GREATER OPPORTUNITY: New Brunswick s Prosperity Plan Premier s Message

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3 Premier s Message Greater Opportunity: New Brunswick s Prosperity Plan is our strategic, ten-year economic growth agenda for the 21 st century. Our made-in-new Brunswick plan will create a positive, economic environment for growth, investment, and jobs. It embodies our determination to embrace the new knowledge-based economy while building on traditional New Brunswick strengths. It will help New Brunswick companies gain competitive advantage so they can succeed in today s globalized economy. It will help individual New Brunswickers gain the education and training they need to achieve their own best potential. Greater Opportunity is about focusing on the areas that matter most if New Brunswick is to succeed in today s fiercely competitive world. This means investing in people; creating a competitive fiscal and business environment; embracing innovation; and building strategic infrastructure. These are the building blocks to lasting economic prosperity. Greater Opportunity brings a whole new approach and attitude to economic growth in our province. It means making choices and focusing on those priorities where we can have the most impact and be truly globally competitive. It means forging new partnerships between governments, business, workers, communities, universities and other learning and research institutions; partnerships in which everyone works together to have the highest impact. It means building a dynamic enterprise culture at the community level where people live and work. Most of all, it means taking real steps now so that all New Brunswickers in every region of the province benefit from the choices we make together - choices that will create greater opportunity for all. None of this can happen without the active participation of individual New Brunswickers. Each one of us has a role in creating prosperity because our families have the highest stake of all. To create greater opportunity in New Brunswick, we must first change the way we think. Then, we must change the way that others throughout the world think about us. It will take time, effort, and a lot of hard work, but by working together, we can succeed. Bernard Lord Premier 1

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5 Table of Contents GREATER OPPORTUNITY...5 VISION AND VALUES...5 PLANNING FOR SUCCESS...6 THE COMPETITIVE CHALLENGE...7 THE TOP THREE COMPETITIVENESS FACTORS...7 GREATER OPPORTUNITY: THE STRATEGIC FRAMEWORK...13 GREATER OPPORTUNITY: OUR PROSPERITY TARGETS...16 GREATER OPPORTUNITY: THE BUILDING BLOCKS...18 INVESTING IN PEOPLE...18 CREATING A COMPETITIVE FISCAL AND BUSINESS ENVIRONMENT...23 EMBRACING INNOVATION...26 BUILDING STRATEGIC INFRASTRUCTURE...30 GREATER OPPORTUNITY: IMPLEMENTATION STRATEGIES...34 ECONOMIC DIVERSIFICATION AND CLUSTERING...34 COMMUNITY ECONOMIC DEVELOPMENT...36 STRATEGIC PARTNERSHIPS...37 CONCLUSION

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7 Greater Opportunity VISION AND VALUES Vision "Greater Opportunity" is our long-term vision for economic growth. It is a vision based on one overriding belief: that greater prosperity for our province is the path to greater opportunity for our people. A prosperous economy is one that offers new, challenging and financially attractive job opportunities for New Brunswickers. A prosperous economy gives us the financial capacity to invest in needed social programs. It allows us to make the investments that enhance our quality of life. It is the benefits of prosperity to families, to communities, to society that matter most. Greater Opportunity: New Brunswick s Prosperity Plan is aimed at improving not just economic conditions in New Brunswick, but the quality of life for all New Brunswickers. That s the greater opportunity we are all seeking. Prosperity will not happen automatically. We must make deliberate choices that will lead to prosperity. We must choose prosperity not only with our decisions, but also, with our attitude -- an attitude that believes in success and is willing to make the choices we need to make as a province. Policy choices like having an attractive investment climate and higher educational standards. Fiscal choices like ongoing balanced budgets and competitive taxes. And social choices like accessible, quality health care and a clean environment. Settling for less means we run the risk of being left behind. Due to the hard work of New Brunswickers over the past twenty years and more, we have made real progress in building our province. Now, by focusing on our strengths and realizing what it takes to succeed in today s globally competitive world, we can achieve even greater growth and opportunity. What it will take to achieve prosperity and opportunity in the years ahead is different than what it took to get us to where we are now. Ideas are the new global currency and innovation is the key to competitive advantage. We live in a truly global marketplace and we compete in countries around the world. Choosing prosperity in the 21 st century means changing some of the ways we do business and continuing to improve the way government works for New Brunswickers. It means setting ambitious success targets for our province. It means working in partnership with other governments, the private sector, workers, universities and other learning and research institutions, and communities to maximize our economic reach. It means focusing government on clear public priorities that we can afford and that will have the most impact. It means joining the strengths of our natural resources economy with the driving forces of knowledge and innovation in the new economy. And it means investing in people, our greatest strength. As a government we haven t waited to get going. Actions we have taken since June, 1999 are already positioning us for the future. Now we must do even more. 5

