Change and Challenge: Chapter Four - Creating a competitive edge (4)

Government Operations

The public consultation process on the development of the strategic economic plan highlighted people's feelings that they are over governed. The public feels the Province is over-regulated, that Government is too inflexible, rigid and complex, and that there is a definite need for a change in the attitudes and commitments of politicians, bureaucrats and the general population alike. People expressed a great deal of frustration about the number of development agencies and the confusion, duplication and red tape which they create. The public emphasized the need for better co-ordination between both federal and provincial agencies; the need for front-line managers to make decisions; the need for government officials to have more flexibility in making business decisions; the need to streamline the process to speed up decision making; and the need for educational and training initiatives within Government to provide public servants with sound management skills, and which would stress the importance of providing quality service to businesses.

Government itself has recognized these concerns and has already taken action to address them. The Province has made considerable progress toward reducing duplication with the consolidation of its business support activities within Enterprise Newfoundland and Labrador, which has also been mandated to co-ordinate regional activities.

The current challenge to Government is to provide better service in a time of diminishing resources and increasing demands for service. Government is, therefore, now committed to the introduction of a long-term program to improve the quality of service to clients. This "service quality initiative" will be a comprehensive approach intended to transform Government's organization from a process-oriented system to a supportive client-focused, results-oriented system. This will require continuous support and commitment from management and an emphasis on open communication, teamwork, innovation and training.

While the greater decentralization of decision making was a recurrent theme in the public hearings of the Royal Commission on Employment and Unemployment six years ago, the issue did not generate as much interest in the public consultations for this strategic economic plan. This may reflect satisfaction with the decentralization of decision making now in effect in the five ENL regions. Government believes that rather than imposing regional decisions from the top, it is better to let regional organizations emerge as needed from the community level.

During the public consultation process the public did indicate a desire for improved co-ordination among departments, more decision making at the local level, a greater sensitivity by regulatory departments and agencies to economic development issues, and an improved attitude and commitment from the existing political and bureaucratic system. There was also general agreement that Government should not be the operators of businesses but instead should establish a positive economic climate for the private sector.

Strategy Statement. The Province mil take steps to ensure that the structures and processes of government departments, particularly those involved in economic development, are streamlined to provide for greater efficiencies and responsiveness in delivering services to the public. Government mill become more focused on serving the client. Likewise, the public will have to recognize that government funding and programs are not limitless and priorities will have to be established for the provision of services.

Actions. The Province will:

30. Establish, within each Enterprise Newfoundland and Labrador region, a process to allow for the better co-ordination of economic development activities across all applicable provincial government departments and agencies. ENL will take the lead in the process by establishing regional groups composed of the senior official of each of these organizations to:

• share information on respective activities and priorities in the region;
• improve the timing of decision making on economic development activities;
• assist in developing a client-Centre approach to program delivery within all departments and agencies working in the regions, particularly programs relating to administrative and regulatory functions affecting economic development decisions;
• advise departments on the appropriate level of authority that should be delegated to local and regional offices;
• establish guidelines which give priority to processing proposals or applications related to economic development; and
• recommend courses of action to co-ordinate federal and provincial
  activities related to economic development, and to reduce duplication of government services and programs.

31. Avoid providing services where they can be provided by the private sector.

32. Implement a Service Quality Program within the public service. This program will make the public service more client oriented, permit more flexibility and accountability within the system, provide for a more decentralized approach to program decision making and ensure a simplification of rules, policies and procedures.

33. Request the Advisory Council on the Economy to make periodic reports and recommendations to the President of the Executive Council on the need for improving the efficiency and effectiveness of government services delivery.

34. Continue the review and elimination of the various fees and licences which directly affect economic development initiatives.

Tax Initiatives

The Province must ensure that its business tax climate will complement its economic development objectives. Both established and new businesses must be assured that the tax regime is fair and equitable. The tax regime has to be structured to provide a business environment conducive to investment and economic growth, and we must remove disincentives which keep businesses from locating here. Although the overall tax burden on businesses in Newfoundland and Labrador is less than in Canada as a whole, it is currently somewhat higher than in the other Atlantic Provinces.

Responsible tax reform must recognize that the Province has to operate within the constraints of Federal-Provincial tax agreements and has to generate a sufficient revenue base to maintain an acceptable level of public services.

Strategy Statement. To strengthen the Province's ability to attract new investment, Government will intensify its comprehensive examination of the tax system in consultation with the business community and others. The Province will ensure that the tax system encourages economic development, and that the private sector operates under a tax system that allows local businesses to compete equitably with those in other jurisdictions.

Actions. The Province will:

35. Pursue at the earliest opportunity harmonization of the provincial Retail Sales Tax (RST) and the federal Goods and Services Tax (GST) and provide full input tax credits for RST. Harmonizing the two taxes will greatly reduce the tax burden on business, stimulate increased economic activity in many important areas and be essential for international competitiveness in the long term.

36. Adjust taxes where it can be demonstrated that these would have a positive impact on investment and economic growth without compromising the overall fairness and efficiency of the tax system.

The Province will move to reduce the corporate tax rate for small businesses, including small manufacturing and processing businesses, to 5% from the current level of 10%. In addition, the current general manufacturing and processing rate will be reduced to 7.5% from 17.5%, and the general corporation tax will be reduced to 16% from the present rate of 17%.

37. Conclude the review of our mining tax regime and make amendments which will ensure a positive climate for investment in mineral development in the Province.

38. Recommend a standardized common assessment base for municipal business taxes, with particular emphasis on the tax burden on capital and equipment.

39. Investigate the feasibility of using the tax system to encourage an employee equity-investment program.

Innovation and Technology

Our past and future economic circumstances are tied closely to export markets. Economic considerations associated with geography and proximity to markets are, however, decreasing in significance. Instead, technological development and adaptation are becoming important determinants of competitiveness.

The Province's low level of productivity and slow adoption of new technologies have constrained economic growth and development in the past and will continue to do so unless our industries increase their use of new technology. The Province will therefore actively implement its Science and Technology Policy to ensure that industry is technologically equipped, and capable of competing locally, nationally and internationally.

