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Thank you, Marshall and good evening ladies and gentlemen, mesdames et messieurs.

Allow me to also welcome you to the Fredericton Chamber of Commerce’s 44th annual State of the Province Address. I hope you enjoyed our reception and are looking forward to a wonderful, locally-source meal. And of the course, a little later on, the reason we’re all here this evening - to hear from our Premier, the Honourable Brian Gallant. I also want to thank tonight’s many sponsors - we could not host this important event without your support and involvement. Our emcee, Marshall, listed the full list of sponsors a few minutes ago and I also want to draw your attention to the program, where they are all featured, including Platinum Sponsor Siemens. I am looking forward to hearing from Siemens Canada CEO Faisal Kazi later this evening as he makes his first appearance at this event after taking over from Robert Hardt in 2017. I also thank the team who put this event together led by our Event Manager, Tanya Senechal. And of course, I would like to thank all of you in attendance for not only being here this evening, but for your contributions to business and public life in our province.

Welcome everyone to the 2018 State of the Province Address.

I am delighted to have nearly 1,000 guests here this evening. It shows there are an awful lot of New Brunswickers that are engaged in politics or business or public policy and maybe all three. We need as many of us as possible to take an interest in government and the economy. Only then will we be truly rowing in the same direction.

Take the public debt for instance. I think a big part of the engagement problem is that people cannot wrap their heads around how big a number a billion actually is. For a bit of perspective - One billion seconds ago it was 1986. One billion minutes ago it was the 2nd century. One billion hours ago it was the Stone Age.

As we begin another year, the Fredericton Chamber of Commerce is optimistic that 2018 will be good for business in New Brunswick, but there is work to do to turn that optimism into reality. We hope to build on some of the good policy decisions made by the provincial government in 2017 such as introducing Pooled Registered Pension Plans, striking the WorkSafeNB task force and introducing health coverage for international students. Federally, we were pleased that Minister Morneau ultimately relented, listened to the concerns of the business community and made some badly-needed adjustments to his tax planning proposals. Those proposals still aren’t perfect, but they’ve come along way since they were released in July.

However, 2017 was a challenging year overall for business in the province, with cost increases continuing to accumulate and weighing heavily on small business. New Brunswick has not, in recent memory, been a favourable tax location – as exemplified by the double taxation regime on commercial and non-residential properties.

When​ ​federal​ ​Finance​ ​Minister​ ​Bill​ ​Morneau​ ​proposed​ ​changes​ ​to​ ​tax​ ​planning​ ​policies​ ​back​ ​in​ ​mid-July, the​ ​first​ ​feedback​ ​that​ ​we​ ​heard​ ​was​ ​from​ ​accountants.​ ​Amongst​ ​many​ ​other​ ​concerns,​ ​they​ ​were​ ​telling us​ ​that​ ​even​ ​if​ ​those​ ​changes​ ​were​ ​implemented​ ​at​ ​that​ ​time,​ ​it​ ​would​ ​be​ ​difficult​ ​to​ ​get​ ​their​ ​clients ready​ ​by​ ​the​ ​January​ ​1,​ ​2018​ ​deadline.​ ​Perhaps​ ​a​ ​surprise​ ​to​ ​Minister​ ​Morneau,​ ​changes​ ​to​ ​the​ ​3,300+ word​ ​tax​ ​code​ ​takes​ ​some​ ​time​ ​to​ ​consider​ ​and​ ​apply​ ​to​ ​each​ ​business.

When​ ​the​ ​proposals​ ​were​ ​first​ ​released​ ​we​ ​asked​ ​questions​ ​like:​ ​has​ ​an​ ​economic​ ​impact​ ​study​ ​been conducted​ ​on​ ​the​ ​proposed​ ​changes?​ ​Has​ ​government​ ​evaluated​ ​the​ ​increased​ ​compliance​ ​burden​ ​and financial​ ​cost​ ​to​ ​small​ ​businesses?​ ​Has​ ​government​ ​evaluated​ ​the​ ​increased​ ​cost​ ​and​ ​administration​ ​for CRA?​ ​How​ ​will​ ​the​ ​proposed​ ​changes​ ​be​ ​managed?  

