Potential opportunities and impacts to businesses and communities

April 8th, 2021

On March 27^th, the Liberal party secured a majority government in the Newfoundland and Labrador provincial election. As a majority government, the party will be able to pass legislation without support from the other political parties. As a result, regardless of which party you voted for, this majority government and its campaign promises and platform will have a major impact on Labrador for the next few years.

This article looks to examine these promises to understand how they may shape businesses and communities in Labrador. It is important to note that this article will not look at other party platforms and has a focus on impacts to Indigenous Entrepreneurs.

Community Sector

The Liberal party states that the community sector is a vital provider of lasting social and economic value to the province. From the Liberal platform, “Rising to the Challenge”, the government plans to: “…help create an incubator and accelerator to spark, grow, and enhance our community sector”, “…launch a request for proposals to create an incubator and accelerator to maximize social and economic impacts of the thriving community sector”, and “…develop the social infrastructure that will allow our community organizations, to grow, contributing to better social outcomes and increased economic activity in the Province.”

Not-for-profit organizations undoubtedly improve social outcomes and can be vital to fostering economic growth. While an incubator and accelerator can help spur this growth, it is important that this initiative have representation that allows for community sector growth that reflects the unique opportunities that exist across Labrador. As an additional benefit of this initiative, the skill sets and experiences that are developed from an incubator have the possibility of spilling over into the for profit market.

Minimum Wage

The Liberal party plans to “…increase the minimum wage in accordance with the consumer price index, following advice from the Independent Review Panel, and renew discussions with other Atlantic provinces to consider establishing a harmonized minimum wage.”

Although we do not know to what value this minimum wage will increase, it is important to note Newfoundland and Labrador’s minimum wage is lower than both Nova Scotia and PEI so we can expect the wage to increase.

As the wage increases, small businesses will see an increase to their operating expenses as labour costs will increase. As a result, businesses will either see a reduction in profits or will need to re-examine their pricing strategies. As a benefit of the increased minimum wage, workers will have less financial stress in their personal lives which will likely lead to increased morale and increased productivity. Additionally, increasing the minimum wage increases disposable income potentially leading to increased sales volumes as there are now more consumers with money to spend. Ultimately, costs and prices per unit may increase slightly, but sales volumes should increase, as well.

Connectivity

One of the promises that could have the largest impact on Labrador is the Liberal promise to expand cellular and internet services in rural areas. Currently, connectivity in Labrador is limited to relatively slow and expensive options – especially outside of Happy Valley-Goose Bay and Labrador West. Even recent major investments made by the Federal Government have by most accounts not met expectations.

These connectivity restraints limit the economic development opportunities available within Labrador. For small businesses, transitioning to digital models is vital to reaching new markets, reducing costs, and increasing revenue. As we have seen through the impact of COVID, it is important that this transition happen as quickly as possible. Poor connectivity can also limit access to information and online training – for small businesses, this is an unacceptable outcome. Furthermore, there are a lot of brilliant technology ideas coming from Labrador that are unable to be realized because of a lack of adequate infrastructure.

Unfortunately, we have not seen established dates for when most of Labrador can expect this improved access to connectivity. Indigrow suspects that this will be a lengthy and expensive process. As a result, it is unlikely that this initiative will have a meaningful impact on small businesses soon. Lastly, Indigrow does not believe the expansion of LTE networks goes far enough – it is long past due that all of Labrador have access to fiber optic packages. Fiber optics may be expensive, but it would be expansive in terms of positive impacts on Labrador businesses.

Strong and Sustainable Municipalities

Another promise is to “…incentivize communities exploring regionalization and seeking to share services, thereby reducing costs and improving outcomes” and to “…introduce modern municipal legislation.”

There are numerous benefits to regionalization as it can reduce costs and allow for holistic views on a region. This can allow regions to fund projects that may have otherwise not happened. However, a potential risk associated with regionalization is that it can create hubs that cause population decline in smaller communities that have fewer opportunities. It is important that regionalization occur in a manner that allows for communities to maintain stability.