Government will also play a proactive and sustained role in concert with research institutions and the private sector in pursuing new areas of technological development. Although this will inevitably result in some risks and additional costs, it will produce better links between institutions, governments and the private sector. Emphasis will be placed on marine-oriented industries where we already have a comparative advantage, as well as on other industries which demonstrate they can develop competitive advantages.

Strategy Statement. The Province will demonstrate to the private sector that innovation through technology development and adaptation is essential to improved productivity and competitiveness. Programs mil be made available to the private sector to develop competitive advantages through the transfer of technology-Actions. The Province will

40. Implement programs to develop further expertise in our research institutions and business community focusing on marine activities, including communications, the sciences, cold-oceans engineering, food and fish processing, and related manufacturing, as well as cold-oceans technologies related to offshore oil and gas exploration and development, and to promote this expertise internationally.

41. In partnership with the Federal Government, implement programs to commercialize and market new technologies, products and processes, and to encourage quality enhancement, plant modernization and training.

42. Within the bounds of national and international trade agreements, develop a strategic procurement program aimed at research companies who have the potential to become competitive suppliers of goods and services in domestic and external markets.

43. Assist Memorial University and other post-secondary institutions to develop better links and partnerships with the private sector and to market more aggressively the capabilities of local research institutions and organizations.

44. Reallocate human resources within Government to give priority to the implementation of the Science and Technology Policy and to work with industry and the general public to demonstrate the importance of a technologically progressive society.

Environmental Initiatives

The past decade has seen a sharp rise in environmental awareness and concern throughout the world. The Province recognizes the potential economic consequences of such problems as global warming, acid rain and changes in the stratospheric ozone level. While we may not have a large impact on the global situation, we accept our responsibility to help resolve these issues. We will also seek solutions to our own problems, such as waste management, and will continue to participate in efforts to protect and restore the natural environment wherever it is threatened.

Vast areas of Newfoundland and Labrador remain unspoiled and must be protected for future generations. However, our environment is also an important economic asset which must be used wisely. Tourism and recreational fishing, for example, are directly dependent on a clean environment.

All resource developments will be properly managed to ensure they are implemented in accordance with the principles of sustainable development, incorporating the values of multiple use, considering wildlife habitat, watershed management, recreation and tourism potential. Public input into major developments which impact on our environment will play an integral part in the Province's decision-making process.

Strategy Statement. The Province mil undertake measures to ensure that all development takes place within the framework of an overall sustainable development strategy. The Province has already established its own Round Table on the Environment and the Economy to identify, advance, promote and advise on a strategic framework to reconcile economic and environmental needs.

Actions. The Province will:

45. Implement a sustainable development strategy which ensures an adequate balance between industrial and economic development and environmental concerns.

46. Establish cooperative arrangements with the Federal Government to harmonize and streamline the federal-provincial environmental assessment process, to avoid unnecessary duplication, expense and delays to potential investors, and to ensure consistency in the application of all legislation. The concept of an Environmental Review Agency, operating at arms length from Government, will be examined.

47. Undertake a program to increase awareness of environmental legislation, the sensitivities of ecosystems, and the requirements for environmental assessment.

48. Introduce a new Waste Management Strategy which addresses such issues as recycling, municipal sewage and solid waste disposal, the disposal of toxic and hazardous waste, and clarifies jurisdictional responsibilities for waste management with federal, provincial and municipal governments.

49. Implement new regulations to address the problems of abandoned vehicle wrecks, littering and the indiscriminate use of All-Terrain Vehicles (ATV) in sensitive ecosystems.

50. Examine current policies with regard to the alienation of Crown lands from resource development to allow multiple use, where appropriate.

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Change and Challenge: Chapter Five - New opportunities for growth

Change and Challenge: Chapter Four - Creating a competitive edge (3)

Income Security Reform

During the past ten to fifteen years the Province's labour force has become strongly dependent on the income security system, particularly unemployment insurance. In many respects the current system is an inappropriate system of income security for a province such as Newfoundland and Labrador. While the Government is committed to ensuring basic income security for all households, our dependence on the present unemployment insurance system must change. As part of its strategic economic plan, the Government is therefore committed to working with the Federal Government to reform the income security system so that it encourages enterprise, education and employment, while continuing to provide basic income support.

It is important to recognize that the dependency on unemployment insurance is a national issue and not just a provincial concern. The Federal Government recently decided that unemployment insurance in Canada would be funded solely from contributions by employers and employees.

Employers and employees in this Province, however, contribute significantly less than the benefits received.

The unemployment insurance system was originally intended to provide temporary income to people seeking alternative employment who had lost their regular jobs in the work force. The system was not designed to provide basic income support, or as supplemental income for short-term, seasonal jobs. The present downturn in the economy has pointed to weaknesses in this system which must be addressed and corrected.

Strategy Statement. The Province will work with the Federal Government to ensure that the inevitable changes to the current income security system are designed so that basic income support is provided to every household, and that weaknesses in the present system are corrected to encourage the economic growth that is needed to reduce dependency on income security itself.

Actions. The Province will direct the Economic Recovery Commission (ERC) to undertake the following action and programs:

18. With support from other provincial agencies and in consultation with community groups, to work with officials from Employment and Immigration Canada to design an alternative income security system that both protects the income needs of Newfoundland and Labrador households and provides strong incentives for work, education and self-employment. The ERC will make recommendations to governments for implementing an alternative to regular
(non-fishermen's) unemployment insurance as a pilot project by 1993.

19. In consultation with other provincial and federal government agencies, the fishermen's union and the private sector, to design and recommend an Industry Stabilization and Insurance Program for Fishermen.

20. In consultation with appropriate federal, provincial and community-based agencies, devise a strategy to ensure that any short-term job creation projects that may be necessary during the interim, until a new system of income security is established, will provide meaningful work to participants and contribute to the long-term economic development of the Province.

21. Establish a Newfoundland and Labrador Conservation Corps which will channel funds into socially useful activities that will both contribute to environmental enhancement and provide valuable work experience and training for its members.

Labour Relations

There is a clear relationship between a positive labour-relations environment and a productive, viable economy. Our society has come to expect and demand certain employment standards to govern the relationship between employer and employee. It is now the challenge of labour, employers and Government to create a workplace and a workforce that is also productive, competitive and responsive to the current economic and social changes and pressures.