8 Values Greater Opportunity: New Brunswick s Prosperity Plan is founded on New Brunswick values. Values like: Opportunity so that all New Brunswickers have an equal opportunity to participate in creating prosperity. Responsibility so that New Brunswickers challenge themselves to fulfill the obligations of participating fully in building our economy and province. Equity so that the gains from prosperity can be shared by all New Brunswickers. Community so that we tap into the economic strengths of the regional, cultural and linguistic communities that make up the fabric of our province. Quality of Life so that while we strive for greater economic growth and prosperity, we do so in ways that allow us to protect our environment, breathe clean air, drink safe water, and enjoy the natural beauty of New Brunswick. PLANNING FOR SUCCESS To achieve our goal of greater opportunity, we must first plan for it. To be successful, three key ingredients are needed. First, we need a plan based on clear goals and focused priorities. Only in this way can we ensure that we are on the right track, making the right policy and budgetary decisions to support our strategic plan. It will ensure that the private sector and our other partners know where we are going and how we will get there. Our plan must be dynamic and flexible, as well, to ensure we adapt to emerging circumstances and take advantage of new opportunities. Greater Opportunity sets out the overall strategic framework that will continue to guide our actions to achieve prosperity. Second, we must forge strategic partnerships. New Brunswick s small size can be a tremendous advantage in a competitive world where speed and collaboration matters. We need to coordinate the efforts of governments, business, labour, communities, universities and other learning and research institutions in a new competitive alliance to build the critical mass that comes from having all partners across the province share a common vision and move with a united purpose toward our clear goals and focused priorities. Greater Opportunity sets out the strategic partnerships we need to achieve prosperity. Third, we have to get government right. Today s competitive economy demands a clearer, sharper role for government than in the past. Government must first and foremost create a positive environment for the private sector to create jobs and growth. It does so by getting the size and structure of government right; by focusing on those policy choices that maximize growth; by managing smarter so the burden of deficits and debt are not passed on through higher taxes; and by putting in place the right framework policies that enable the private sector, communities, and learning institutions to invest and grow. Greater Opportunity sets out the right role for government to achieve prosperity. 6

9 THE COMPETITIVE CHALLENGE Today s economy is global in reach, more and more knowledge-based, and driven by innovation. Our competitive challenge is to set out a plan that allows us to meet these realities from a New Brunswick perspective. It s a Global Economy Our markets and customers extend well beyond our own geographic borders. Goods and services can be produced and sold anywhere in the world. While customers can be everywhere, so too can be competitors and investors. Investment capital moves around the globe. Markets have become more integrated and more interdependent -- events around the world, or just next door, can impact our own economy. New Brunswick must recognize and reflect these global realities in our decisions and strategies to achieve Greater Opportunity. It s a Knowledge-Based Economy Today s economy is knowledge-based. Knowledge, skills, and ideas are the new economic drivers. Information moves at lightning speed through cyberspace. Competition for skilled and creative workers is fierce. People who continue to learn and adapt their skills to keep pace with the demands of a changing workplace are best positioned to succeed. In today s knowledge-driven world, education, training, and literacy are bedrock economic programs in which New Brunswick must invest to ensure our competitiveness and ability to achieve Greater Opportunity. It s an Innovative Economy Successful economies today are ones that encourage innovation by investing in Research and Development (R&D), technology adoption, and commercialization. Right here at home in New Brunswick, the digital economy e-business; e-learning; and e-government is already transforming the way businesses, governments and consumers relate to each other. Innovation makes us more productive and more competitive, and that means jobs and growth. It will help us achieve Greater Opportunity THE TOP THREE COMPETITIVENESS FACTORS "Additionally, it is clear the New Brunswick economy has not been transformed. It looks much as it did in Though improvements have been made, they are at the margins." Dr. Donald Savoie, Université de Moncton Pulling Against Gravity: Economic Development in the McKenna Years,

10 Success in the Global Economy 1. INNOVATION Driving force behind productivity improvements, and development and commercialization of new, quality, value-added products and services Global Competitiveness 3. EXPORTS Greater export growth with a stronger value-added orientation that expands our export base into the new economy 2. PRODUCTIVITY Improvements in productivity lead to rising living standards and higher incomes To be prosperous, we must be competitive. We must understand and act upon what it takes to successfully compete in today s global, knowledge-based economy. New Brunswick s future competitiveness will be determined by how well we perform in three key areas: (1) improving our innovation capacity; (2) increasing our productivity; and (3) expanding our export orientation. Innovation Without a significant improvement in our innovativeness, our long-term success in wealth and job creation is at risk. As a country, we cannot expect to be a world leader in terms of our standard of living if we are not prepared to be a world leader in innovation 1st Annual Innovation Report Conference Board of Canada, 1999 Innovation is the successful development and application of new forms of knowledge to create greater value for customers. It begins with an idea and can result in new products being introduced to market, new production processes being developed, or organizational changes being made. Innovation is vital to New Brunswick s economic growth and development. It has a direct impact on corporate performance and a firm s competitive position at home and in world markets; firms that are more innovative perform better. Innovation is not just about the high technology sector. The adoption of knowledge- based technologies can now be found in virtually all sectors of the economy, from fish processing to mining to government services. Many players are involved in innovation, including individuals, communities, companies, learning institutions and all levels of government. We need to build significantly New Brunswick s capacity for innovation. We need to ensure that our workforce has the appropriate skills and experience to develop and use new products, processes and technologies. We need to ensure that small and medium-size businesses develop or acquire, apply and commercialize knowledge leading to new and improved products, services, processes, skills and technologies. For more than a decade, New Brunswick s investments in R&D have not even kept pace with inflation. From 1988 to 1999, the province s share of national R&D expenditures declined from 1.7% of total expenditures to less than 1%. 8