As​ ​New​ ​Brunswick’s​ ​WorkSafeNB​ ​Task​ ​Force​ ​nears​ ​completion​ ​of​ ​its​ ​work,​ ​with​ ​a​ ​report​ ​expected​ ​in​ ​late 2017/early​ ​2018,​ ​there​ ​seems​ ​to​ ​be​ ​confusion​ ​in​ ​the​ ​province​ ​about​ ​the​ ​recent​ ​cost​ ​increases,​ ​the interests​ ​of​ ​employers​ ​and​ ​the​ ​nature​ ​of​ ​workers’​ ​compensation​ ​generally.​ ​New​ ​Brunswick’s​ ​Ombud, Charles​ ​Murray’s​ ​appearance​ ​before​ ​the​ ​task​ ​force​ ​and​ ​subsequent​ ​interview​ ​on​ ​CBC​ ​Radio​ ​has highlighted​ ​some​ ​of​ ​the​ ​misconceptions​ ​with​ ​the​ ​public,​ ​which​ ​I​ ​will​ ​endeavour​ ​to​ ​address.

Perhaps​ ​the​ ​most​ ​foundational​ ​misunderstanding​ ​Mr​ ​Murray​ ​states​ ​is​ ​characterizing​ ​workers’ compensation​ ​as​ ​a​ ​‘social​ ​support’​ ​program​ ​rather​ ​than​ ​an​ ​insurance​ ​system.​ ​Social​ ​programs​ ​by definition​ ​are​ ​funded​ ​through​ ​a​ ​government​ ​department​ ​or​ ​agency.​ ​The​ ​WorkSafeNB​ ​system​ ​is​ ​outside of​ ​this​ ​scope​ ​-​ ​it​ ​is​ ​a​ ​pooled​ ​fund​ ​supported​ ​by​ ​employers​ ​of​ ​the​ ​province​ ​who​ ​provide​ ​100%​ ​of​ ​the premiums.

Royal​ ​Commission​ ​Needed​ ​to​ ​Review​ ​Taxation​ ​in​ ​Canada

Throughout​ ​this​ ​week​ ​Finance​ ​Minister​ ​Bill​ ​Morneau​ ​-​ ​and​ ​other​ ​members​ ​of​ ​the​ ​federal​ ​government​ ​- have​ ​been​ ​announcing​ ​changes​ ​to​ ​their​ ​corporate​ ​tax​ ​planning​ ​proposals.​ ​These​ ​changes​ ​are presumably​ ​based​ ​on​ ​feedback​ ​from​ ​the​ ​small​ ​business​ ​community.​ ​​ ​It​ ​would​ ​be​ ​difficult,​ ​if​ ​not impossible​ ​to​ ​have​ ​carefully​ ​considered​ ​the​ ​feedback​ ​received​ ​during​ ​their​ ​belated​ ​‘listening​ ​tour’​ ​as well​ ​as​ ​in​ ​the​ ​20,000+​ ​written​ ​submissions​ ​received​ ​by​ ​the​ ​deadline​ ​two​ ​weeks​ ​ago.

Some​ ​of​ ​the​ ​announcements​ ​-​ ​such​ ​as​ ​not​ ​moving​ ​forward​ ​with​ ​reducing​ ​the​ ​capital​ ​gains​ ​exemption​ ​to protect​ ​intergenerational​ ​transfers​ ​-​ ​are​ ​positive​ ​steps​ ​to​ ​mitigate​ ​the​ ​damage​ ​that​ ​would​ ​have​ ​been caused​ ​by​ ​the​ ​original​ ​proposals.​ ​However,​ ​given​ ​the​ ​process​ ​so​ ​far​ ​we​ ​will​ ​need​ ​to​ ​see​ ​what​ ​is​ ​in​ ​the actual​ ​legislation​ ​in​ ​order​ ​to​ ​make​ ​a​ ​judgment​ ​on​ ​the​ ​final​ ​package.​ ​In​ ​short,​ ​the​ ​entire​ ​process​ ​and​ ​the flurry​ ​of​ ​announcements​ ​this​ ​week​ ​has​ ​left​ ​us​ ​with​ ​more​ ​questions​ ​than​ ​answers.

Let​ ​us​ ​consider​ ​that​ ​process​ ​for​ ​a​ ​moment.

Megaprojects like Energy East invariably attract intense opinions for and against, and the reaction to the announcement that TransCanada Pipeline (TCP) has abandoned its proposal to build the Energy East pipeline have been a mixture of celebration and concern. But when the reality is that an energy development company can invest $1 billion to respond to approval review processes only to be confronted with a wall of changing regulations and conditions it is time we answer the question whether Canada is interested in providing companies with a stable, predictable investment environment.