The importance of a positive labour-relations climate and the necessary partnership between Government, employers and labour were emphasized during the public consultation process on the development of this strategic economic plan. It was also observed that adversarial labour relations exist in Newfoundland and Labrador and that their existence impedes economic development. Participants in the consultation process suggested that the province can move forward to resolve its economic problems only if Government, employers and labour work cooperatively to address these problems and seek solutions.

Government supports the view that a stable, positive labour-relations climate is essential if we are to attract new investment in the province as well as to ensure a vigorous and competitive environment for existing businesses. A review of recent figures on work disruptions and person days lost because of work stoppages indicates encouraging signs of improvements; the statistics also show that there is no appreciable difference in work stoppages in the public and private sectors.

Because this Province has the highest proportion of unionized workers of all provinces in Canada, the operation of the collective bargaining process is particularly important here. Its flexibility allows it to represent workers' interests better than strict government regulation of the workplace. It also allows for the development of labour contracts appropriate to different workplaces. Too much direct regulation would result in reduced competitiveness and would destroy the appeal of collective bargaining in a system that should be responsive to a variety of needs.

Employers and workers together share the responsibility of creating a viable labour-relations environment; however, there is also an important role for Government. For example, our legislative framework requires government involvement before a strike or lockout can occur. The role of Government in this case is to provide services that can facilitate and encourage better communication between workers and employers. The recent preventive mediation program of Government underscores these important principles, but it is essential that the employers and workers themselves recognize their role and responsibility in the process. Mediation and conciliation may be effective in averting or reducing conflict but cannot help if parties consciously ignore or avoid these services.

A positive commitment by all parties involved is essential to successful labour relations and cannot be legislated or imposed by Government, though it can be encouraged and facilitated. Unions, workers, employers and Government must meet the challenge of continuing to improve labour-relations practices, especially when the economy, the composition of the workforce and the workplace itself are undergoing rapid and fundamental change. Recognition of the need for change provides a unique opportunity for improving the labour-relations climate.

To ensure that we can compete in an ever-expanding global marketplace employees and employers must work together. The challenge is to create a positive labour-relations environment which satisfies the aspirations of workers, minimizes work and family conflict and produces a well-trained and committed work force. Maintaining a balance between competitiveness and employment security must be a shared responsibility of labour, employers and Government. All three must recognize the conflicting pressures of global market forces and a growing demand for fundamental workers' rights and the collective bargaining process.

During the public consultation process, reference was made to the Province's other role as a major employer and the need to review the present policy of having different collective bargaining regimes for public and private sector employees.

Government can make an important contribution to the challenge unions, workers and employers face by increasing services that help the parties work together and by making all employers and employees aware of the importance of their own commitment to improved labour relations. While there is a clear link between a positive labour-relations environment and a productive business environment, it is equally clear that it takes a commitment from all parties to make it work.

Strategy Statement. The Province mil work to develop a stable, positive labour-relations climate to maintain and attract investment to the Province and to ensure a vigorous and competitive environment for economic development. Special emphasis will be placed on the development and use of innovative dispute resolution mechanisms and other workplace practices to minimize disruptions and enhance productivity for the mutual benefit of employers and workers.

Actions. The Province will:

22. Convene, within six months, a joint labour-management consultative committee, with both public- and private-sector representation. This committee will bring labour and management together at the provincial level to develop broad strategies for responding to restructuring and adjustment issues, to investigate and propose appropriate policy and program reforms (including new and innovative methods of dispute resolution), and to review the recommendations of the Background Report on Labour Relations to the Royal
Commission on Employment and Unemployment which are not yet implemented.

23. Appoint a Cabinet committee to address matters involving public-sector labour relations and Government's role as the major employer in the Province.

24. Establish, during the next year, tri-partite committees of employers, employees and Government for each major sector of the economy to develop a better understanding of, and to discuss and advise on, labour matters. These committees will meet regularly with the appropriate Cabinet Ministers to ensure improved communication among the interest groups.

25. In consultation with management and labour, establish a Labour-Relations Education and Research Centre which will develop new skills and strategies for effective collaboration, communication, mediation, arbitration, health and safety planning, grievance procedures, conciliation and collective bargaining. This Centre will be associated with a post-secondary institution which will adopt as its area of specialization the new mandate for labour-relations education.

26. Ensure there is a partnership between business and labour to provide information on the role, importance and mechanisms for positive labour relations at the secondary and post-secondary educational institutions.

27. Allocate additional financial and human resources to the promotion and delivery of the Preventive Mediation Program.

28. Undertake a thorough review of legislation relating to labour relations; consolidating all collective bargaining legislation will be considered.

29. Establish immediately a labour-management cooperation fund to provide cost-shared financial support to projects jointly sponsored by labour and management, such as those related to improved communication, productivity or labour relations.

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Change and Challenge: Chapter 4(4)

Change and Challenge: Chapter Four - Creating a competitive edge (2)

Education and Training

Education is the key to economic development. Studies have shown conclusively that skills, qualifications, innovation and the adaptability of individuals are critical determinants of economic performance and the success of enterprises.

During the public consultation process on the development of this strategic economic plan, the general public indicated that the status quo is no longer acceptable. The public felt that our economic circumstances cannot be improved without a fundamental change of attitude on the part of Government and the people. The public generally perceived education to be the single most important element in facilitating a change in attitude, but indicated that they had serious reservations about the ability of the education system, as it is currently structured, to meet the challenges.

There is also a general belief that the education curriculum should be more focused, more relevant and more challenging; that there is a tremendous need for better guidance and career counseling; and that there should be better links between the school system, the post-secondary system and the private sector. People want to see increased efficiencies in the system and they want to see the savings realized from increased efficiencies reallocated within the education system to address its most urgent needs, such as improved facilities and equipment, laboratories, libraries, computers, books and other learning materials. People also realize that education must become a life-long process. In pursuing its strategic objectives, Government will draw extensively on its public consultation process and on the recommendations of the recent Royal Commission of Inquiry into the Delivery of Programs and Services in Primary, Elementary, Secondary Education.

Strategy Statement. The Province will undertake initiatives to ensure that the education and training system is more responsive to changing labour market demands for a highly skilled, innovative and adaptable workforce. Special initiatives will be pursued which allow governments, business and labour to work together to improve the level and quality of education, training and re-training.

