday, other initiatives may also reappear from the 1990s, including some ideas generated by Dunderdale's deputy minister Doug House but rejected by the Wells administration. The Royal Commission on Employment and Unemployment, chaired by House, had recommended and the ERC subsequently endorsed the idea of series of investment schemes such as the Newfoundland and Labrador Stock Savings Plan, the Venture Capital Tax Credit Program, and the Newfoundland and Labrador Development Savings Bonds.
There are some differences in the New Approach and these may prove telling for overall government policy in the future.
First, the New Approach does not contain a simple set of objectives, as the SEP did to guide overall economic development. There are no simple set of guiding statements that cabinet may use when tackling issues such as the future direction of the fishery. Old ideas which run counter to a commitment to innovation and productivity can take hold. As a result, government policy may well support holding people in stagnant jobs, dependent on some form of income supplement like Employment Insurance because it is politically expedient rather than economically sound.
As well, government may begin to reassert itself into the actual business of economic development thereby replacing the private sector as the engine of growth. Before 1989, government was often seen as the economic engine of the province. Emphasis was placed on government jobs. Government itself invested in industries or provided loan guarantees. Under Wells this was replaced by the SEP philosophy. But in time, the Tobin administration restored government's misplaced role with his decentralization program. The Williams Blue Book talks of using procurement as a means of generating economic activity. it advocates changing procurement decisions from a basis on quality and cost to one of net economic benefit. May we see pencils made in Labrador at 50 cents each because of the job creation involved, rather than buying imported pencils at a nickel each?
Or, in a related way, calls have been made recently for greater government spending generally, both federal and provincial, on public sector jobs with no other benefit than giving everyone a piece of the action. Bella Oxmix would be pleased.
Second, in a structural sense, government is no longer served by a fundamental competition of ideas between established interests and a new vanguard. Doug House railed bitterly against many things in his memoir Against the tide, not least of which was what he called "The Old Guard". These were senior public officials who held their positions under the Peckford administration and who continued to do so under Wells and later Tobin and Grimes.
House's Old Guard could be better described as government officials used to operating within established bureaucratic organizations and patterns. The names may well have changed in the intervening decade but the fundamental approaches of government bureaucracy - hierarchical decision-making, "process" versus outcome - are all retained.
What House missed in his memoir was the value of the competition of the ERC and the "Old Guard" in generating ideas for cabinet. Government is about choices but too often established orthodoxy limits the range of choice. Under Doug House, the ERC embodied the core values of the Strategic Economic Plan. Yet none of its ideas was allowed to emerge as policy without being rigorously tested by a critique from House's nemesis. Cabinet benefited from this process since half-formed ideas could be made whole through the very act of advocating an idea. House disliked advocacy, prefering to simply impose the idea but there is no question of the value of rigorous examination and debate in developing an idea into government action. Out of the dialectics of the approach, policies and programs could emerge which were more likely to stand up to the trials of actual experience. There was little chance of some folly surviving or of some minister or other latching onto a hare-brained scheme that met short-political needs but which was scatter-brained in any other sense.
Unfortunately, the Williams administration has put House into a line department thereby perpetuating the monolithic process of the Tobin administration. House has become, after a fashion, part of the very bureaucracy he once derided. But in a larger sense, House and his associates have become the new Orthodoxy, the new "Old Guard", at least within his department. They will face no meaningful test of what they propose before it is government policy. Much worse, though, House and company cannot define themselves as being different from the bureaucracy when they are now an integral part of it. House may have what he always wanted - namely the power to impose a concept - but he has earned it by essentially becoming what he derided in Against the tide. How many of those he lambasted in its pages have spent the last year chuckling in their retirement beer? In time, Doug House may not serve the province as well in his new role as he did in seven years as ERC chair.
Third, there is no ENL. While it grew out of the Peckford era development corporation, ENL in the early 1990s was a model of practical business advice. It pioneered the use of computer networks to deliver support in communities across the province. It partnered with federal agencies and created positive relationships with all sectors of the economy and society. More importantly, though, ENL provided local groups with direct access to solid information. Contrast that to the post 1996 approach which brought greater power into the hands of St. John's bureaucrats and encouraged in the zone boards - now called Red Boards - a focus on seeking government hand-outs instead of actually fostering sustainable development.
