PVP Interview with Prominent NB Business Consultant on Shale Gas and the Economy

David Campbell is one of Atlantic Canada's leading economic development consultants.Campbell authors a daily online blog called, It's the Economy, Stupid, writes a weekly economic column at a provincial newspaper and is also a published author. He is a frequent commentator on radio and TV and guest lectures at several Maritime universities. Campbell holds a Certificate in Economic Development from the University of Waterloo in Ontario and a Masters in Business Administration from Liberty University in Lynchburg, Virginia. He currently holds the position of President at Jupia Consultants Inc. in Moncton, New Brunswick.

We have been wanting to interview Mr. Campbell for a while with his take on the shale gas issue in New Brunswick. We were able to do so this week.

As a New Brunswick business consultant focusing on the New Brunswick economy, what do you think are some specific benefits for the province, and its people, if the shale gas industry makes a home here?

Thank you for the opportunity to join the conversation on this subject.   I have been studying economic development for more than 20 years and have been focused on finding ways to help New Brunswick build a sustainable economic future.  It has been a hard slog – in fact we are heading in the wrong direction.  There haven’t been net new jobs created in the private sector in this province for almost five years.  Many of our biggest industries – forestry, the call centre industry, even fish – are either stagnant or in slow decline.  We need new growth sectors for the economy.

Every ‘Have’ province in Canada – Saskatchewan, Alberta, British Columbia and Newfoundland has a substantial stream of oil and gas royalty revenues.  Even Ontario slipped into have not status in the past couple of years.  The Canadian economy – for better or worse – relies on its natural resources more than most other countries (a lot like Australia).  Hopefully we are smart enough as a country to use the dividends from non-renewable natural resources to build economic strengths elsewhere.

I raise this because I believe New Brunswick’s heavy reliance on federal transfer payments has contributed to our economic malaise which has led to net out-migration every single year except one since 1994 and net out-migration of young people steadily for generations.

The oil and gas industry –unlike most – could provide a substantial stream of royalty revenue to the government.  I don’t know how much – the government has talked about some very big numbers but suffice it to say that if the industry grows at a moderate pace here in should lead to tens of millions of dollars each year in royalty revenues and several thousand jobs.

Right now the industry is importing some of its workers and infrastructure and there is some what we call ‘leakage’ of the economic benefits.  We should work to rectify that by building expertise in our firms and turn out graduates from our universities and colleges.  But we are in the early stages here.  It is possible the industry may not get off the ground.

The other thing here is that most of the areas that are exploiting their indigenous sources of natural gas have lower cost gas for other industries.   One of the things that most supporters of green energy don’t talk about (or don’t know) is that green energy itself can be very energy intensive in the production of systems and the energy itself.  Biofuel production in the U.S. is a very natural gas intensive industry and these plants locate in areas that have low cost natural gas.  The manufacture of solar panels (the polycrystalline silicon) is very energy intensive and they locate in places with cheap energy.  Even the manufacture of wind energy systems uses a considerable amount of energy.  My point is that we should look to use our natural gas for further economic development here in New Brunswick.

The final thing I would say here is that there should be direct economic benefits from the shale gas industry flowing back to the communities where the industry is based.  The industry does cause disruption, noise pollution, trucks on the roads, etc.  We need to see money flowing back into communities.

If the shale gas industry doesn’t make a home here, can you forecast the implications for the province’s economy, given your economic expertise?

I am not a doom and gloom guy but there are some very dark clouds on our economic horizon.  In 1971, there were over three people under the age of 18 for every person over the age of 65 and now it is less than one-to-one. Most of this has happened because of a sustained outmigration of our youth and a lack of immigration compared the rest of Canada.   It is going to have profound implications for both rural and urban New Brunswick.   There are a lot of people who disconnect economic considerations from our community and social objectives.  They see the decline (70% of NB communities are losing population) – overall the population in 2011 is about the same as it was in 1997 – only a lot older – but they don’t connect it to their quality of life.

The shale gas industry is certainly not the full solution but it could be part of the solution generating revenue, jobs and eventually cheaper natural gas for use by residents and industries.

What other areas of investment would you like to see the government pursue to help pull it out of its economic quagmire?

I think there is considerable opportunity to position New Brunswick as a centre for ‘cloud computing’ which is just a fancy way of saying a storage centre for all the video, pictures, audio and other data people and companies are putting in the ‘cloud’ these days (storing on the Internet).  This is a huge opportunity around the world.  I also see some potential for us to foster more information technology-based business activity.  We now are one of the only places in North America with 100% broadband coverage around the province.  We should look for ways to develop virtual IT activity.  I think mining has more potential here too.