Actions. The Province will:

11. Review and update course curricula at all levels and conduct evaluations of curriculum implementation to ensure that courses continue to be relevant to the changing needs of society and the economy by:

• introducing new programs at the intermediate and secondary levels which focus on the sciences, enterprise, cooperative education and technology based education;
• expanding the provision and use of computers and computer-based technologies within the school system and developing a comprehensive information technology plan for the Department of Education and the school system; and
• expanding the current post-secondary cooperative education program by including additional designated occupations and exploring the application of work/study concepts to the pre-apprenticeship programs;

12.  Develop a dynamic post-secondary education system which is capable of  meeting the education and training needs of all citizens, which can identify and address areas of weakness in our human resource requirements and which can respond quickly to changing requirements of the workplace and the economy.

Specifically the Province will:

• design and implement a provincial common studies program for colleges, establish a council for academic credit transfer, and, where feasible, revise provincial post-secondary programs to a credit-based system;
• establish high school graduation or its equivalent as the minimum admission requirement to all provincial post-secondary programs, and mandate colleges to offer preparatory programs so that adults can upgrade to meet the new requirements;
• give high priority to developing student support services in the provincial post-secondary system, including better guidance and career counseling;
• support Memorial University's efforts to increase program emphasis  related to the Province's marine focus;
• change the provincial teacher certification process to strengthen the province's educational workforce and recommend that Memorial University raise the entrance standards for the Teacher Education Program at Memorial University; and
• establish a Centre of Expertise for training teachers for rural and
  small schools.

13.  Form new partnerships between the public and private sectors based
on common interests and mutual interdependence. Specifically the Province will mobilize business, labour and the education community through:

• implementing a provincial "Adopt a School Program";
• supporting expansion of the Junior Achievement Program;
• expanding cooperative education programs;
• recruiting high-profile community individuals to be "Partnership Champions";
• promoting community education by establishing a province-wide system of community-based "Partnership Action Teams";
• developing and implementing a process for evaluating education and training programs;
• establishing measurable objectives against which to evaluate the strategy's success and prepare an annual report card to track the progress being  made towards achieving the Province's educational goals; and
• strengthening the links between the education system and private industry by initiating a formal exchange program whereby individuals from  industry would work in the Department of  Education and departmental employees in private industry;

14. Establish a Kindergarten-Grade 12 education system that is student-and classroom-oriented, and capable of responding to the changing requirements of society and the economy.  Specifically the Province will:

• establish standards of performance in the core areas of literacy, numeracy and science. This will assist school districts and schools to improve their assessment of students in the classrooms and ensure that all workers have the foundation they need to pursue the retraining required to meet changing economic conditions;
• in consultation with the appropriate agencies, implement a professional development program for teachers which requires that they participate in in-service training as a condition of continued certification, and which ensures the matching of teacher training with the actual needs in the education system and the workforce;
• expand the distance education program to small schools and offer additional courses;
• implement revised graduation requirements commencing in the 1992 school year to place more emphasis on mathematics, the sciences and economic education; and
• implement better career guidance and counseling services to provide relevant and current advice to students entering post-secondary institutions and the private sector.

15.  Substantially increase initiatives which address adult illiteracy and provide basic skills upgrading. These initiatives will be extended beyond traditional adult basic education programming in the school and college system and will be linked with federal and provincial training programs. Among the initiatives to be undertaken is a workplace literacy program to provide employees with the basic
academic foundation necessary to undertake retraining for alternative  employment opportunities.

16.  Streamline the present school system to make it more efficient, cost effective and responsive; the money generated through such changes will be reinvested in education resources that are of most benefit to students.

17. Develop and implement, in conjunction with the Federal Government, human resource development initiatives focusing on skills improvement to adjust and adapt to the current economic environment.

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Change and Challenge - Chapter 4(3)

Change and Challenge: Chapter Four - Creating a competitive edge (1)

Creating a competitive edge is essential to improving our standard of living. Indeed, as the global economy changes, improved competitiveness will be necessary simply to maintain our present standard of living. To meet the legitimate expectations of our citizens about income, employment and public services, we must sell high value-added, competitively priced, quality goods and services that meet the needs of customers in local, national and international markets. Consequently, we must add value in our existing resource industries, consolidate them, develop new resource opportunities such as offshore oil and gas, and aggressively pursue high value-added opportunities in manufacturing and the services sector.

Government recognizes that it has a responsibility to work with other orders of government, business, labour and academia to create an environment which supports enterprise and economic development. Consequently, support policies will focus on developing the Province's entrepreneurial base; educating and training our labour force; creating a positive labour-relations climate; reforming the income-security system; encouraging product and process innovation; introducing new tax incentives and marketing programs; and providing a quality of government service which attracts investment and welcomes businesses.

Developing the Entrepreneurial Base

Government realizes that to generate wealth, the creativity, imagination and entrepreneurial drive of our people must be nurtured and harnessed. The entrepreneurial base of the Province requires both a balance of domestic and non-resident capital and expertise, and a mixture of small, medium and large enterprises selling goods and services in local, national and international markets.

It must be recognized, however, that we do not yet have an adequate entrepreneurial base. While Newfoundlanders and Labradorians have always been resourceful, our history of trading unprocessed commodities and our protectionist philosophy have restrained the development of the entrepreneurial spirit which is so necessary in these economic times. Because of our focus on selling primary resources, we have only limited expertise in marketing value-added goods and services, particularly in export markets. Consequently, we lack a marketing orientation. Recognition of Newfoundland and Labrador products in national and international markets is, for the most part, non-existent. Further, recent surveys indicate there is very little recognition of Newfoundland and Labrador products even within the Province.

The lack of a dynamic and thriving entrepreneurial base also contributes to the perception that Newfoundland and Labrador does not offer attractive investment opportunities, and this makes it difficult to leverage external investment. The Government is determined that these circumstances and the negative attitudes associated with them can and will be changed.

Provincial policy for rural and regional development will be directed towards stimulating the self-reliance and enterprise that have historically characterized social and economic life in rural areas. In addition to emphasising large, technology-based export industries, Government is committed to creating an environment that nurtures and supports all enterprise, including small-scale and home-based initiatives that turn the traditional strengths of the rural and household economies into commercial businesses.