11 Percent NB Share of R&D Expenditures Down New Brunswick s share of national R&D expenditures in per cent, 1988 to 1999: losing ground Source: Statistics Canada - Estimates of Canadian Research and Development Expenditures (GERD) While other jurisdictions have been significantly increasing their R&D expenditures, New Brunswick s ability to do so has been impeded in part by the basic structure of our economy. Many small and medium-size enterprises are less able to innovate or engage in R&D due to their size and financial limitations. This in turn has increased the relative importance of our educational and special research institutions in performing R&D in New Brunswick. Yet, these institutions have suffered from the tendency for research funds to gravitate toward larger centres with proven track records in targeted fields of interest. New Brunswick has also fallen short in terms of forging the collaborative linkages that would result in more successful commercialization of our institutional research efforts. Innovative Capacity Dollars R&D expenditures per capita, 1999: NB at less than half the national average $215 NB Gap $350 $565 CANADA Source: Statistics Canada - Estimates of Canada Research and Development Expenditures (GERD) Over time this has led to an innovation gap that we must close. Fortunately, New Brunswick has many assets that can be mobilized to close this gap. We have core capabilities that we can build on in such things as information technologies, telecommunications, engineering consulting, manufacturing, and value-added natural resources. We also have strong learning institutions around the province, an increasingly skilled workforce, and effective public resources that can be leveraged. Closing the "innovation gap" is critical because innovation is a key driver of productivity gains and long-term economic growth. Productivity By improving productivity through innovation, businesses increase the wealth they contribute to the economy in the form of increased employment, higher incomes, and more capital investment. It is that wealth that sustains public spending and leads to better education, health care, social programs, and infrastructure The Business Case for Innovation Canadian Manufacturers & Exporters,

12 Productivity, or the efficiency with which resources are used to produce goods and services, is a basic yardstick of an economy s health. When employment and productivity are growing, living standards tend to rise; a highly productive economy can afford to pay higher wages. For companies, the benefits of productivity improvements are lower costs of production and increased value of goods and services to customers. Both enhance competitiveness. Productivity rises through innovation, training, and technology. Productivity is a national issue for Canada. A large productivity gap exists between Canada and the United States. The economy-wide productivity gap widened from 14% in 1981 to 18% in 2000; the manufacturing productivity gap rose from 14% in 1981 to 35% in While some individual companies in New Brunswick excel in productivity, our overall performance is in urgent need of improvement. When measured relative to the national average, New Brunswick s industrywide labour productivity has been trending downward for most of the past twenty years, increasing the gap between our performance and the Canadian average. Productivity in 2000: NB and Canada Productivity measured as Real GDP / Hours Worked $2,500 Real Dollars $2,000 $1,500 $1,000 $1,568 Gap $404 $1,972 $500 $0 New Brunswick Canada Source: NB Finance The benefits of closing our "productivity gap" would be significant. The Atlantic Provinces Economic Council estimated in 1999 that improving New Brunswick s productivity levels to the Canadian average would produce an additional $1.4 billion worth of real output per year an amount equivalent to New Brunswick s Health and Wellness budget for To close this "productivity gap" we must invest in workers skills, build our innovation capacity, and expand our export orientation. 10

13 Export Orientation "High value products and services are still a small share of total exports. Although many of these sectors are growing, the pace of growth lags behind overall Canadian performance and is well behind that of central Canada Atlantic Canada remains heavily dependent on its resource sectors for exports and export growth. Atlantic Canada s International Trade in the Post-FTA Era; APEC, 2001 NB s Exports of Goods and Services: Millions of 1997 dollars $8,000 $7,000 International $6,000 Interprovincial $5,000 $4,000 $3,000 $2,000 $1,000 $ Source: Provincial Economic Accounts, New Brunswick has an export-dependent economy. We have always had to export to support our industrial base and to generate sufficient wealth to sustain our quality of life. In 2000, New Brunswick s international exports reached $7.6 billion and exports to other provinces were $5.2 billion. Together, international and inter-provincial exports of goods and services were equivalent to nearly 69% of our GDP, exceeded only by Ontario. We export around the globe to more than 100 countries spanning six continents. More than 57,000 New Brunswickers jobs flow from trade and exports. Free Trade Exporting More, but Trailing Canada s Export Growth Percentage change Growth of international exports, (Exports measured in 1997 dollars) NB 90 CAN 142 NB 203 Gap 37% Goods Services Total NB Canada Source: Provincial Economic Accounts, CAN 98.6 NB 99 CAN 136 Since the Canada-United States and North American Free Trade Agreements came into being, our international exports of goods and services have grown significantly: by 99% between 1989 and While free trade has clearly been beneficial to New Brunswick, we have generated an "export gap" in some key areas. 11

