Frank McKenna on tearing down trade barriers and Atlantic Canada’s momentum

Public Policy Forum President and CEO Edward Greenspon sat down with Frank McKenna, the former premier of New Brunswick, for a recent fireside chat. They discussed Atlantic Canada’s newfound success, the gaps that still need to be filled, and ways the region could soon lead the country.

Greenspon: Former premiers and deputy premiers, seventeen of you endorsed this Atlantic Momentum Index, and we’re happy for that. But let’s start with how you think the region can leverage the strengths that are indicated there, balance out the weaknesses, and continue building momentum.

McKenna: It’s a great question, and I want to start by thanking the Forum and you personally for your service to the country, but to the region as well. It kind of goes back to the ACOA report before we’ve had such a seminal report, such a powerful document for our region. And I just want to take a minute on this because people have to understand that in Atlantic Canada we’re proud of where we live, and we love where we live, and we love our neighours, but we do from time to time have a bit of an inferiority complex with the rest of the country. And when somebody else validates what’s going on here it’s really powerful, and it gives us confidence. It’s a small and not a very nice anecdote, but I found every year when I was premier, for some reason my poll numbers used to go up in the fall. And I could never understand that and I asked some smart guy, might have been Francis in fact, he said: oh, it’s easy, all the tourists come in, and they see our local people and say we think you have a great premier. Local people say: jeez, we thought he was an asshole but if you think he’s a good premier, maybe he is all right!

Also see: The Atlantic Canada Momentum Index

EG: Never a prophet in your own home.

FM: Right! It’s just kind of powerful to have that outside validation. First of all, it’s empirical, so it’s fact-based that we’re doing well, and better than the rest of the country. But secondly, it’s almost spiritual, it’s almost a validation of what’s going on in the region, and it validates what we see with our own eyes. We think things are going well, we see faces of colour that we’ve never seen before, we see growth that we’ve never seen before, but it’s a validation of all of that. So thank you, nobody else has done this and it’s extremely powerful for us. On 16 of the 20 indicators, the region shows positive and even powerful momentum compared to 10 for the rest of Canada, so it’s remarkable.

EG: The momentum here is better than the rest of Canada, but there are still gaps, there are still significant gaps. The biggest in there was the research and development gap. The intensity of research and development is only 40 pc of the rest of Canada. A lot of the gaps are actually a lot narrower than they were years ago. The GDP per capita gap is at 87pc. But I wonder that in some of these gaps, like that one in particular, can it be filled in the next 10 years?

FM: If you’d have asked me 10 years ago, I wouldn’t have thought we would be where we are. I wouldn’t have thought the pandemic would actually be a plus for Atlantic Canada, and I think it was. I wouldn’t have thought that Ottawa would come up with such a progressive immigration policy, that it would give us what the rest of Canada has had forever – access to growth. So those are powerful. With growth comes the problems of growth, and they’re well-known – housing, even though we’ve spent $900 million on housing in the last two years, we’re still short tens of thousands of units of housing. That could be dealt with, I think we have a willing federal partner in that. Health care, it’s a big challenge for health care, an expensive challenge as well, but in my submission health care needs to be more efficient anyway and needs to respond to this. We saw this five years ago or more when we brought the TD centre to Moncton. Almost 1,000 jobs, and over a period of time a lot of hiring took place, some 40 different countries were represented in our finance centre. But when I would call every few months to see how things were going, it was the same lament every time: we’re having trouble on housing and health care. So those two are constraints.

EG: Even before the pandemic, we said: there’s something that seems to be happening here. You’re seeing the creation of some interesting tech businesses, you see globally competitive companies, you see something in the step. But the pandemic was a focus. I know the Atlantic Bubble was contentious, some people think it’s overblown, but if you’re sitting in Ontario, and your friends in Nova Scotia and New Brunswick and PEI and Newfoundland and Labrador were hanging out with each other while we were alone in our homes, you kind of went: there’s something that’s going on, that’s well-governed, that’s socially cohesive that we don’t have. And there’s a business bounce, and that’s where the idea came from – right from the beginning we talked about disenablers. Housing and health were the disenablers. Will that inhibit people from coming into the region?