Although the value of household, home-based activities is not included in formal economic measurements, it is significant and these activities will continue to play a vital role in developing a stronger enterprise culture in the market economy, particularly in rural Newfoundland and Labrador. In this regard, Government also recognizes the important role credit unions and producer/worker cooperatives play in fostering social and economic development in rural areas.

For economic development to succeed, we must provide our entrepreneurs with the opportunity to develop their managerial, technical, financial and marketing skills, help them turn good ideas into viable businesses, and promote our Province as a place which welcomes and supports outside investment. We will also recognize and promote our successful firms and entrepreneurs, both within the Province and outside, as part of an overall strategy to enhance the image of the Province. We will introduce our young people to the benefits of entrepreneurship through enterprise education in our secondary and post-secondary systems and we will provide adequate training to aspiring entrepreneurs. Through more co-ordinated Government efforts, we will encourage and support enterprises to seek out and penetrate national and international markets. We will aggressively pursue new investment to ensure that our core resource industries are maintained, especially investment in value-added activities, that new resource opportunities such as oil and gas are developed, that new manufacturing opportunities are pursued - especially those which are marine-related - and that services-sector opportunities, notably in tourism and professional services for export, are developed.

Strategy Statement. The Province will undertake measures to introduce students to the benefits of entrepreneurship; will provide appropriate training to aspiring entrepreneurs; will recognize and promote the success of local enterprises; will promote and assist local enterprises to develop and market their products in national and international markets; and will promote the Province's attractive investment opportunities, supportive investment climate and unsurpassed quality of life.

Actions. To implement this strategy, the Province will:

1. Support entrepreneurship by:

• instituting a Province-wide promotional campaign in support of entrepreneurship and developing an enterprise culture;
• expanding enterprise education throughout the school system;
• encouraging Memorial University, through the Faculty of Business Administration, and the Community Colleges to expand business skills training to entrepreneurs in the Province;
• supporting changes to the income security system, in cooperation with the Federal Government, that will strengthen entrepreneurship; and
• encouraging and supporting the growth of home-based businesses,
  producers' and workers' cooperatives, credit unions and commun­
  ity-based development corporations.

2. Work closely with other orders of government to remove barriers to entrepreneurship, such as changing land-use regulations and the tax system; and implement changes to programs, policies and regulations under its control in order to promote and attract investment for small, medium and large-scale enterprises.

3. Develop and maintain comprehensive data bases on product requirements in various key markets (Canada, U.S., Europe, Asia) and make such data more easily available to the private sector.

4. Develop and deliver, in close cooperation with the private sector, a campaign which establishes the Province nationally and internationally as a supplier of top-quality goods and services, especially its broad range of marine-related and derived products.

5. Establish a Trade Development Council to improve private and public sector capability in international trade and marketing, and to provide advice to Government on trade-related issues.

6. Immediately institute a program to upgrade Government employee skills and knowledge of trade development to facilitate a significant new thrust in trade development services; where possible, Government will use secondments and exchanges to supplement in-house capabilities.

7. Assess its full range of financial support instruments for business to determine if they are inappropriately sustaining industries or enterprises which are not economically viable, and to redirect their use to support the priorities of this strategic plan. Where appropriate, efforts will be made to direct financial assistance programs away from loan guarantees and grants, and toward equity investments which give businesses a better opportunity to succeed.

8. Use its financial assistance programs to ensure that businesses receiving assistance have the necessary management and marketing skills to operate successfully, that quality assurance and control are integral aspects of production, and that productivity through training and upgrading of workers is emphasized.

9. Accelerate programs and activities which facilitate joint ventures, technology licensing, co-manufacturing and other forms of industrial cooperation and investment.

10. Undertake a long-term promotional campaign to educate Canadians about the positive attributes of our Province's economy, work ethic, culture, lifestyle and geography, and to promote the Province's business opportunities in key investment markets in Canada and throughout the world. Government will also improve awareness of Newfoundland and Labrador in key Canadian foreign posts and enlist their pro-active participation in our investment promotion activities.

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Change and Challenge: Chapter 4(2)

Change and Challenge: Chapter Three - Charting the Course

To address the challenges our Province is facing and to prioritize and co-ordinate government policies so that they will increase the level of wealth in the economy, the Government is committed to implementing a strategic economic plan for Newfoundland and Labrador. This plan articulates a new vision for the future, outlines the guiding principles for economic development, and provides a policy framework to support our strategic industries.

A Vision for the Future

The Province of Newfoundland and Labrador is at a turning point in its economic history. To improve our prospects for the future, fundamental changes in attitudes, industrial structure and government policy are required, changes which must be part of a new vision for the Province's economy.

Our economic vision for Newfoundland and Labrador is that of an enterprising, educated, distinctive and prosperous people working together to create a competitive economy based on innovation, creativity, productivity and quality.

A primary role of government in such a society will be to create a positive economic and social climate so that the private sector can respond to opportunities in the global marketplace. To improve our competitiveness, the ideals of productivity, quality, profitability and a passion for excellence must be adopted by government, business, labour and other groups.

Guiding Principles for Economic Development

To achieve our vision, the strategic economic plan is founded on a set of guiding principles for economic development in Newfoundland and Labrador:

1. The Province must focus on strategic industries. With increasing competition in world markets and limits to growth in primary- resource industries, the Province must target high-value-added activities in which we have, or can develop, a competitive advantage.
2. Our education and training system must adapt to the changing labour market demands for a highly skilled, innovative and adaptable workforce. In an increasingly knowledge-based economy, it is critical that governments, business and labour work together to improve the level and quality of education, training and re-training.
3. Newfoundland and Labrador must be competitive both at home and in world markets. To improve our prospects for economic growth and  development, and to maintain and expand local and export markets, the province must diversify its economic base by producing goods and services that are internationally competitive in price, quality and service.
4. The private sector must be the engine of growth. While it is the role of government to create an economic and social environment that promotes competitiveness, it is the enterprising spirit of the private sector that will stimulate lasting economic growth.
5. Industry must be innovative and technologically progressive to enhance productivity and competitiveness. A competitive advantage can be created by integrating advanced technologies in the workplace with the innovation, skills and creativity of our people.
6. To achieve economic prosperity, there must be a consensus about the need for change and a commitment from governments, business, labour, academia and others to work together in building a competitive economy.
7. Government policies and actions must have a developmental focus where the client comes first. The structure of government must be streamlined, efficient and responsive to public needs and to changes in the economy.
8. The principle of sustainable economic development must be maintained. Our natural resources and environment must be managed to ensure that development can be sustained over the long term.