To do this, organizations can and should leverage remote working capabilities and allow for hub employees to be spread across multiple communities rather than bringing them to a centralized location like Happy Valley-Goose Bay. Furthermore, this decentralized approach allows for equal community representation during regionalization and can prevent some communities from being left behind.

Fixed Link

An interesting inclusion in the Liberal platform is to explore “…a fixed link between Labrador and the Island of Newfoundland, funded through the National Infrastructure Fund.” Although examining the feasibility and benefits of a fixed link is crucial to its realization, the financial situation of the province limits the ability to invest in such an expensive project. 

For perspective, a 2018 Feasibility Study suggested that a tunnel would take 15 years to construct and cost $1.65 billion. As a result, in the near term we do not expect this to lead to any meaningful impact to Labrador businesses.

If a fixed link were completed, it would be beneficial to Labrador businesses – it would reduce the reliance on unreliable winter ferries allowing for better transfer of goods and services. Additionally, it could act as a tourist attraction and help drive the tourism industry in Labrador.

Investment

To support access to funding, the Liberal Government will be creating “…InvestNL, a one-stop trade desk for investors to access opportunities in the Province.” Essentially, this online portal will link companies and entrepreneurs to customers and investors at an international level. As access to funding can be difficult, we see this as a great boon to small businesses in Labrador. Furthermore, allowing for improved access to this type of funding will allow small businesses to expand into national and international markets more easily. As Labrador can sometimes feel like a closed ecosystem for businesses, we anticipate that this will allow Labradorians to grow their businesses more easily.

The platform also discusses how the government plans to attract start-ups and businesses to Newfoundland and Labrador. However, it is important to note that the platform does not state how the government plans to attract these start-ups to Labrador. Although a strong ecosystem of entrepreneurs on the island is beneficial to the province as a whole, we would love to see this expanded and to see concrete support for start-up incubators in Labrador.

Sector View

Within the platform there is an overview showing support for multiple sectors: aquaculture, secondary processing, wild caught fishery, clean energy, oil and gas, mining, technology, and arts and entertainment. We recommend reading the platform to get a fuller understanding of what is proposed for these sectors.

 However, when reading the platform, we note that there is little mention to how this focus and these initiatives will benefit Labrador businesses. Furthermore, there was little mention on the role of or impact to Indigenous Entrepreneurs in enhancing these sectors.

Greene Report

Another important consideration is that we have not seen the details of the economic recovery team’s Greene Report. This report is meant to outline the economic challenges faced by the province and a path forward. With the province’s dire financial situation, it is possible that this report contains austerity measures. As a result, some of the promises in the platform may not be realized or there could even be a complete reversal on some topics based on recommendations from this report.

Although the interim report was delayed in February, Indigrow is highly anticipating the release of the final report at the end of April. Once released, expect an article from Indigrow outlining what this report means to you.

Overall Thoughts

Although there are many positive impacts mentioned in the majority government’s platform; Indigrow would like to see more information on how this platform will impact small businesses in Labrador and Indigenous Entrepreneurs.

This should include dedicated funds, infrastructure, and other resources being committed to expanding the entrepreneurial ecosystem within Labrador. Such an ecosystem should be easily accessible by Indigenous Entrepreneurs from Forteau to the Torngat Mountains. We would also like to see a single, searchable government portal that summarizes funding sources by industry – simplifying the process for Indigenous Entrepreneurs to seek out grants and other funding. 

Let us know your thoughts on this article – how will this new government impact your business or community? What government investments do you believe could best support your business or community? Was there anything missing from the Liberal platform that you believe is important for your business?

In the coming weeks, Indigrow will be writing a series of articles on rural economic development. This series of articles will look at economic development strategies of similar geographies and tie them back to the Labradorian context. Please subscribe to stay up to date on our InBusiness insights.