New Brunswick premier Shawn Graham dreams of the day his province no longer needs equalization payments from Ottawa. He knows self-sufficiency is a tall order, but is convinced it can happen if he sets the right pace. Now he just needs the rest of the province to keep up.

As a teenager in Kent County, N.B., Shawn Graham had two claims to fame. The first was that his father, Alan, was the local member of the legislative assembly; he had been through his son’s childhood and would be until Graham was 30. The second was that, at 17, Graham represented his province in the 800-metre race when Saint John hosted the 1985 Canada Games. Now, talking with the premier in his office in Fredericton’s Centennial Building, these two influences are evident at each turn in the conversation. 

At 40 years old Graham is youthful and relaxed, and moves with an easy agility. He has a young face that frequently breaks into wide grins, and a boyish haircut free of the grey strands one might think would come with the premier’s office. Like all mature athletes, he still enjoys discussing his glory days. Track, he says, required equal measures of speed and endurance. “I’ve always been an underdog, and I like the role,” he says. “I was not blessed with natural ability, so I had to practice extra. I worked twice as hard to prove the critics wrong.” 

Pondering that statement, I wonder if Graham is revealing more of his experience as an athlete or as a public servant. It sounds like something a politician would say, and it would be easy to dismiss him as just another sports star (well, almost a star—he was disqualified in the second semi-final of his event and never made it to the Canada Games finals) who converted local celebrity into a political career—sort of like Ken Dryden on a smaller scale. 

But there is something that separates Graham from other politicians, and it’s not just that he’s a first minister. It’s his ambition—not for himself, but for his province. He has decreed that New Brunswick will be self-sufficient by 2026, which means that it will no longer require equalization payments. 

Easily said, but look at what it means: The province brought in about $6.29 billion this fiscal year, with equalization payments comprising $1.44 billion of that total. That’s right; Shawn Graham’s grand strategy is to find a way over the next 18 years to lose 23% of his revenue and replace it with a more predictable (especially considering Ontario’s current financial situation), sustainable stream of income. He likes to say that he’s the only premier in the country asking Ottawa for less money. It’s a task that will probably dominate public discourse in New Brunswick for the next generation, and there’s no guarantee the mission will be successful. But even skeptics credit him with setting the goal. 

“Full kudos to him for having enough courage to present the challenge,” says Charles Cirtwill, the executive vice-president of the Halifax–based Atlantic Institute for Market Studies. “It’s not an Atlantic Canadian thing to do, at least not in recent history. It hearkens back to a New Brunswick that was founded by people with that sort of attitude.” 

Other observers give Graham credit for starting the debate but want more details before embracing the scheme. “I’m very skeptical about the program,” says Don Desserud, a political scientist at the University of New Brunswick in Saint John. “I don’t see it as having any substance to it. To me, it’s just Frank McKenna–lite.” 

Graham’s uncharacteristic political ambition has not come about overnight. He remembers witnessing political life from the vantage of a child, a process he now describes as both a curse and a blessing. At times it was difficult growing up with a father who was frequently away in Fredericton. “I only saw my dad one day a week, but at the same time I saw how much he changed Kent County for the better,” he says. “It was the days of [former premier] Louis Robichaud and equal opportunity, and I saw that public office can be a change to improve people’s lives.” 

Despite his father’s career, Graham’s early years gave little hint of his own future in politics, although his close friends had few doubts. Stephen Doucet, a Bouctouche lawyer who met Graham when they were both freshmen at the University of New Brunswick in Fredericton, says the future premier was already a leader back then, but one who really listened to people. 

“I remember saying to him, ‘I bet one day you’re going to be in politics,’ ” says Doucet, who later became Graham’s riding campaign manager. He says he got a non-commital response. Graham finished his physical education degree at UNB, then moved on to an education degree at St. Thomas University. After college he briefly worked as a substitute teacher before entering the civil service as the manager of industrial relations for the Department of Natural Resources. 

After serving in the legislature for a record 31 years, Alan Graham retired in 1998, and his son successfully kept the seat in the family in the resulting byelection. 

