David Campbell: All I want for Christmas is an increase in exports

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The Christmas season is an important reminder of just how much of what we consume in New Brunswick is produced elsewhere in the country and around the world. If you look at all the gifts you give and receive this year it will be clear to you just how much money you sent out of the province.

Why does this matter? It matters because the more money households, businesses and organizations send outside the province to purchase goods and services means less money put to work in New Brunswick creating jobs, income and tax revenue here.

Just to be clear I am not recommending the New Brunswick government should try to attract clothing manufacturers, electronics manufacturers or other industries where there is no clear business case to do the work here. What I am saying is we need to ensure we are focused on the export industries where we have strengths and making sure the case for investing here is strong. This includes competitive operating costs, access to a high-quality workforce, a reasonable tax environment, etc.

What industries are we good at and have a track record of exporting to the world?

The largest export industry by value is the oil refinery in Saint John. It accounts for $8 billion to $10 billion worth of exports per year depending on the underlying value of the oil used in the refining process. The challenge with this industry is there is not much opportunity for growth. In fact, the gross domestic product (GDP) from oil refining has been declining in recent years.

The largest export industry as measured by its gross domestic product (GDP) contribution is the forest products sector which ships $3 billion worth of wood and paper products out of province in a typical year. There is some potential for growth in this sector but it is entirely based on access to wood fibre.

New Brunswick exports a lot of agricultural products and value-added food. Including seafood, the value of food exports in 2020 also exceeded $3 billion. An interesting fact not many New Brunswickers know is we are actually self-sufficient in food. In other words, if the province was cut off tomorrow from global food markets, we would have enough food to feed ourselves. This would not be the case with many jurisdictions including Ontario. The problem is we would be eating a lot of chicken, lobster, salmon, blueberries, apples, and cranberries. New Brunswick produces very little of the rest of the food that makes it to your table such as breads, vegetables, beef, value-added milk products and most fruits. When you sit down to your Christmas dinner this year ask yourself how much of what is on the table was produced in New Brunswick?

There is considerable potential both for agriculture-related exports growth and also increasing the production of food here we currently import. There are many challenges, however, including difficulties finding agricultural workers and new rules that are increasing costs for farmers.

New Brunswick also has seen exports growth in a number of services industries. Administrative services and business services (such as when you call your bank to get help) boosted export revenue by $1.2 billion in 2020. Information technology (IT) companies exported nearly $500 million worth of products and services in 2020. The good news about service industries is that they are based on human resources and not natural resources. As long as we have the workforce, entrepreneurs and a good business environment, we should be able to increase our services-based exports.

What about new export industries?

There are a number of potential industries that could boost exports from New Brunswick. The energy sector is one and there are several initiatives underway that, if successful, will lead to hundreds of millions of new export revenue for the province every year. The mining sector also holds potential but faces many hurdles including a population that does not seem to like digging holes in the ground.

The post-secondary education sector has been increasing its export revenue. The college sector in New Brunswick only generated $10.5 million in tuition and related fees from students coming from outside the province in 2010. By 2020, the amount had swelled to nearly $34 million, and this doesn’t include all the living expenses that students must pay when they come to New Brunswick to study. The province’s universities generated $83 million in tuition and related fees in 2020.

Tourism is also an export industry as it brings in money from outside the province. In 2019, before the pandemic, the prepared meals sector generated $413 million in export revenue (i.e. people from outside New Brunswick eating at restaurants in the province). Add in accommodations, recreation and other related tourism activity and the amount of export revenue in 2019 was close to $900 million.

The other way to boost export revenue is to attract national and international firms here to establish export-focused manufacturing or services-based operations in the province. According to Statistics Canada, foreign owned companies accounted for 57 per cent of the value of Canada’s international exports in 2022. In New Brunswick, by contrast, foreign owned companies only accounted for 15 per cent of the value of exports. In order to attract these firms, we must have a strong business case for them to locate here.

In 2022, New Brunswick ran an $8 billion interprovincial and international trade deficit. Every $1 billion we shave off that deficit would bring somewhere in the range of $200 million in new tax revenue to provincial and local governments.

It is worth noting that the only provinces in Canada running a significant interprovincial and international trade surplus are Ontario, Saskatchewan and Alberta.

I am asked on a fairly regular basis why all the population growth we have seen in the past three years has not translated into robust economic growth. One of the main reasons for the relatively weak economic growth is the softening of export revenue even as the amount of money leaving the province to pay for imports is on the rise.

Statistics Canada reported recently the value of exports from New Brunswick in the early 2000s was similar to the value of imports (trade balance). By 2022, the value of imports was 37 per cent higher than the value of exports. If this trend continues, the impact on New Brunswick will not be good.

Because of this, all I want for Christmas this year is for Santa Claus to increase New Brunswick’s export revenue in 2024 and beyond. If Santa cannot do it, government and industry should get together and figure out a plan to get it done.

David Campbell is president of Jupia Consultants Inc., an economic development consulting firm based in Moncton, and New Brunswick’s former chief economist