The Big Reset lacks detail where it needs it most: Rural Economic & Entrepreneurial Development

May 12th, 2021

This week a report that was eight months in the making was finally released. The aptly named “The Big Reset” report was released by the Premier’s Economy Recovery Team (PERT) lead by Dame Moya Greene. This report was written as a response to the unsustainable fiscal situation that the province has been grappling with for a while. This plan outlines measures the province can take to reverse its fortune in a five to six year time period. In particular, the report calls for increased accountability, cost cutting measures, tax increases, and privatization.

It is important to recognize that the report was written by volunteers and we are grateful for their time; however, the article lacks significant depth in what in our opinion are vital areas to true economic recovery: Indigenous ownership, entrepreneurial development, and rural economic development.

Howdy partner – how the report sees Indigenous communities

Within the body of the report, the Innu Nation and NunatuKavut are not mentioned, Nunatsiavut is mentioned once, and the term Indigenous is referenced only 29 times. For a report of this size this is negligible; however, each usage of Indigenous is typically coupled with the word “partner” or “partnership.”

As a result, it often feels like Indigenous Peoples and communities are nothing more than an afterthought and the report lacks depth for how to move forward – especially with a lens towards reconciliation through meaningful participation in the economy. While we agree that it is important for Indigenous governments, organizations, and communities to be partners; it is more important that they be key drivers in economic development, and this is where the report lacks detail. The report stresses that Labrador will be a key area for achieving a Green Economy Transition – so why not provide Labradorians with the skillsets, knowledge, and funding to take ownership and control of their own future?

This is quite jarring when the report also states that rural communities need to drive their own economic diversity. While the report is geared as recommendations to the Provincial Government, the report could have also provided specific recommendations to challenges faced by Indigenous leadership. Ultimately, a province is the combination of all its parts and stating “be a partner” is not useful.

If we will it, they will come – Attracting Entrepreneurs

A fact that is often overlooked but mentioned in the report is that “…the reality is that the government has limited ability to create jobs beyond hiring people for public service. The Provincial Government can put a framework in place to encourage investment, business start- ups, and private sector job creation, but it can’t actually create jobs. An entrepreneurial approach by the private and not-for-profit sectors is important.”

This call to action for an entrepreneurial approach is highlighted multiple times in the report but lacks significant details about what these frameworks need to look like. The report mentions that we should teach entrepreneurship from a young age, but also states “PERT was surprised that some K-6 classroom teachers are unable to adequately teach reading and math.” To overcome this challenge, the report suggests bringing in experts to teach the subjects of entrepreneurship and coding – this will result in a lot of variability. A standardized approach needs to be adopted.

So, what other levers does the government have at its disposal? Increased funding access – aim for sustainable businesses and not just unicorns. Businesses take time to develop and often pivot and grow once in operation. Waiting for the perfect, high-growth business idea discourages a lot of smaller, sustainable ideas. Increasing the number of business incubators, especially in rural areas, also supports this growth. Simplifying the process for a business to set- up and better communicating the information on Biz NL would also support this initiative.

Another interesting action is for the Provincial Government to “introduce a three-year tax incentive for small start-up companies (or new companies moving into the province). If a company leaves within five years, the credits are recovered.” Although this idea was brought forward describing how the government could support the technology sector, we believe that this is a great way to reverse urbanization. A similar system could be used to encourage new or existing businesses to become established in rural areas.

Keep on Keeping on – Strategy on Rural Economic Development

The report frames rural economic development as two pronged – 1) the government must ensure infrastructure and regulatory environments encourage growth and 2) communities should drive economic diversification themselves.

The report recommendation to keep up the status quo – “the Provincial Government should continue to support and encourage local economic development initiatives that are community-led and that build on local and regional strengths” does not go far enough. Rural communities have seen population decline in the past few censuses, not changing anything will not reverse this trend. If anything, the trend will worsen as the population continues to age and young individuals continue to move to urban areas for economic opportunity. This creates a vicious loop as fewer and fewer economic opportunities exist until the community ceases to exist.

So why does the status quo not work? Rural communities struggle with capacity challenges – it is hard to plan for the future when focusing on current operations. It can also be hard to identify how to diversify an economy or attract young people – if it were easy and if the status quo worked, this would not be an ongoing problem.

How do we reverse this trend? The Big Reset should have mentioned prospects around regionalization, providing strategy capacity, additional funding grants, rural immigration policies, tax incentives, and connectivity (physical and digital) – just to name a few. Government should broaden its definitions for distributing funding as long as the funds are tied to measurable financial and social key performance indicators. Ultimately, it may be up to rural communities to drive economic diversity, but these communities require stop-gap measures (such as increased funding for entrepreneurs) to prevent population decline.

Overall Thoughts

The Big Reset does an impressive job of explaining the current situation in a detailed and simple manner. It also does a great job of outlining global trends and what has been successful in other jurisdictions and applies these learnings back to the Newfoundland and Labrador context.

Where it falls well short of expectations, however, is providing a meaningful path to economic recovery for Labrador. The report takes the approach that Labrador has assets that should be exploited for the benefit of the entire province – although, the report says that there should be proper partnerships and executed in eco-conscious manner. The report outlines this as a reflection of the provincial economy as a whole, “…economic successes not linked to resource extraction include successes in the IT and oceans technology sectors. Outside of some exceptions such as these, however, the provincial economy remains largely dependent on resource extraction with cyclical challenges and fluctuations in commodity prices.” The report does not outline in enough detail how to better create sustainable jobs with high job multipliers in Labrador.

The Big Reset is not written to get the province balanced in five years but to give the province a surplus in five years – the surplus is needed to cover the oil revenue that will be going towards the Future Fund. Beyond a few lines on the Future Fund, the report provides limited guidance on how to grow beyond that.

No one has a crystal ball to see the future, but some of the recommendations in the report seem to be short-term views that may lead to a recession while doing little to mitigate the long- term pain. While we wait for the government to act (if it does) – it is up to all of us to make a difference: communities to pursue economic development opportunities, business owners to re-evaluate growth strategies, and entrepreneurs to start the next wave of job opportunities.

Your Thoughts

Please let us know your thoughts on how Labrador should proceed with a plan forward. What economic recommendations would you make? Based on your suggestions, we will look to develop an article outlining Labrador’s view on a path forward. You can contact us at hello@Indigrowbusiness.ca.