I am particularly interested in industries that benefit rural and Northern New Brunswick.  I think natural resources – forestry, mining, fishing and agriculture – are vital economic development opportunities outside the urban areas.  Many of the jobs we lost over the past decade were in the forestry, mining, manufacturing, etc.  Many of our neighbours had to leave the province to find jobs elsewhere. I think we can get at least some of these folks back if we can get develop more of our natural resource industries.

Research has shown investment in sustainable agriculture in New Brunswick could surpass profits from the shale gas industry and last indefinitely. Could you see NB going in a more sustainable direction? 

I haven’t seen this research – please send it along.  I am a big fan of agriculture but I think Canadians need to start to pay more for our food.  We spend well below average as a percentage of our household income on food compared to other countries and this drives the need to import cheap food and hurts local food production.  As the third world starts to build more domestic demand for its agricultural products, that should force us to produce more of our own.  I just don’t know how much it will contribute in terms of tax revenues to government.

Again I am not an expert here but I have been told that the average rural New Brunswicker is far more at risk from agricultural runoff than from another other kind of water contamination.  If we are going to ramp up far more agriculture, we have to do it in a way that doesn’t lead to these kinds of externalities.

You wrote in a recent blog posting the anti-shale gas lobby in New Brunswick is sometimes hysterical in its opposition to shale gas in using evidence of adverse effects on the environment, what are some specific examples that lead you to believe that? 

I don’t remember using the word ‘hysterical’ but I did say that I disapprove of people overstating the risks in order to scare people.  There is a sign in Rogersville that reads “Hello Shale Gas, Goodbye Miramichi Salmon”.  That is an outrageous statement as there is no case anywhere in the world where shale gas has led to the elimination of the fish out of a river system.  Not even alleged cases.    I realize the people who put up that sign (and the signs with faucets spewing fire) are taking creative liberties to emphasize their points but in my opinion at that point we are not having an honest debate.  Someone could say that without shale gas, we will have to cut off rural New Brunswick from public services.  Of course, that would be a gross exaggeration and everyone would think so.  But if someone on the other side says if the shale gas industry goes ahead we will lose the salmon in our rivers that should be considered a gross exaggeration as well but for many people they will actually believe it (or believe the risk is high).

It seems to me – and I am not an expert in public opinion – that there is a growing mistrust of government and that is a worrisome thing.  We need government now more than ever to take leadership and work with industry and communities on solutions to our biggest challenges but if they are always running scared – we will just muddle along.

But I wouldn’t overplay this issue as some have.  We don’t read enough of our own history and we lose the perspective that comes from it.  There were huge protests – vandalism – deep anger and resentment over the building of the Mactaquac dam and the dislocation of the people in the region.  The Lepreau nuclear power station faced similar anger and frustration.    Beyond that, the language reforms in New Brunswick just in the past 20 years or so really cause a lot of anger and frustration and led to the creation of a political party (CoR) as a manifestation of these frustrations.

When we are dealing with big, potentially controversial issues we need to – as citizens – take the time to look at them from all sides.  Sure the language changes caused discomfort to some and added costs to the system but it was the right thing to do.

Some people might say I am against grass roots political activism but that is not true.  The reality is that grass roots efforts play an important role in a healthy democratic society but we do have to be wary of special interests – on all sides – and their efforts to influence our views.  In a world where we are bombarded within information – without any filters – we have to be able to discriminate ourselves.

The mention of a referendum on shale gas has been getting play in the province’s mainstream media the past few days.  Do you think putting the province’s economic issues to referendum could be a detriment to building the economy? 

No.  I don’t actually mind referenda in certain circumstances but I think there has to be a way to ensure the public has a full understanding of the options on the ballot – or otherwise powerful lobbies – be they anti-shale gas or a large corporate interest – could get their way to the detriment of the public good.  I would say there have got to be things that should not go to referenda – people need to use the ballot every four years to make their voice none.  If you think about the equal opportunity reforms of the 1960s – on a referendum those would never have seen the light of day.  

You also wrote in a blog posting yesterday that people have been coming to you saying the government might cave and ban shale gas in NB or put a moratorium on it. One would think you wouldn’t publish something like that unless there is something to it. Do you have credible people coming to you and saying it’s a strong possibility? 

Two people that I consider to have a very strong understanding of the political dynamic in New Brunswick told me – on the same day – that in their opinion the government would back down on this.  Subsequently I got an email from someone in government saying they would not back down.