FM: Well that is part of the reason why people did come though. In fairness, a lot of people because of the pandemic were forced to look at the world differently, and because of the housing availability and cost here, they were buying sight unseen, I think you can all testify to that. Everything got bought up, across the province sight unseen. So we’re seeing a lot of pressure. We’ve had well over 100,000 immigrants in our region, population growth over the last couple of years. So it’s created pressure. But I think those are solveable problems. The one that’s deeper entrenched that we have to deal with, and we can deal with it, is around the whole productivity/innovation agenda. ACOA quite frankly has been leading on that now for some years. It’s been identified, but we just have to keep piling on and putting more resources to that. That’s part of what the McKenna Institute is all about, and what’s going on across our region in trying to create centres of excellence in a digital economy and creating a more productive workforce. It’s not an easy problem to solve because you have to go right back into the school system, you have to make sure that those who were left behind are brought up, we need to reskill people, unemployment insurance has not been our friend over the years in that it’s left a lot of people clinging to marginal jobs with substandard skills and we need to make sure they’re not left behind, we need to bring people up. We need to microcredential immigrants coming in. There is nothing that is more repugnant to me than some highly trained doctor who is working in a retail store because they can’t practice their trade.

EG: Especially with the problem we’re having with access to physicians.

FM: Those are all solveable probems, in fact some of them are being resolved now. In my humble submission, with unemployment basically zero for all intents and purposes, it really makes no sense to have any trade barriers between the provinces. They were usually designed to protect jobs. We should tear all of those down, and as well we should give our population the tools of the modern economy, and I mean people in the most rural parts of Canada. I’m talking about having high-speed internet, bandwidth, everywhere in New Brunswick, everywhere in Atlantic Canada, so that people wherever you want to live are going to have the tools to work in the modern economy. Those are tools for productivity as well.

EG: Let’s take a couple of those points and dig a little deeper. Let’s take the word unemployment, which of course has been a word that has hung around the neck of the region for decades and decades. When you were premier, the focus was on unemployment, the focus was on transfer payments. The world has kinda changed suddenly, eh? Are leaders prepared for that? Everyone grew up in a world that wasn’t about labour shortages, and how are you going to get labour, and how are you going to train up labour in this way. If you were premier today, would your priorities be different in many ways?

FM: My priorities for 10 years were creating jobs, literally. I would make the argument with people, ‘look, it’s all about connecting the dots. We’ll create the jobs. We create the tax base that pays for the services that we all want.’ But we had an unemployment rate as high as 17 percent, and we weren’t even the highest in the region, so we were afflicted in this region with very, very high unemployment. I would love to come back today and have the problem of trying to find labour for the positions available. And believe me, it is a whiplash. We have gone from having chronic, double-digit unemployment to a point now where there is hardly a business in New Brunswick that doesn’t have a help wanted sign out. It’s a different problem, it’s still a serious problem, but I think it’s a solveable problem. I just love the challenges that our current leaders have in dealing with that particular issue.

EG: When you talk about interprovincial barriers, and you talk about those challenges, I think you’re right, they have the opportunity to have positive challenges in front of them. And they have the opportunity to take leadership in the country. Although it is four provinces, and although that presents its own challenges, it’s also a coherent region in many respects, and it’s small enough that you can move the levers. So you could be a leader, the first place in the country to finally get rid of these interprovincial barriers. That’s certainly in the realm of possibility if four leaders, and they seem to co-operate with each other, can just come to the table with each other.