14 First, our export growth, while impressive at 99% between 1989 and 2000, was still well below that achieved nationally at 136%. Our export mix was, and continues to be, dominated by resource-based commodities such as petroleum, paper, wood, woodpulp and fish, while some of the fastest growing Canadian exports during the same time period were higher value-added products including pharmaceuticals, furniture, plastics, electrical machinery, aircraft and technical instruments. Second, New Brunswick has not achieved the same level of diversification in its export mix that has been achieved nationally since the introduction of free trade with the United States in In nominal dollar terms, the top five international export commodities for New Brunswick represented 51% of total exports in In contrast, the top five international export commodities for Atlantic Canada represented 40% of the total and only 26% of the total for Canada as a whole. Given New Brunswick s high dependence on a limited number of export commodities, the impact of a large decline in a key export can be significant in terms of provincial employment and incomes. We are making progress toward diversification. While still representing relatively small percentages of our export mix, we have experienced stronger export growth in recent years in electronic parts and components, plastic products, feed products and inorganic chemicals. In both 2000 and during the first nine months of 2001, New Brunswick s export growth also outperformed Canada s. Fully closing the "export gap" will require growing more diversified export-ready companies, adding more value to our resources before we export them, expanding our export base with new knowledge-oriented products and services, gaining greater penetration in key markets, and developing new markets. It will also require that the economic fundamentals here at home create competitive advantage for our exporting firms. 12

15 Greater Opportunity: The Strategic Framework Economic and Social PROSPERITY Goal Innovation Capacity Global Competitiveness Productivity Thrust Export Orientation Economic Diversification and Clustering Community Economic Development Strategic Partnerships Implementation Strategies Investing in People Creating a Competitive Fiscal and Business Environment Embracing Innovation Building Strategic Infrastructure Building Blocks Greater Opportunity: New Brunswick s Prosperity Plan provides a clear strategic framework for achieving prosperity and creating greater opportunity for New Brunswickers. The strategic framework consists of several integrated parts that all work together. 13

16 Building Blocks Four Building Blocks form the foundations of prosperity and competitive advantage for New Brunswick. Investing in People Creating a Competitive Fiscal and Business Environment Embracing Innovation Building Strategic Infrastructure Each Building Block starts with a Strategic Goal statement setting out where we want to be ten years from now, in Each Building Block has four Cornerstones 16 in total that establish the focus of each Building Block. Specific Action Priorities flow from each of the Cornerstones. More than 60 action priorities have already been identified. These will be expanded upon as the Prosperity Plan is implemented and further action priorities will be added. Each Building Block is interdependent with the others. An educated, skilled workforce, for example, is the engine for innovation and a major attraction for new investment. Competitive taxes, in turn, attract both investment capital and the skilled people needed to grow our economy. Strategic infrastructure today includes information technologies such as broadband, which builds our innovation capacity. The Building Blocks and Cornerstones Quality Learning Agenda Recruitment, Retention & Repatriation Competitive Taxes Balanced Budgets Total Develpment R&D Transportation Communications Reducing Barriers to Work Skills Training and Retraining Debt Reduction Red Tape Reduction enb.ca Technology Adoption and Commercialization Energy Public Infrastructure Investing in People Creating a Competitive Fiscal and Business Environment Embracing Innovation Building Strategic Infrastrucure Implementation Strategies Three Implementation Strategies will be undertaken to achieve our prosperity goals. These strategies are: Economic Diversification and Clustering Community Economic Development Strategic Partnerships Each strategy is designed to focus our efforts, mobilize resources, and ensure all partners in the economy are working together to maximize our competitive advantages. 14

17 Thrust All of our efforts must be channeled in one key direction if we are to succeed. The overall economic thrust of our plan is global competitiveness. In today s global economy, we must look beyond our borders provincially, regionally, and nationally to the international economy if we are to achieve lasting prosperity. Our future competitiveness will be determined by how well we perform in three key areas: innovation, productivity, and exports. The strategic plan will focus our efforts to succeed in each of these areas. Goal Our overall goal is clear: prosperity -- greater prosperity that leads to greater economic and social opportunity for all New Brunswickers. 15

