Canada’s dismal growth prospects should raise alarm bells in New Brunswick

According to a recent study, Canada ranked third-last among 30 high-income OECD countries for growth in per-person GDP, a common measure of prosperity and living standards, from 2014 to 2022 (the latest year of available data). Canada’s growth was barely half of growth in Australia and the United Kingdom and less than one-third of growth in the United States and New Zealand.

Worse yet, Canada’s projected growth between now and 2060 is the lowest among the 30 countries. Barring a change in course, this means Canadians will experience declining living standards compared to our peers in other developed countries.

This should concern all Canadians. But in New Brunswick, it should raise alarm bells, for at least a couple of reasons.

New Brunswick is a relatively low-income province in Canada. One recent analysis of per-person GDP placed New Brunswick third-last in Canada at $48,940 (in 2019 dollars), trailing the Canadian average by a whopping $10,440. Low projected growth for the country does not bode well for those who are already well below the Canadian average.

Second, while several factors influence Canada’s growth projection, relatively poor performance on investment (as measured by capital per worker) remains a key contributor. By this measure, New Brunswick has a better track record that its peer provinces Nova Scotia and Prince Edward Island, likely owing to the New Brunswick’s larger industrial base, and has slightly improved its level of business investment in recent years. However, for business investment (per worker after adjusting for inflation) the province still substantially trails all other Canadian provinces and the average of all U.S. states.

The good news? For both New Brunswick and Canada, growth-oriented policy reform can help turn things around. Three immediate policy levers are available to both the provincial and federal governments.

First, reduce the size of government—at current spending levels in both Ottawa and Fredericton, the size of government hurts economic growth. Second, implement predictable competitive regulatory regimes, particularly for natural resource development. Third, reduce tax rates to make them more competitive.

There’s no reason for New Brunswickers to accept declining living standards as a matter of fate. As a low-income province within a declining-income country, the data should prompt New Brunswickers to demand better policies from their elected officials.