FM: There was a premiers meeting just this week, and they announced some really good co-operation on medical credentialling. I think the premiers are very compatible and doing very good things, and as a population I think we need to get behind that so that we have a push pull on those policy levers. You’re absolutely right, there is no reason why we could not take down all the trade barriers between the provinces. We should. In Canada, if we took down all the trade barriers between provinces, it would increase the productivity of the nation by as much as $80 billion a year. It’s a staggering commentary on our country that we can have free trade with Europe, with Asia, with the United States, but we don’t have free trade within Canada. So yes, we could do it within our region. I also love the way the leaders in our region now are dealing with health-care issues. I think they’re leading the country in taking barriers down. I don’t have anything to lose by just being candid: it really annoys me that professional associations put barriers up to enter into their profession at a time when the need is so acute. I believe that our region, and I think they’re headed this way, could agree, and I think this is what they’re saying: if you’re a doc in one province, you’re a doc in all provinces. If you’re a nurse in one province, you’re a nurse in all provinces. If you’re a nurse practitioner, you’re a nurse practitioner in all provinces. If you’re a doctor anywhere in Canada, you’re a doctor in New Brunswick. Even extending that across the world, and if someone comes in here who is a highly trained ear, nose and throat specialist from India, don’t make them go through three years of BS in order to get their credentials.

EG: And this is micro credentialling?

FM: Exactly. Just deal with the specific shortfall that you think they might have and move on. I think if we start to address that as how to get to yes instead of how we get to no, I think we could be a helluva role model for the country in that as well, opening up the doors. And again I repeat: just create the highway. We had to put a four-lane highway in: the lives we were losing, and the productivity of people having to commute to work. Now you can live in Hampton and work in Saint John or Moncton, you can live in Woodstock and work in Fredericton. We didn’t have any money at that time to do it. We kind of did it by cobbling money together and pressuring the Government of Canada. Today there is a lot more money and a lot more private sector participation. There’s no reason why we shouldn’t have had high speed Internet everywhere in the past.

EG: Your emphasis on telecom and on Internet and on digital skills, etc., through the McKenna Institute, comes at a moment where we’ve kind of suddenly experienced because of the pandemic work from home. And people seem to like working from home. A lot of us want to bring them back to the office. I don’t think I want to because I think it’s a competitive advantage that we have versus the federal government in recruiting people. But a lot of people, you know, want people back in the office. People want to work at home. It sort of seems that in a digital economy that the there’s an opportunity for Atlantic Canada. Obviously, more people are going to be employed at home because the economy is stronger and more dynamic. But people can sort of send their skills away at eight in the morning and go to their kid’s soccer game at eight in the evening. That’s a that’s a whole different set of possibilities there, if you’re connected.

FM: Yeah, we have a lot of people now who work from home across Atlantic Canada and their job is in San Francisco or New York or someplace. They’re bringing in very high wages and they’re producing great products. But I think there’s a bit of a difference from working remotely and working from home per say. You know, I work in Toronto during a good part of the year, and it’s very worrisome to see downtown deserted and the buildings deserted and kind of the culture of the downtown destroyed. And just about every employer that I talk to feels that there is a loss of productivity and a loss of collegiality and team spirit and everything else with people not being in the office. So I think you’re going to see more and more push and pull pressure to get people into offices.

EG: It is going to be a struggle, and not a point we have to debate. I was really talking about the working remotely piece, particularly the opportunity in that. Although I do think that employers may find that they don’t have as whip hand as they want when it comes to social change, which, you know, got accelerated probably by ten years. But that’s a discussion for another day. Let’s just wrap up on some of the important indicators. You already talked about labor productivity. I think one of the things that in our discussions as we were starting the Momentum Index and you alluded to this a moment ago, was employment income is an important one. There’s a lot of employment, but employment income is still trailing the rest of the country. And I would think that’s an important one to make up exports or, on a decent trajectory. But that’s an indicator of a truly competitive economy. Labor productivity, as you say, investment, particularly investment numbers are not great anywhere in Canada.