A Focus on Strategic Opportunities

Opportunities for growth in the resource, manufacturing and services sectors, combined with a supportive government policy framework, can produce the level of economic activity required to reduce economic disparities between this Province and the rest of Canada. To realize our development potential in spite of limited financial resources, we must concentrate our economic development efforts on business opportunities in areas where we have, or can develop, a competitive advantage.

If we build on our strengths, a logical economic focus is our marine environment - our 10,000 kilometres of coastline and all the resources of nearly 1,000,000 square kilometres of continental shelf. By heritage and by aptitude, our people are knowledgeable, hard-working, and enterprising in marine-related industries. In fish harvesting and processing, in marine communications, in cold ocean research and technology, in offshore oil and gas, in marine-related education and training and in marine-related tourism, we have unique advantages that enhance the competitiveness of our economy.

Another major strength is the Province's environment, culture and quality of life. Such factors are becoming more important in determining where entrepreneurs decide to locate, and these attributes need to be promoted to attract new investment, especially in tourism development.

The initiative, inherent skills, resourcefulness and determination of our people, who have survived and progressed here for five centuries, are also important strengths which need to be developed for the benefit of the Province. These attributes can provide the basis for maximizing our competitive advantages as we adapt to the changing global economy and pursue new opportunities for growth. Action is therefore required to implement human resource development initiatives which build on these personal qualities in order to ensure that we are equipped with the necessary knowledge and skills to develop all opportunities which can contribute to economic growth.

To capitalize on these strengths, Government must assume a leadership role in creating an economic and social environment in which the private sector can stimulate real economic growth. To create the right economic climate, Government must ensure that Newfoundland and Labrador industry is equipped with a well-trained, highly motivated and productive workforce which is technologically progressive. Specific initiatives in the areas of education, technology transfer, competitiveness, trade and marketing, and business development are keys to future economic expansion.

Economic Zones and Regions

In addition to implementing the general support policies for economic development identified above, it will also be the role of Government to ensure that each region of the Province is able to participate in and respond to the opportunities which arise. To help ensure this, the Province's five major administrative regions will be sub-divided into 17 economic planning zones (see following map).

This division will provide for better coordination and integration of economic planning and development activities, including the provision of the infrastructure and services that are needed. More specifically, the creation of these economic zones will facilitate or allow:

• the development of economic plans by the people in each zone;
• communities within each economic zone to undertake joint initiatives which will benefit the whole zone;
• Government to strengthen the major centres in each zone to ensure that they have the necessary infrastructure and services to attract new investment and build a strong economic base;
• the economic zones to work more efficiently and effectively with the five regional offices of Enterprise Newfoundland and Labrador (ENL) to ensure that each zone's economic plan is considered in the policy and program directions being pursued by ENL and other government agencies;
• the Province to promote more effectively the economic opportunities and strengths of each zone and region; and
• more regionalization of Government administration.

In addition to these advantages, the concept of economic zones will allow the unique characteristics of each region of Newfoundland and Labrador to be identified and better understood by both residents and non-residents. This is especially true for the Labrador region of our Province. While the vision, guiding principles, and general actions outlined in this document apply also to the Labrador region, it is recognized that the uniqueness of Labrador's geography, demography and ethnic diversity means that the region requires specific attention. Throughout this strategic economic plan there are actions which apply specifically to Labrador.

The Province is committed to a co-ordinated effort to develop fully the strengths of the Labrador region in order to improve employment and income prospects through the pursuit of sustainable economic activities based on viable and realistic opportunities. To accelerate this process, the Province will direct the Labrador regional office of Enterprise Newfoundland and Labrador to facilitate the integration of economic plans for the five economic zones into a regional economic plan for Labrador.

Underlying these economic plans will be the Province's strong commitment to complete the Trans-Labrador Highway through a cooperative effort with the Federal Government, as well as completing appropriate secondary roads and winter trails; to continue to support and facilitate the expansion of Labrador's resource industries, including hydro developments, and of the low-level military-training activities which are so vital to Happy Valley-Goose Bay; to work with aboriginal peoples in Labrador to ensure their input into Government policy decisions that particularly affect them; to support aboriginal peoples in formulating their own economic development strategies; and to continue to work with aboriginal peoples and the Federal Government to accelerate the settlement of land claims and the establishment of agreed levels of self-government.

A Cooperative Approach

The people of Newfoundland and Labrador have indicated that they believe all orders of government have a responsibility to contribute to economic development and that partnership among the federal, provincial and municipal governments is essential to future economic growth. It is counterproductive for one order of government to address economic problems in isolation from the others. There has to be a full, cooperative effort involving all orders of government, as well as the private sector and others with particular interests.

The public recognizes that governments do not have unlimited financial resources and that closer harmonization of programs and policies is thus required to avoid duplication and overlap.

The Government of Newfoundland and Labrador views this strategic economic plan as a foundation on which all orders of government can actively cooperate to build an economy which is productive and competitive and to restore the confidence which is so necessary to allow Newfoundland and Labrador to contribute positively to the economy of our nation.

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Chapter Four (1)

Change and Challenge: Chapter Two - The Challenges

The economy of Newfoundland and Labrador is underdeveloped and economic disparities between our province and other provinces in Canada persist. In addition to these long-standing problems, the Province now faces new challenges as the result of global economic change. Thus, in the 1990s, the need to diversify the economy and to improve productivity and competitiveness has become critical.