18 Greater Opportunity: Our Prosperity Targets To achieve prosperity, we must target prosperity. New Brunswick has made economic progress over the past two decades. Our standard of living has risen. Personal income is higher. Dependence on federal transfers has dropped. Employment has increased and participation in the labour force is up. New Brunswick s Challenge Percent Per capita economic indicators in relation to national average (national average = 100%) Percentage Point Gap 74.9 Real GDP 72.8 Real Personal Income Percentage Point Gap Percentage Point Gap 89.4 Real Personal Disposable Income Percentage Point Gap Real Labour Income Percentage Point Gap 90.2 Employment/ Working Age Population But, while our province has made progress from where it was, so too have our neighbours and competitors. Gaps in the key areas of innovation, productivity and export orientation have remained between New Brunswick and Canada as a whole. Significant gaps also remain between New Brunswick and the national average with respect to GDP per capita, income per capita, and employment per working age population. Closing these gaps realistically and over time must be the objective of our strategy. Source: NB Finance Just as the runner in the middle of the pack must run faster than everyone out in front to break rank and win the race, we must actually outperform our neighbours and competitors to close these gaps. This will not happen over night and that is why Greater Opportunity: New Brunswick s Prosperity Plan is a ten-year plan. A longer-term horizon gives us perspective. It grants us more flexibility to set ambitious goals, the time to strive to achieve them and to measure progress on the way. And, by setting "targets that reach", we will "stretch" ourselves as a province to achieve them. In doing so, New Brunswick s economic performance during the next ten years will exceed that of the previous ten years. Two sets of targets are set out in our plan. First, are our overall Prosperity Targets. These targets are set with respect to broad measures of economic success in general: growth in gross domestic product; employment; and income. In each case, we aim to narrow the gaps that exist between New Brunswick and the rest of Canada. Second, are our targeted Competitiveness Targets. These address the specific competitiveness gaps we must close with regard to the key factors of success in today s global economy: productivity, innovation, and exports. 16

19 Ten-Year Prosperity Targets Targets Indicates Economic Prosperity NB will increase real GDP per capita (expressed in relation to national average) by 10 percentage points to meet or exceed 85% of Canadian average by NB has a strong, growing economy. Employment Prosperity NB will increase its "employment per working age population" ratio (expressed in relation to national average) by 5 percentage points to reach or exceed 95% of Canadian average by More job opportunities are available to New Brunswickers. Income Prosperity NB will increase its real personal income per capita (expressed in relation to national average) by 7 percentage points to reach or exceed 93% of Canadian average by New Brunswickers have an improved standard of living. Ten-Year Competitiveness Targets Targets Indicates Innovation NB will join the top four provinces in R&D expenditures per capita by 2012 NB has a stronger innovation capacity. Productivity NB will improve its labour productivity (expressed in relation to national average) by 10 percentage points to reach or exceed 90% of Canadian average by NB has a highly skilled and productive workforce. Export Orientation NB will increase its percentage of exporting firms from 45% to 55%, and the proportion of its non-resource-based exports from 29% to 40% of total exports by NB has a more diversified and export-oriented economy. 17

20 Greater Opportunity: The Building Blocks INVESTING IN PEOPLE Quality Learning Agenda Reducing Barriers to Work Recruitment, Retention & Repatriation Skills Training and Retraining Strategic goal: New Brunswick has an educated, well-trained, skilled and adaptable labour force supported by a culture of life-long learning. The single most important factor in achieving prosperity is the quality of our workforce. In today s information age, knowledge and creativity are the human capital in building economic success. An educated, well-trained, skilled, and adaptable labour force helps current businesses grow and attracts new investment from outside; it is an essential ingredient in high growth economies. Many jurisdictions are investing more and more in worker training and skills development to ensure new investment can be supported by a workforce equipped with the necessary skills to do the job. In today s fast-paced, changing world, learning cannot be static. It must be dynamic and form part of a life-long learning culture for New Brunswickers. It is predicted that in less than five years, more than 80% of all new jobs created worldwide will require at least two years of post-secondary education or training. New Brunswick has already experienced this trend. From 1992 to 1999, net employment grew by 43,300 for workers with some post-secondary education, but declined by 14,800 for those with high school or less. New Brunswick has made progress in achieving higher educational levels. From 1990 to 2000, the percentage of New Brunswickers age 25 and over, with at least some post-secondary education, rose from 37.6% to 48.1%. New Brunswick s community colleges have graduated between 2600 and 3000 students per year over the last five years, an increase of 10 15% over the previous five years. Challenges New Brunswick faces many challenges in meeting its Investing in People goal. These include: A small population that is growing only slowly and may actually begin to shrink by Significant gains in both the size and the skill levels of our workforce are needed to achieve lasting prosperity. The need to attract back to New Brunswick, many of the young people who have left the province in past years. We must grow the taxpaying workforce to support a retiring and ageing population. The relatively lower educational attainment levels achieved by New Brunswick students in international reading, math, and science tests. The number of New Brunswickers who must face the challenges of a knowledge-based economy with inadequate levels of education. 17% of New Brunswickers over the age of 25 still have less than a Grade 9 education. The relatively low participation rate of New Brunswickers in post-secondary education. While 84% of students are graduating from high school (one of the highest percentages in the country), only about 30% of young New Brunswickers (18 24) pursue post secondary studies, compared with approximately 46% of all Canadians. 18