A year later, the Progressive Conservative administration of Bernard Lord took power, and two years after that, Liberal leader Camille Theriault resigned. The favourite to win the leadership was former cabinet member Paul Duffie, but support began to grow for the young Graham. With the encouragement of MLA Greg Byrne, a former leadership contender himself, Graham entered the race. Duffie soon dropped out, and Graham beat Jack MacDougall, capturing more than three-quarters of the votes. 

Suddenly, the 34-year-old Graham was heading a party that held just seven of the55 seats in the legislature. Undaunted, he immediately began to talk of forming a Liberal government in the province, and he began using a term that people simply weren’t used to hearing. After meeting with then Prime Minister Jean Chretien and then Finance Minister Paul Martin in May of 2002, he told reporters: “I’m a proponent of free enterprise, and I think that if we allow a tax advantage that encourages businesses to move into our region…it would begin the drive toward self-sufficiency.”

When Graham took over a re-energized caucus, something subtle changed in the way he conducted business. The Liberals now appeared to be a government in waiting, and their young leader began to recruit potential cabinet members. The strength of Graham and his party became apparent in October of 2005, when Liberal candidate Ed Doherty doubled the totals of both the Conservatives and New Democrats in a byelection in Saint John Harbour. Graham would later call it the “most satisfying” election of his time as leader. 

Despite the Tories’ throttling in the Saint John Harbour vote, they went into the 2006 general election with a good chance at re-election, and Graham was again in for a gruelling political battle. In the end he eked out a narrow win, taking 29 seats to 26 for Lord’s Conservatives. At the age of 38, Graham was suddenly in charge of the province, joining a cascade of young New Brunswick premiers (Lord was 34, Robichaud was 35, and McKenna was 39 when each took office). Just as quickly, “self-sufficiency” became a buzzword in New Brunswick politics and business, and Graham created his legacy. No matter what else happens during his tenure, for better or worse, he will always be known as the man who set the target of weaning the province off equalization by 2026. 

Critics are quick to point out the problems with achieving the goal, or with the way the government is going about it. But at the very least, Graham has framed the political debate in New Brunswick and determined how all economic developments in the continued on page 34 province are viewed. Case in point: In December, Kevin Scott, the director of refining growth with Irving Oil Ltd., in an interview with The Globe and Mail, listed the economic and social benefits of the petroleum company’s proposed new refinery for Saint John. At the end of the list, he paused and added, “It could also help in Premier Graham’s goal of achieving self-sustainability by 2026.” 

Of course, it’s one thing to talk about it and another to follow through. And in wrestling with that daunting task, the premier has revealed tendencies that his critics have seized upon. Early in his administration, Graham struck a task force of business leaders to advise the government on how to achieve self-sufficiency. The committee came back early in 2007 with scads of recommendations ranging from improving education and health care to increasing the population, developing resources, and “put[ting] citizens and businesses first in the delivery of public services.” 

The second problem is that the recommendations were largely broad vague statements, such as improving health care and attracting investment, with few specifics of how these ethereal dreams would be realized. Even the province’s auditor general is left wondering where the beef is between the self-sufficiency buns. “What I’m asking for is a definition of self-sufficiency,” Michael Ferguson told reporters earlier this year. “What will things look like in the future? If we’re heading toward self-sufficiency, what is the end goal and what will it look like as we move forward?” 

As spring blossomed this year, the critics emerged from hibernation and even academic Donald Savoie, one of the architects of self-sufficiency, criticized the government for lacking focus. Some pundits believe that the main problem is not with self-sufficiency itself, but with other programs that are eating into the government’s political support and therefore its ability to implement the economic program. The greatest outrage has been caused by the government’s plan to scrap early French immersion, which has infuriated even some longtime Liberals in Canada’s only officially bilingual province. 

Jeannot Volpé, the interim Progressive Conservative leader, adds that Graham’s government is taking the province in the wrong direction by raising some taxes and has introduced no new economic policies to bring about self-sufficiency. “We’re not saying that self-sufficiency, in itself as a way to move the people of New Brunswick forward, is wrong,” says Volpé. “We’re saying they’re taking the wrong steps.” 