A Changing Global Economy

The world economy is constantly changing, driven by profound changes in trade patterns, investment flows and technology. More specifically,

• the liberalization of world trade has contributed to rapid growth in export opportunities for manufactured goods and commercial services and, as a result, to increased international competition;
• the emergence of major multinational trading blocs within the world trading system has resulted in an increase in joint ventures, technology sharing and mergers between firms from different countries;
• in order to promote competitiveness within acceptable international trading guidelines, there has been a shift in national and provincial economic policy from direct government subsidies to government support in the areas of business development services, tax incentives, education and training, technological innovation and diffusion, and the provision of economic infrastructure;
• the technological advances made in transportation and communications have reduced the effective distance between producers and consumers. This wider market for our goods and services is also creating opportunities for the development of new products and services, but it means, of course, that we also face more international competition;
• employment opportunities continue to concentrate in urban centres even though traditional impediments to development, such as domestic market size and distance from export markets are playing a lesser role in determining where firms choose to locate;
• the gradual shift from labour-intensive to knowledge-intensive industries, particularly in developed countries where labour costs are higher, has required firms to invest in both new technologies and human resources to improve their competitiveness; and
• environmental considerations are becoming increasingly integrated into the decision-making processes of governments, industries and individuals.

These world-wide economic changes will intensify over the next decade as new technologies and increasing competition force existing industries to restructure and new industries to develop. These changes mean that Newfoundland and Labrador will have to strengthen and build on existing comparative advantages in our resource industries and also target strategic opportunities in new growth industries. If we ignore the realities of a changing global environment, local firms will inevitably find themselves unable to compete at home or abroad.

The Province's Economic Structure and Performance

There are significant differences in economic structure and performance between Newfoundland and Labrador and the rest of Canada, though during the last two decades, our economy has generally mirrored the direction - but not the magnitude - of Canada's economic growth.

Newfoundland and Labrador's economy is very "open", which means that it is strongly influenced by the level of economic activity elsewhere, largely because of our reliance on resource-based exports. As shown in Chart 1, the goods-producing sector (including the resource industries) accounted for 29% of the Province's gross domestic product (GDP) in 1990, while the services sector accounted for 71% of GDP.

Because Newfoundland and Labrador's goods production is concentrated largely in primary-resource industries, the Province's economy has pronounced seasonality in output and employment, low value-added production and a narrow export base from which to generate new economic wealth. These weaknesses produce persistently high unemployment and low per capita incomes (Chart 2). 

The amount of personal income available is a major determinant of economic activity and of the Province's living standards. The amount of tax revenue which is available to Government for expenditure on areas such as education, health and transportation infrastructure, for example, is also influenced by both the level and distribution of personal income. It is therefore important to understand the relative importance of the components of personal income, specifically labour, business and investment income, unemployment insurance (UI) benefits and other types of transfer income (Chart 3). 

Transfer payments to individuals, such as UI benefits, social assistance, family allowances, pensions and old age security payments, represent the second largest component of personal income in the Province. Some elements of transfer income, such as family allowances and old age security payments, are based on demographic and social factors, while others, such as UI payments, are related to employment (and especially part-year or seasonal employment) and the general level of economic activity in the Province. However, this over-dependence on government transfers is no longer acceptable to most people nor can it be sustained by governments.

The challenge now facing governments, business, labour and other groups is to make sure that this dependence is replaced by productive employment and more appropriate social programs. For the Provincial Government, in particular, this means using its financial resources more efficiently and effectively.

Chart 4 shows that for the fiscal year 1992-93, total gross capital and current account expenditures are expected to reach $3.5 billion. At present, only 8.7% of that amount, approximately $300 million, is directly targeted for the resource or economic sector. On the other hand, the social sector is expected to consume 65.4% of the budget - about $2.3 billion. Because some traditional social-sector areas, such as education, are directly linked to economic performance, the challenge the Provincial Government faces, now and in the future, is to ensure that economic development considerations influence expenditure decisions.

While there are many opportunities which can contribute to economic growth, they must be pursued within a framework which is realistic and attainable. Too often, when setting goals for economic growth in the Province, achieving the Canadian average has been adopted as a medium-term target.

This, however, is probably unrealistic: over the medium term (5-10 years) - depending on the Canadian rate of growth -the Provincial GDP would have to grow between 4.4% and 12.3% a year to reach the Canadian average (Table 1).

A more realistic target may be for the Province to attain equality with the Maritime Provinces. The levels of economic growth necessary to reach the Maritime average are shown in Table 2. 

The Importance of Productivity and Competitiveness

In the expanding global economy, international competitiveness has become the most important single factor affecting economic growth or decline. Many of the Province's prospects for economic development, therefore, hinge on our willingness, determination and commitment to work together to build a more productive, diversified and efficient economy. One of the greatest challenges is to become more competitive while simultaneously improving the living standards, employment opportunities and real incomes of our people.

Newfoundland and Labrador's productivity performance, in particular, will be a key determinant of our ability to compete, but between 1975 and 1989, the Province experienced one of the lowest productivity growth rates in Canada. As a result, the difference in productivity between this province and the rest of Canada has increased and our economic problems have been compounded. The factors contributing to this disparity include differences in industrial structure, increasing seasonality in the employment of labour and capital, a small, widely dispersed population, lower levels of educational attainment, inadequate investment in capital for technological change, and a lack of cooperation among governments, business and labour. If this trend in productivity is not reversed it will have profound negative implications for our competitiveness, our economic growth and our overall standard of living.

To change this pattern, both old and new businesses in the Province will have to use modern production methods, invest in new technologies, provide adequate training and re-training, and produce higher value-added goods and services. We will all have to be adaptable to a changing work environment and be committed to life-long learning. And governments will have to become more efficient in providing quality public services and ensuring that their policies, programs and actions create an environment that supports real economic growth and diversification.

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Chapter Three - Charting the Course

Change and Challenge: Chapter One - The Changes

The Changes

In the fall of 1990, the Government of Newfoundland and Labrador began the process of developing a strategic economic plan for the Province. This planning process involved three phases. During the first phase, government departments and agencies reviewed their activities, assessed the economy's strengths and weaknesses, and identified threats and opportunities within our existing resource industries as well as in our other strategic industries.

Further research and analysis concerning various sectors of the economy were undertaken during Phase 2, and a public consultation paper was published to give the people of the Province an opportunity to have a say in the vision, guiding principles and actions that have become the strategic economic plan. The Advisory Council on the Economy (ACE), an independent advisory group comprising representatives from business, labour and other groups, co-ordinated the release of nearly 11,000 copies of the consultation paper, and in the fall of 1991, public consultations were held in 16 locations across the Province.