Energy East had the potential to create a source of secure and sustainable infrastructure to provide a domestic market for Canadian oil. From a purely economic standpoint, it could have stopped the flow of $30B in revenue each a year to oil producers in foreign countries. It could have provided multiple markets rather than the virtual monopoly pricing of our primary market in the United States. It could have largely decreased the need to transport oil by railcars. It could have provided much needed employment during pipeline construction and operation. It could have provided increased government revenues to western provinces that fund equalization payments to eastern provinces. It could have provided additional revenues to energy companies who are predominant investors in the development of new technologies to reduce greenhouse gas transmission. It could have demonstrated that Canada is open for investment in resource development.

Now​ ​that​ ​the​ ​federal​ ​government’s​ ​whirlwind​ ​tax​ ​planning​ ​changes​ ​consultation​ ​period​ ​has​ ​passed,​ ​let us​ ​catch​ ​our​ ​breath​ ​and​ ​take​ ​stock​ ​of​ ​what​ ​the​ ​heck​ ​just​ ​happened.

When​ ​Finance​ ​Minister​ ​Morneau​ ​dropped​ ​the​ ​department’s​ ​consultation​ ​document​ ​in​ ​the​ ​middle​ ​of​ ​the summer​ ​-​ ​widely​ ​understood​ ​to​ ​be​ ​an​ ​ineffectual​ ​time​ ​to​ ​consult​ ​(or​ ​less​ ​generously,​ ​the​ ​perfect​ ​time​ ​for a​ ​less​ ​than​ ​genuine​ ​consultation)​ ​-​ ​while​ ​only​ ​providing​ ​a​ ​scant​ ​75​ ​days,​ ​it​ ​was​ ​immediately​ ​clear​ ​to those​ ​of​ ​us​ ​with​ ​experience​ ​with​ ​government​ ​consultations,​ ​that​ ​the​ ​minister​ ​was​ ​hoping​ ​to​ ​check​ ​off the​ ​‘Consulted​ ​with​ ​Business’​ ​box​ ​without​ ​much​ ​debate​ ​or​ ​give​ ​the​ ​private​ ​sector​ ​enough​ ​time​ ​to​ ​fully contemplate​ ​the​ ​effects​ ​of​ ​the​ ​proposals.​ ​Unfortunately​ ​for​ ​the​ ​minister,​ ​the​ ​business​ ​community​ ​was unwilling​ ​to​ ​comply​ ​with​ ​the​ ​desire​ ​for​ ​minimal​ ​debate.

On​ ​18​ ​July​ ​2017,​ ​the​ ​federal​ ​Finance​ ​Department​ ​released​ ​a​ ​discussion​ ​document​ ​that​ ​proposed​ ​a tectonic​ ​shift​ ​in​ ​how​ ​small​ ​businesses​ ​would​ ​be​ ​taxed.​ ​A​ ​tax​ ​policy​ ​review​ ​was​ ​not​ ​a​ ​surprise​ ​-​ ​this government​ ​did​ ​indicate​ ​in​ ​their​ ​platform​ ​that​ ​they​ ​would​ ​like​ ​to​ ​take​ ​a​ ​look​ ​at​ ​how​ ​tax​ ​is​ ​administered in​ ​Canada​ ​-​ ​great​ ​idea,​ ​the​ ​business​ ​community​ ​has​ ​been​ ​asking​ ​for​ ​a​ ​review​ ​of​ ​the​ ​tax​ ​system​ ​for​ ​many years.

What​ ​we​ ​were​ ​not​ ​expecting​ ​was​ ​completed​ ​‘draft’​ ​legislation​ ​and​ ​a​ ​scant​ ​75-day​ ​consultation​ ​period, which​ ​began​ ​in​ ​the​ ​dead​ ​of​ ​summer​ ​-​ ​hardly​ ​the​ ​best​ ​time​ ​to​ ​genuinely​ ​engage​ ​stakeholders.​ ​To​ ​be​ ​sure that​ ​the​ ​message​ ​was​ ​crystal​ ​clear,​ ​Finance​ ​Minister​ ​Morneau​ ​has​ ​stated​ ​that​ ​“we​ ​will​ ​not​ ​change​ ​our minds,”​ ​in​ ​reference​ ​to​ ​the​ ​proposals.​ ​Our​ ​members​ ​agree​ ​with​ ​the​ ​minister​ ​that​ ​this​ ​is​ ​a​ ​consultation​ ​in name​ ​only.​ ​For​ ​some​ ​perspective,​ ​the​ ​last​ ​time​ ​changes​ ​this​ ​fundamental​ ​were​ ​made​ ​to​ ​our​ ​tax legislation,​ ​a​ ​Royal​ ​Commission​ ​was​ ​appointed​ ​in​ ​1962,​ ​which​ ​produced​ ​a​ ​six-volume​ ​report​ ​in​ ​1966. Changes​ ​were​ ​implemented​ ​in​ ​1972​ ​-​ ​10​ ​years​ ​after​ ​the​ ​government​ ​first​ ​began​ ​the​ ​process.

