Thursday, January 28, 2010

Feds Shoud Save our Money and Scrap Western Economic Diversification

Bernard von Schulmann's 24 hours column

Thursday, January 27th, 2010

In 1987 Prime Minister Brian Mulroney created Western Economic Diversification to shift the economy of the West away from natural resources. 23 years later this agency has spent close to $6 billion trying to improve the economy in BC, Alberta, Saskatchewan, and Manitoba.

The mission statement of WED
:

to promote the development and diversification of the economy of Western Canada and advance the interests of the West in national economic policy, program and project development and implementation.

The economy of the West has not significantly diversified in the last 23 years, natural resources are still the core of the economy. Clearly WED is failing on their core mandate. They try to justify the spending with a list of success stories, but it is very thin list for $6 billion. The evidence on the ground indicates they have failed to diversify the economy.

They are supposed to advance the interests of the West in national economic policy. They must be very quiet because I have never heard of any stand they have taken for the West. The GM bailout is a good example of this. Why did WED not fight against the GM bail out when this harms the economy of the West? Why has WED not pushed to have GM or their suppliers to move factories to western Canada?

WED is supposed to reduce boom bust cycle of natural resources through diversifying the economy. Since the mid 1990s a crisis has been coming to the BC forestry from the pine beetle. Communities like Quesnel, Vanderhoof, and Williams Lake are headed towards a big drop in forestry after the pine beetle wood has been harvested. Where has WED been? Why have they not focused their energy on bringing in blue collar manufacturing jobs to these towns? This is a crisis with enough lead time even for a federal bureaucracy to react with a plan of action. This sort of crisis was the point of WED and they have failed completely to make a difference.

One new mine in the private sector, the Prosperity mine in the Chilcotin, will create more jobs than anything WED has done in the Central Interior.

The reality is that government economic development agencies do not work. They spend a lot tax dollars to accomplish very little. WED spends about 25% of their money administering what they invest. In total each year the federal government spends close to $1.2 billion on regional economic development agencies with no measurable success.

If WED did not exist and the money was given directly to the western provinces it would have more of an impact. For BC this would be $140,000,000.

The economy in West is doing well, but there are problems in rural communities. I see no evidence that WED is any way responsible for western success or is doing anything to help rural communities. The time has come for the Federal government to admit that WED is failure and shut it down.
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