21 The need to better match skills training with employment opportunities. Although the unemployment rate remains above the national average, a 2001 survey of 750 New Brunswick employers indicates that 36% anticipate having difficulty hiring qualified workers in 149 occupations over the next three years. The need to provide ongoing skills training and upgrading for existing members of our workforce. Nearly 70% of our workforce is under the age of 45, will be working for another years, and will require new skills to meet the requirements of a changing economy. The stiff competition being faced by our universities and businesses for highly qualified personnel in the fields of R&D and innovation. The significant number of working-age New Brunswickers who have employment potential but, despite sustained economic growth in recent years, still have not made the transition from social assistance to work. Actions to Date Since taking office in June, 1999, the government has already taken significant actions to invest in people. These include: Increasing education budget levels to record highs Hiring more than 250 new teacher assistants Putting $3 million more in a top up fund to help schools purchase basic supplies Reducing class sizes for Grades K 3 Increasing university funding by $11.4 million over three years Implementing a new province-wide "Healthy Minds" school nutritional program for Grades K-3 Introducing a new on-line introductory Spanish course in high schools Opening N.B. s first Virtual Community College on the Acadian Peninsula Creating new District Education Councils to empower people and communities Initiating recruitment and retention programs for physicians and nurses Creating a new Training and Employment Development department emphasizing long-term jobs and skills programs 10,000 individuals are in training programs today compared to only 2,200 three years ago. Increasing minimum wage from $5.50 to $6.00 by 2002 Improving employment standards for parental, bereavement, and sick leaves Improving post-secondary student aid assistance by $6.1 million per year Enhancing Aboriginal employment initiatives Allocating increased funding for partnering with Mi kmaq and Maliseet communities on educational initiatives for Aboriginal children Cornerstone Priorities The following four Cornerstone Priorities will form the basis of a comprehensive action plan for Investing in People: 1. Quality Learning Agenda 2. Skills Training and Retraining 3. Recruitment, Retention and Repatriation 4. Reducing Barriers to Work 19

22 1. Quality Learning Agenda New Brunswick will have a quality education system that fosters a culture of life-long learning for citizens from the earliest moment, aspires to excellence and achievement at all times, and ensures graduates have the knowledge and are well prepared to successfully participate in today s knowledge-based economy. The Quality Learning Agenda has the following action priorities: A Quality Start to Education Ensuring children are given the strongest start possible through early childhood development programs, such as childcare, pre-natal care, and early language development, so they are prepared to learn from the moment they enter school. Quality Results in Education Ensuring students are able to meet and exceed national and international achievement results in education with greater emphasis on literacy, math, science, computers, communications and employability skills, along with the established benefits of second language programs. Greater accountability will be required across our entire education system such that parents, students, teachers, and schools all know what is expected of them and are accountable to communities and each other for their performance. Quality Educational Experience Focusing on the whole-child and ensuring students receive a broad educational experience resulting in the personal enrichment and wellness that comes from physical education, music, and art. Quality Schools and Communities Ensuring schools have strong leadership and purposeful teaching, and providing all students with access to quality learning opportunities, supported and encouraged by involved parents, teachers and communities. Quality Language Programs Ensuring students develop excellent mastery of New Brunswick s official languages through quality learning opportunities in Core English, French, and second language programs. Improving access to Spanish language programs. Access to Quality Post-Secondary Education Ensuring students are both prepared and encouraged to move on to post-secondary institutions through a variety of financial and support programs. Quality E-Learning Ensuring distance learning offerings are expanded for students in schools, community colleges and universities. 2. Skills Training and Retraining New Brunswick workers and employers will have access to expanded training and retraining opportunities to ensure we have a skilled, adaptable workforce that is work ready at all times, with a key focus on long-term employability. The Skills Training and Retraining cornerstone has the following action priorities: Training and Employment Development Programs Providing an effective range of programs to ensure workers have access to training and skills-upgrading opportunities that improve their long-term employability. Also, improving practical skills development and facilitating transition to the workforce by increasing on-site training and work experience opportunities for students. This includes: supporting expansion of co-operative education programs; exploring opportunities for wider application of the apprenticeship training model; and promoting trades training to meet employment opportunities resulting from projected skilled trade shortages. 20