Tobin's business corporation, perpetuated by Williams, is a rump with little real ability within its ranks to do what ENL used to do. After 1996, economic initiative died in Newfoundland and Labrador, assimilated neatly under the control of bureacurats. The words, the appearances survived but underneath the exterior trappings bureaucratic nanoprobes stifled the creativity and effectiveness of the old ERC and ENL staffers. There is no small irony that Roger Grimes has criticized the ERC, falsely, for dictating to rural Newfoundland and Labrador, yet the system that emerged after 1996 with his support did exactly that.
House himself may well see the shortcomings of the modern structures; he criticized them very accurately in his memoir. Yet now he is trapped within that framework. There is little effective co-ordination between Ottawa and St. John's, for example, and in the fall-out from the Premier's Great Crusade, the federal government is unwilling to entertain much in the way of co-operation with the flag stompers.
As an integral part of the bureaucracy, beholden entirely to Williams for his place, House is unlikely to set about building contacts within the federal system that would work despite political disagreements. House was able to do it before, under Wells, but now he cannot go against his master. There is no one who occupies the same role Doug House once occupied to build much-needed bridges to the mainland. There is no Doug House, but more importantly there is no place for such a person to work.
Fourth, what we actually have here in the DUnderdale announcement is less of the substance of the Wells era SEP and more that of Tobin and Grimes. The Blue Book, for example, copies almost word for word the SEP as its first chapter. Yet, in its second chapter, with the emphasis on petrochemical plants and hydroelectrical development and mineral processing we see the same theme of heavy industry and primary resource extraction common to Tobin and Peckford.
We see exactly what Doug House characterized as the ideas of the "Old Guard" (p.79):
"With respect to economic development, the Old Guard, who are of the same age cohort, espouse ideas that were conventional when they did their undergraduate degrees. Their views combine the urbanization/industrialization approach of the Smallwood era with the resource management approach of the Peckford years. In the main, they believe that industrial, resource-related megaprojects in oil and gas, hydroelectricity, and minerals constitute the province's best hope for the future. ... They also believe in a federal presence in Newfoundland and Labrador that would reflect this megaproject philosophy through such things as large penitentiaries and defence bases. [or we might now add agricultural stations, weather forecasting or giant underwater tunnels]".
To be fair, the current administration has not displayed overt skepticism of small and medium-sized enterprises, as House describes the Old Guard view. In fact, House's approach aims at them. But this announcement on Friday was soft. There was no sign of the Premier, confirming that he has no personal interest in the regional diversification initiatives contained in whatever Dunderdale unveiled. The Premier may be earnestly occupied with something else, or taking a vacation but were he genuinely interested, he would have scheduled the announcement for a time when he was available. He campaigned on jobs and business development. He is said to want to focus on that now that he has shuffled some responsibilities off his plate. Yet, where was he on Friday past?
The New Approach is slowly revealing itself to be very familiar. The essential strengths of the Wells administration's economic policy have been affirmed by the very fact that a decade and more after they were put in place, they remain as government policy. Danny Williams trumpets his success to an audience at the Empire Club of Toronto. His landmark economic policy: the "EDGE" program established under Clyde Wells.
Yet for all the strengths of the various programs that made up the policy, its current incarnation contains the same fundamental weaknesses that grew up under the Tobin and Grimes administrations. Only some have been touched on here, but the ones noted point to lingering challenges in economic development.
One is getting politicians out of the business of job creation. Recall, if you will, that Danny Williams stood for election on a platform of creating jobs, not fostering the climate for job creation. Danny Williams, entrepreneur, entered government in order to create employment. Only in Newfoundland and Labrador is this not considered a bizarre idea.
The other challenge is to increase emphasis on anything but government and government- subsidized industrial activity.
Those two are aspects of a fundamental tenet of the SEP: the private sector is the engine of economic growth. They reflect more than a half century of failed efforts up the notorious Sprung greenhouse. They come from two and a half years of consultation with the private sector that led to the SEP, yet for all that, they remain something from the SEP politicians refuse to accept.
They remain the enduring challenge to be overcome before meaningful change can take hold.