Altogether, the public consultation process resulted in 15 public meetings, 15 meetings for formal presentations, 5 regional round tables, a provincial round table, and the submission of 261 written briefs. Government also held meetings with industry groups, and several submitted reports. A final report on the results of the consultation process was prepared by ACE and published in April 1992.

This process provided some sobering insights into the challenges the Province's economy must face and established that there is a broad consensus for change. Most people now realize that government spending is becoming increasingly limited, and that there must be less dependence on government transfers. Most also recognize that working together to establish a competitive economy is the key to strengthening our economic and social fabric.

Some of the fundamental changes that people said they wanted to see are:

• A change within people. There is a need for a renewed sense of pride, self-reliance and entrepreneurship. We must be outward-looking, enterprising and innovative, and to help bring about this change in attitude we will have to be better educated. During the consultation process, most people agreed that education is essential to our economic development.
• A change within governments. Governments (both politicians and the bureaucracy) must focus on long-term economic development and planning, while still responding to short-term problems and needs. Government programs and services must place a greater emphasis on the quality of the services provided and on the client. Changes in education, taxation and income security systems are also considered critical to our economic development.
• A change in relationships. To facilitate the necessary changes in the economy, new partnerships must be formed among governments, business, labour, academia and community groups. In particular, better co-ordination between the federal and provincial governments in the delivery of business and economic development programs is needed to eliminate duplication and to prevent confusion for those who use them.
  

The final phase - implementation, monitoring and evaluation -begins with the release of this strategic economic plan. The plan will be monitored and evaluated as it is put into effect, to ensure that it is working and that it is responding to new challenges and opportunities. Throughout this process, Government will continue to encourage public participation and to seek the advice of business, labour, academia, community groups and individuals throughout the Province.

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Chapter Two - The Challenges

Change and Challenge: a strategic economic plan for Newfoundland and Labrador, Introduction

When it was released 16 years ago this month, Change and Challenge marked a departure in the provincial government's approach to economic development and diversification. The document subtitled "a strategic economic plan for Newfoundland and Labrador" laid out a long term approach to diversifying the provincial economy. It called for a transformation of culture, away from a dependence on government initiatives and government control and toward one based on individual initiative and private-sector entrepreneurship.

The plan did not promise easy answers, nor did it fixate on one sector of the economy or on large megaprojects. Change and Challenge represented the result of a long development process that was itself crucial. The long period of discussion and consultation both inside and outside government helped to develop a consensus among those who took part in the discussions.

Development of the plan lay with a economic planning group, appointed by cabinet in the summer of 1990 under the chairmanship of the premier's chief of staff, Edsel Bonnell. The group brought together a diverse set of individuals with an equally diverse set of ideas. There were within the group contending ideas, as former chairman of the Economic Recovery Commission Doug House describes in his book Against the tide.

The process was not an easy one but the fruits of the group's labour proved substantial. It's echoes can be seen in government policy four administrations after it first appeared, even if the old fixation on resource megaprojects and government paternalism in all spheres has come to fill the vision of policy makers once again.

Unfortunately Change and Challenge has not been available online before now. When it first appeared the Internet was in its infancy locally and so no electronic version was produced.

To overcome that problem and to mark the anniversary of this historic achievement, Bond Papers will present the strategic economic plan, chapter by chapter, over the next several days. The original document contains charts and graphs, all of which were printed in black and white as a cost-saving measure. They are recreated here in colour, where possible. Other than that there have been no changes to the content.

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Change and Challenge:
a strategic economic plan for Newfoundland and Labrador
June 1992

A Living Document

Foreword by Premier Clyde K. Wells

On behalf of the Government of Newfoundland and Labrador, I am pleased to present the Strategic Economic Plan which will determine the focus and direction of the Province's future economic development activity.

This document is the result of nearly two years of research, analysis and public consultation by Government. On behalf of my colleagues in Cabinet, I wish to express our gratitude to the Advisory Council on the Economy for conducting and evaluating the public consultation process; to the 261 organizations and individuals who submitted formal briefs and to the many hundreds of people who participated in regional discussions; to the private sector working groups from specific industries who provided valuable background information and recommendations; to the Economic Recovery Commission and Enterprise Newfoundland and Labrador for their significant participation in the entire planning process; and to the many Government officials from various departments and agencies who worked diligently and effectively in the research, evaluation, and compilation of an enormous amount of economic data.

The Strategic Economic Plan, in its final form, is the synthesis of hundreds of other documents, including statistical reference works, reports, working papers, studies, and briefs. The objective of the Cabinet working group of senior officials (the Economic Planning Group) was to produce a final document that would be as succinct as possible without sacrificing essential supporting data or background material.

This is an Action Plan. The 134 action items in this document are not merely philosophical observations or even statements of intent; they are commitments by Government based on specific decisions of Cabinet. These decisions were made carefully, taking into account the representations made by special interest groups and the general public, and always in the light of our fiscal capacity to support desired economic initiatives. They are presented here in the context and sequence of the plan itself, and not in any particular order of priority.

Implementation of the Strategic Economic Plan has already begun. Many initiatives were undertaken during the process of preparing the document. Others will start with the announcement and release of the Plan, but there are some programs which cannot be ready for implementation for months or even years to come. The Plan does not promise overnight miracles, but establishes the basis for economic recovery through sound, effective, and focused long-term planning. This is the only approach that can have credibility, because the people of Newfoundland and Labrador indicated clearly in the public consultation process that they would not take seriously any schemes that promised "quick fixes" or band-aid solutions to our structural problems. Indeed, in the pages which follow it will be shown that even if the province's growth doubled the national rate every year, it would take 20 years of such economic performance simply to reach the Canadian average.

Finally, this document is not the end of the strategic planning process for Newfoundland and Labrador; rather, it is just the beginning. We live in a constantly changing global economic environment, and every day brings new challenges and new opportunities. Our economic strategy must always be flexible enough to accommodate change and to accept challenge.

Change & Challenge is, therefore, a living document for the Newfoundland and Labrador economy in the latter years of the 20th century and beyond 2000. It is a plan prepared not just by government and business, but by the people of every region of the Province. That is what gives it the best prospect of success in charting the course for economic recovery and future prosperity.

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Chapter One - The Changes