23 Labour Force Profiles Developing up-to-date industry and regional labour force profiles and labour market information. These will be developed to provide a clear picture not only of available skills but also the skill gaps that will have to be addressed in order to ensure businesses and other organizations have access to the skilled labour they need. Federal/Provincial Skills Agenda Developing a joint, cooperative skills agenda with the federal government to ensure sufficient resources are available to address the challenge of maintaining a highly skilled and appropriately trained workforce in all regions. Human Resource Development and Community Economic Development Linking training needs and initiatives with business development initiatives as part of the government s new Community Economic Development Agencies. E-Learning Opportunities Expanding distance-learning offerings for skills updating through schools, community colleges, universities and Community Access Centres. Private Sector Training Improvement Encouraging employers to invest more in existing workforce training and development including the use of e-learning and other new learning technologies to meet their training challenges. Small and Medium-Sized Enterprises Supporting quality management practices as a key to small business success by working with SME s to improve management training opportunities. 3. Recruitment, Retention and Repatriation New Brunswick will actively recruit, retain and repatriate needed professionals and highly qualified people required to build our R&D and innovation capacity, sustain existing and attract new investment, and fulfill key public service needs. A special emphasis will be placed on repatriating New brunswickers who have left our province. The Recruitment, Retention and Repatriation cornerstone has the following action priorities: University and Community College Recruitment Assisting our universities and community colleges to recruit key researchers and teachers who can build the province s R&D and innovation capacity in identified disciplines, by investing in research infrastructure and providing flexible financial support. Knowledge Worker Recruitment Working with businesses in key industrial clusters such as IT, to identify skill needs and facilitate knowledge worker recruitment into key positions. New Post-Secondary Graduate Recruitment Encouraging new graduates to remain in New Brunswick with viable employment and career opportunities, through innovative financial and support measures. Immigrant Investment and Recruitment Integrating the immigration program with Business New Brunswick s new investment prospecting initiatives, while working with multi-cultural communities to develop welcoming and comfortable environments for new immigrants. Bringing New Brunswickers Home Undertaking an "outreach" initiative to repatriate New Brunswickers, including young New Brunswickers living outside the province, to return home and help build our province. 21

24 4. Reducing Barriers to Work New Brunswick s growth and development requires the full participation of all individuals, including those in traditionally marginalized groups who face social and economic barriers to achieving greater opportunity. Reducing barriers to work will occur by developing training and employment strategies to address the range of barriers people face so they may find work and contribute fully to society. This cornerstone priority includes: Greater Opportunities to Work Examining the employment restrictions experienced by underrepresented groups, including people with disabilities, and developing informed and innovative approaches to overcoming them. Training and Employment Development Ensuring individuals with only temporary or no attachment to the workforce are given the opportunity to upgrade their education and skills and gain meaningful work experience as part of a long-term plan to achieve permanent employment. Addressing Disincentives to Work Examining all social assistance policies to ensure that the limited security they provide does not dissuade recipients from pursuing the long-term benefits of self-reliance for themselves and their families. In addition, developing a flexible program of one-time transitional supports to help social assistance clients overcome the specific issues they face in making the transition to employment. Reducing Barriers for the Future Improving the prospects of economically disadvantaged children and breaking the cycle of inter-generational dependency through a range of Early Childhood Development initiatives and the introduction of counselling programs for social assistance-dependent youth at risk of dropping out of school. Minimum Wage and Low-Income Earners Complementing recent increases in the minimum wage by raising, over time, the threshold at which low-income earners begin to pay provincial income tax to one equivalent to an annual salary at minimum wage. Aboriginal Employment Fostering greater opportunities for Aboriginal employment through partnerships with Mi kmaq and Maliseet communities, Aboriginal organizations, the private sector, and the federal government. Progress Indicators The following are examples of indicators that will be used to monitor progress: Employment per working age population K-12 school achievement results Post-secondary graduate completions The number of people requiring social assistance The number of immigrants coming to, and staying in, New Brunswick Employment of Aboriginal persons Employment of persons with disabilities 22