FM: The investment numbers here are down, but that may be a lagging indicator. We’re getting a lot of investment contemporaneously. You might have seen the APEC report that came out this week indicating there’s something like $225 billion kind of in the funnel over some 500 projects and with wind and with hydrogen and with ammonia plants and small modular nuclear reactors, there is the potential here that will get a major boost in investment which which would help to change that particular factor somewhat. And those jobs are also high paid jobs, great jobs. And the other thing I’d be remiss if I didn’t mention it because Trevor Holder is here, but talk about the port in Saint John and the port in Halifax for that matter, and ports generally. Our ports are on fire. And you might have noticed – I hate to speak ill of the dead – but you might have noticed that they did a survey of 350 ports around the world in the last year and Vancouver was second last in terms of productivity. Well, most of the West Coast ports were similar to Vancouver in productivity. So we have a chance here with the railroad access that we have and the distances that we cover and rail lines now covering all of North America to be the NAFTA ports. And I think the potential is huge. One of the greatest sources of wealth may be just from access or proximity accidents of geography. And these are big jobs, well-paying jobs. And so, again, there’s not only are we doing well, but we have the potential to be doing better even.

EG: Let’s end on this Frank, because the economy and having a strong economy is an enabler to a lot of things in life, and it’s an enabler to a healthy life. It’s an enabler of many things on the social side, too. One of the things that the Momentum Index shows is sense of belonging, much stronger in Atlantic Canada. Life satisfaction, much stronger. The quality of life indicators are also much stronger. To what extent are those also a competitive factor

FM: I think they’re hugely competitive factors. I live in two worlds. This is my home. But I spend the winter in Toronto and I live in two worlds and I respect both and enjoy both. But this is home. And the difference here, and you saw it during the pandemic, is that people trust each other. We’re neighbors. If you shaft somebody, it’s likely somebody that you know or is one of your neighbors or part of your family. And if you’re in trouble, you can almost count on people piling in to help you out. I grew up in a little farming community where if somebody’s barn blew down, within three or four days, all of the local people would come together and put it back up again. I come from communities where if there’s a death in the family, everybody rallies around that family. You can’t put a price on that, on love and respect and social cohesion. And we have that in spades here in Atlanta Canada. We have a lifestyle that is really pretty special. And I’m not sure that we appreciate it as well as we should, because we haven’t known any other lifestyle. People who come from away and come here, they notice it very quickly. Just how warm and close people are and how respectful people are of each other. And I think it’s a killer advantage for us, quite frankly. If somebody is in, I don’t know, somewhere in the world and they’ve got a house that cost a million bucks, which is cheap in a lot of places, and they end up having to take a subway to work in the morning and they get crammed on the subway, somebody pushing them in. And then they get out and they go down the street with a mob of people and they get into an elevator and again somebody pushes them in. And they get off on the 18th floor of this building and walk into their desk. You can’t expect them to be nice to other people! It’s stressful. And anyway, I don’t want to over overstate it, but I think we’re special people in a special place.

EG: As somebody who’s been coming down here from away for 35 years, someone who my grandparents started here before they moved away, yeah you notice it. You notice it immediately.

FM: Let me tell you a little story. I’ve got three grandchildren now who’ve come here for university. So my oldest grandson just graduated. He came back last week to meet up because he missed all his friends to play golf. My granddaughter’s coming next week because she misses all her friends and she wants to see them. And the week after that, my other grandson is coming because he misses all his friends down here and wants to be with them as well. There’s something in the water here. 

EG: Now you’ve got to get them to move back permanently. Well, look, thank you for the discussion today, but thank you particularly for lending your name to the Frank McKenna Awards. We have three extraordinary award winners today.

FM: I’ve had a chance to meet them. And Cynthia and Anastasia, I haven’t known you before, but you wouldn’t receive this award by accident. It’s for achievement. As for Francis, I don’t know what to say! He’s been part of my life for so long. I’m just tired of people saying that Francis McGuire is Frank McKenna’s brain. I’ve always thought he was one of my organs, but I thought it might be my liver or something. Not necessarily my brain. Anyway, he’s been an important part of my life. So to all three, congratulations on this.