Preparations​ ​are​ ​in​ ​their​ ​final​ ​stages​ ​for​ ​Fredericton​ ​to​ ​host​ ​the​ ​2017​ ​Canadian​ ​Chamber​ ​of​ ​Commerce annual​ ​general​ ​meeting​ ​and​ ​conference.​ ​Conferences​ ​are​ ​big​ ​business.​ ​On​ ​average,​ ​one​ ​delegate​ ​of​ ​a national​ ​conference​ ​provides​ ​$324​ ​of​ ​economic​ ​impact​ ​for​ ​​everyday​ ​that​ ​they​ ​are​ ​in​ ​the​ ​city​ ​-​ ​money going​ ​to​ ​our​ ​local​ ​hotels,​ ​restaurants,​ ​local​ ​shops,​ ​taxis,​ ​tourist​ ​attractions​ ​and​ ​more.​ ​The​ ​Canadian chamber​ ​estimates​ ​that​ ​the​ ​economic​ ​impact​ ​on​ ​Fredericton​ ​over​ ​the​ ​course​ ​of​ ​the​ ​six​ ​days​ ​(including the​ ​preceding​ ​Canadian​ ​Chamber​ ​Executives​ ​of​ ​Canada​ ​conference)​ ​will​ ​be​ ​nearly​ ​$1​ ​million.​ ​Beyond​ ​the direct​ ​economic​ ​impact,​ ​this​ ​conference​ ​is​ ​an​ ​opportunity​ ​for​ ​the​ ​region​ ​and​ ​the​ ​province​ ​to​ ​show​ ​what it​ ​has​ ​to​ ​offer​ ​to​ ​national​ ​business​ ​leaders​ ​and​ ​decision​ ​makers.

It​ ​is​ ​also​ ​a​ ​chance​ ​to​ ​influence​ ​national​ ​policy-making​ ​-​ ​with​ ​the​ ​national​ ​chamber​ ​and​ ​the​ ​federal government.​ ​The​ ​centrepiece​ ​of​ ​the​ ​conference​ ​is​ ​the​ ​policy​ ​debates,​ ​where​ ​resolutions​ ​submitted​ ​by local​ ​chambers​ ​from​ ​across​ ​the​ ​country​ ​will​ ​be​ ​debated​ ​by​ ​the​ ​delegates​ ​in​ ​attendance.​ ​The​ ​Fredericton chamber​ ​has​ ​submitted​ ​a​ ​resolution​ ​that,​ ​if​ ​adopted​ ​by​ ​the​ ​federal​ ​government,​ ​will​ ​give​ ​international students​ ​more​ ​options​ ​to​ ​gain​ ​work​ ​experience​ ​during​ ​their​ ​studies​ ​and​ ​increase​ ​the​ ​time​ ​that​ ​have post-graduation​ ​to​ ​establish​ ​a​ ​career​ ​in​ ​Canada​ ​-​ ​including​ ​access​ ​to​ ​the​ ​Canada​ ​Summer​ ​Jobs​ ​program. These​ ​changes​ ​will​ ​make​ ​it​ ​more​ ​likely​ ​that​ ​these​ ​students​ ​will​ ​connect​ ​with​ ​businesses​ ​and​ ​the​ ​city generally​ ​-​ ​ultimately​ ​putting​ ​down​ ​roots​ ​in​ ​our​ ​community.​ ​The​ ​full,​ ​detailed​ ​resolution​ ​can​ ​be​ ​found​ ​on our​ ​website​ ​at​ ​​www.frederictonchamber.ca​.

The sharp rise of craft breweries in Fredericton and New Brunswick has been an exciting development over the past decade. By getting ahead of other jurisdictions, New Brunswick has been able to build a reputation as a premier location for craft beer, cider, wine and even mead. Our local producers - more than a dozen in Fredericton alone (and more than 30 across the province) - have done a remarkable job of producing high-quality products, building recognizable brands and carving out space in an industry traditionally dominated by large players. This has been no small feat and a testament to their entrepreneurial spirit and passion for their products.

While the craft brewing industry is making an undeniable impact on New Brunswick’s economy, there is potential for so much more. To date the provincial government’s approach to the industry can be characterized as one of a tax strategy. The Fredericton chamber echoes the call by stakeholders and industry leaders to move beyond this and adopt an economic development strategy to unlock the industry’s potential long-term benefits and growth.