25 CREATING A COMPETITIVE FISCAL AND BUSINESS ENVIRONMENT Competitive Taxes Debt Reduction Balanced Budgets Red Tape Reduction Strategic goal: New Brunswick has a strong and attractive business climate founded on sound fiscal management and a competitive tax regime. A strong, positive business environment is the core foundation for attracting new job-creating investment to New Brunswick and encouraging growth of firms within our province. This begins with strong financial management that balances the provincial budget and reduces the net debt. This gives us the financial flexibility that allows for tax relief for people and businesses so we can become even more competitive. It will help us recruit and retain highly qualified people to live and work in New Brunswick while encouraging young New Brunswickers to stay and build our province. At the same time, ongoing reduction of government red tape will continue to foster a more positive business environment. Competition for job-creating investment is fierce throughout the world. A competitive taxation regime is essential to give us a critical investment edge over our competitors. With all provinces seeking to lower taxes now or in the near future, that competition can only intensify. Lowering the overall tax burden on individuals and corporations becomes critical to attract new job-creating investment and allow existing businesses to invest more of their profits in their workforce, innovation, and productivity. Challenges New Brunswick faces a number of challenges in meeting its Creating a Competitive Fiscal and Business Environment goal. These include: A fiscal imbalance in Canada that favours the federal government and more affluent provinces. An Equalization program that has been restrained by a ceiling on payments to provinces, reduced revenue coverage, and a limited five-province standard, rather than a national average standard, for determining entitlement. Competitive pressure from other provinces and jurisdictions, that are reducing personal and corporate taxes. Significant public debt interest charges of almost $2 million per day that reduce the province s financial flexibility to invest in new economic and social programs. A $650 million cumulative reduction in federal transfers to health, post-secondary education, and social assistance since 1994, that has affected the province s ability to fully manage its finances, provide needed services to people, and invest in economic growth. Actions to Date Since taking office in June, 1999, the government has taken significant actions to create a competitive fiscal and business environment. These include: Reducing the small business income tax rate to the lowest in Canada Increasing the small business income tax threshold from $200,000 to $300,000; a 50% increase Removing 15,000 low income earners from the provincial tax rolls Reducing the general corporate income tax rate to 16%; the first reduction in more than 20 years Reducing personal income taxes by more than 8% 23

26 Creating a $100 million Fiscal Stabilization Fund Changing to a made-in-new Brunswick tax system with more flexibility to help those New Brunswickers most in need Achieving two balanced budgets with balanced results Reducing red tape for business by implementing recommendations from the private sector-led Red Tape Reduction Committee Saving $1 million annually by eliminating or amalgamating 29 agencies, boards, and commissions Maintaining the best provincial credit rating in Atlantic Canada Removing tolls from the Moncton-Fredericton highway Cornerstone Priorities The following four Cornerstone Priorities will form the basis of a comprehensive action plan for creating a Competitive Fiscal and Business Environment: 1. Competitive Taxes 2. Balanced Budgets 3. Debt Reduction 4. Red Tape Reduction 1. Competitive Taxes New Brunswick will ensure it has a competitive taxation regime to attract new job-creating investment and reward economic success. The Competitive Taxes cornerstone has the following action priorities: Personal Income Tax Relief Continuing to reduce personal income taxes to reward success and help recruit and retain highly qualified people to invest, work and live in New Brunswick. Business Tax Relief Continuing to reduce business taxes to reward success and encourage growth. Lower taxes will also encourage corporate head offices to locate in New Brunswick. Special Taxation Incentives Encouraging new investment from companies and targeted industry clusters, both outside and within New Brunswick, through focused taxation incentives. Encouraging greater labour force participation for those whose incentive to work is marginal, by addressing the incidence of taxation at lower income levels. 2. Balanced Budgets New Brunswick will continue to respect the balanced budget legislation and strive for balanced budgets each and every year. The Balanced Budgets cornerstone has the following action priorities: Balanced Budget Law Achieving ongoing balanced budgets that respect the province s balanced budget legislation. Balanced Results Producing reasonable and realistic balanced budget forecasts that lead to balanced results. 24

27 Fiscal Stabilization Fund Continuing strong fiscal discipline and prudent financial management that allows for further contributions to the Fiscal Stabilization Fund for future use, on a one-time basis, when the fiscal situation requires it. 3. Debt Reduction Reducing our net debt will create greater financial flexibility over time and lessen the heavy financial legacy for our children and grandchildren. It will allow us to invest more in health care and education, as well as provide tax relief for workers and families. The Debt Reduction cornerstone has the following action priority: Net Debt Reduction Continuing to reduce net debt. Making payments on gross debt when there is a cash surplus. Reducing New Brunswick s debt-to-gdp ratio. 4. Red Tape Reduction Reducing government red tape, eliminating duplication and overlap in programs and services and streamlining service delivery, while ensuring essential standards are met and the safety of the public and the environment is maintained, will encourage new job creation and business expansion. The Red Tape Reduction cornerstone has the following action priorities: Red Tape Reduction Report Implementation Completing implementation of the 34 recommendations accepted from the private sector-led Red Tape Reduction Committee. Undertaking additional red tape reduction steps to preserve and create jobs. Atlantic Regional Cooperation Working with the other Atlantic provinces to reduce internal trade and business development barriers and enhance region-wide service delivery through e-government. enb.ca Enhancing delivery of government services on-line. Quality Service Standards Designating and applying quality service standards for customers and beneficiaries of government services. Progress Indicators The following are examples of indicators that will be used to monitor progress: Personal income tax burden relative to other provinces Overall tax burden relative to other provinces Corporate tax rates relative to other provinces Provincial credit rating Balanced budget results Reductions in net debt Range of, and satisfaction with, on-line government services 25