For his part, AIMS’s Cirtwill credits Graham for taking the commission’s recommendations and prioritizing them, so the most important ones will be acted on first. Graham insists there is flesh on the program’s bones and that he has set interim targets that will allow him to assess whether the province is on track to reaching the goal. His aims by 2010 are to increase the population by 6,000 people, create 25,000 to 30,000 jobs, reduce the social assistance logs by 2,500, and hold electricity cost increases to 3% annually. 

But once again, these developments could pose challenges not only for the province but also for Graham and his Liberal government, if southern New Brunswick becomes increasingly properous while the northern communities continue to lose jobs, wealth, and population. But Graham is adamant that the opportunities in the energy hub will create potential within businesses in other parts of the province and the entire region. Others aren’t convinced. Desserud says that his hometown of Bathurst has already shrunk from 20,000 residents in 1974 to today’s 12,000, partly because of emigration to such southern hotspots as Moncton and Saint John. 

Graham is under no illusions about how difficult it will be to fulfill his ambition, saying the province has to punch way above its economic weight. He is working on developing relationships with a number of parties—even political opponents—to help realize the dream. Former Saint John Mayor Norm McFarlane, a longtime Tory, gives Graham full marks for helping develop the energy hub. And the premier is strategically developing a reputation as the Atlantic Canadian ally of Prime Minister Stephen Harper, who has suffered rocky relationships with his Conservative brethren Danny Williams of Newfoundland and Labrador and Nova Scotia’s Rodney MacDonald. He wants to help the federal government’s plan of reducing corporate income taxes by lowering them in New Brunswick, and he is counting on the federal government to help the province upgrade the key Highway 1 link from Saint John to St. Stephen as part of the Atlantic Gateway proposal. 

Realizing the importance of the Maine–New Brunswick relationship, Graham has befriended Governor John Baldacci; the two men have a date this summer to cement their friendship by climbing the highest peaks in each jurisdiction. But the middle distance runner knows that he had better summon some endurance if the province is to realize its dream of self-sufficiency. “I know expectations are high,” he says. “One has to realize this is a marathon, not a sprint.”

New Brunswick has been doing a good job in terms of economic growth in recent years. Between 2001 and 2006, the province increased its per capita GDP 13% to $29,826, outpacing such provinces as Nova Scotia (8.3%) and Ontario (5.9%). Shawn Graham himself is quick to note that his province has undergone the second-fastest job growth in the country in the past two years, exceeded only by Alberta. “If we didn’t have the crisis in the forestry sector,” he says, “we’d be hitting on all four cylinders.” 

The province’s weakness is in population growth. New Brunswick’s population in the same five-year period grew only 0.07% to 730,000—about 1/60 of the national growth rate. If present trends continue, New Brunswick can keep pace with the economic growth but needs a huge influx of residents if it is to become self-sufficient. Graham’s goal is to bring in 100,000 more people by 2026. It may sound like a lot, but it amounts to less than 1% annual population growth between 2006 and 2026—less than the national average and less than the rates of Ontario, Alberta, and B.C. And it is conceivable that the development of the energy hub in the Saint John area, plus an eventual recovery in the forestry industry, could attract people back to the province. 

Yet Charles Cirtwill, the executive vice-president of the Halifax–based Atlantic Institute for Market Studies, cautions that the participation ratio will have to be maintained. In other words, as population increases, the province will have to ensure that the percentage of people in the workforce (as opposed to retirees and children) remains steady. 

If Canada maintains the same overall growth rates for the next two decades, then the country’s per capita GDP will be about $53,898 in 2026. If New Brunswick is going to add 100,000 citizens and reach that national level, it is going to have to increase its per capita GDP by 3% each year while seeing 1% growth in population. That is tantamount to overall GDP growth of 4% every year. Cirtwill again points out that the strong growth would have to happen every year, and if there is a recession or zero growth for two years of those 20, the other 18 years would have to be excessively strong to make up for it. 

So how would Cirtwill do it? He believes implementing the deepest cuts in personal and corporate income taxes discussed in the recent Green Paper is a good place to start (he would even cut deeper) to attract people and investment to New Brunswick. He says Graham will also have to distinguish between “needs” and “wants.” And he adds that New Brunswick should reform its regulatory policies so they are more predictable for business. Finally, the moves must come quickly, not in a decade, so they can begin to impact the economic environment now, in order to have the desired effects in 10 to 20 years. — P.M.