Beyond Local Markets: Why Atlantic Canada’s SMEs must Export More

By Ainslie Pierrynowski (AIMS on Campus Student Fellow) 

“To successfully grow a business in today’s economy requires innovation, determination and resiliency. Atlantic Canadian entrepreneurs have all of these qualities and more.” These words were spoken by Business Development Bank of Canada (BDC) CEO and President Michael Denham, on the occasion of a $280 million BDC investment in Atlantic Canada’s small and medium-sized enterprises (SMEs). Denham’s statement echoes similar calls to support the region’s SMEs from policymakers, investors, employers, and business associations. After all, small businesses have become essential employers in post-industrial communities across Atlantic Canada. In fact, SMEs are responsible for approximately 92% of private sector employment in each of the Atlantic provinces. With the recent emergence of several start-up accelerators or incubators—organizations which provide prospective entrepreneurs with the skills and knowledge needed to grow and manage one’s business—SMEs seem ready to act as engines for economic growth in Atlantic Canada.

Despite these promising developments, however, the world of SMEs is not without its challenges. In April 2017, an Atlantic Growth Advisory Group roundtable pointed to persistent issues that have stymied SME growth, including interprovincial trade barriers and limited access to capital. Another important overarching concern, in this writer’s view, consists of Atlantic SMEs’ largely inward-looking approach. That is, few firms in Atlantic Canada export their products. As a matter of fact, nearly three quarters of SMEs in Atlantic Canada trade neither internationally nor inter-provincially. Overall, only 10% of Canadian SMEs sell to other countries, while 94% sell to their local municipality and 44% sell to other locations within their province. A renewed emphasis on international exports may prove not only profitable, but crucial, for both SMEs and Atlantic Canada’s economy as a whole.

More precisely, it is essential that SMEs in the Atlantic provinces diversify their markets. The aforementioned figures suggest that many SMEs in Atlantic Canada rely on consumers within their home provinces. As a result, SMEs’ potential for growth is constrained by a falling population—and hence a decreasing number of potential consumers—coupled with relatively low household incomes. In fact, as of 2015, Atlantic Canada, alongside Quebec, had the lowest median household incomes in the country. Additionally, SMEs’ extensive reliance on local consumer bases puts these crucial employers in a vulnerable position, should an unforeseen event impact Atlantic Canadian spending habits.

Conversely, international trade offers Atlantic Canada’s SMEs much-needed opportunities for growth. For instance, this report notes that with the reduction or removal of key tariffs on Canadian goods under CETA, Atlantic Canadian SMEs could fill a niche in EU public procurement, a market valued at $3.3 trillion. In particular, prominent growth industries and established economic sectors among Atlantic Canadian SMEs, such as construction, biotechnology, and communications, closely align with the public procurement needs of the EU and its member states.

Moreover, current trends in international trade provide Atlantic Canadian SMEs with all the more reason to act now. As an element of uncertainty has entered Canada’s relationship with its largest trading partner, the United States, Canada seems poised to expand and deepen its connections to other markets. Given that half of exporter SMEs in Atlantic Canada sell to the United States, this development represents both an opportunity and a necessity for the area’s small businesses. Ultimately, SMEs can play a significant role in the region’s prosperity—but only if they look beyond local markets.

 

Confronting the Rising Cost and Decreasing Accessibility of Healthcare in Atlantic Canada: Time for New Ideas

By Henry Gray (AIMS on Campus Student Fellow) 

Since Hippocrates’ Oath, the Western world has understood the underpinnings of healthcare to be rooted in a fundamental, fiduciary bond of trust. Yet present Canadian policy does little to promote this bond. For many Canadians, this strong fiduciary relationship is not a reality. This problem is particularly acute in Atlantic Canada. In comparison to the rest of the country, the Atlantic Provinces have higher numbers of residents on waitlists for family physicians. This leaves many seniors without a dedicated advocate as they face higher rates of chronic illness, unique health challenges, and desperate lack of mental health services. In Nova Scotia, for instance, a 2017 report by Doctors Nova Scotia lamented that more than half of the 235 physicians they surveyed felt unable to properly care for their patients. The report identified five key issues contributing to this shortfall: (1) fragility of the physician workforce, (2) loss of professional autonomy and satisfaction, (3) erosion of comprehensive family medicine, (4) unsustainable rural specialty services, and (5) lost opportunities to leverage technology. The report claims that these challenges stem from a lack of trust that once existed between “physicians and key health-system stakeholders.”

 

It is a cliché that Canadian healthcare is “free,” and we “get what we pay for.” But, of course, Canadians pay quite a lot in taxes for the privilege of enjoying our universal-access health care system, which is close to being the most expensive of its kind in the developed world. Despite the steep price of admission, our system ranks near-to-last in most assessments of timeliness of care. Canadians who take ill can look forward to long wait-times in the emergency room and longer wait-times for specialized services. Due to the unavailability of family physicians, patients often have no choice but to visit the emergency room for conditions that regular doctors could treat. Further, government-imposed fee schedules prevent physicians from making their patients’ care more accessible, while bureaucratic red tape stands in the way of facilitating physician-patient communication thus impeding the potential for integral physician-patient relationships.

 

Atlantic Canadians living in rural areas have an even harder time getting access to healthcare. According to Dr. Michael Teehan, head and clinical chief of Dalhousie University’s psychiatry department, it is much more difficult to access mental health services in rural settings, “although the people who are practicing are as well-trained as anybody in the city. They’re just stretched beyond capacity.” At root, what we have in Atlantic Canada is a problem of supply and demand. Physicians in rural areas are struggling with the costs associated with maintaining a practice, which are rising while fees remain stable, and are experiencing burnout as their patient roll increases and they struggle to meet needs that exceed their individual capacity. This is coupled with their awareness that while they have entered their profession to heal and provide care, they are living with the reality that many people in their community are going without.

 

The current model is unsustainable. If nothing changes, physicians will continue to burn out or be unable to maintain their practice for financial reasons, and Atlantic Canada, especially her rural areas, will continue to lack adequate and timely services.

 

What are some possible improvements that could be made?

 

A growing number of graduates of top-tier Canadian medical programs are being overlooked for residency positions. Readers may recall the tragic story of Robert Chu, a medical school graduate who took his own life on September 5, 2016, after being passed over twice for medical residency programs. On the one hand, there is a desperate lack of healthcare providers in rural Canadian provinces, and, on the other hand, we have a system that devotes hundreds of thousands of provincial government dollars into educating and training future doctors, only to inform them that there are not enough residency positions for all of them. And this is certainly not for lack of need in communities across Canada. A major step in improving access to healthcare in rural areas would be to increase residency spots, and, ideally, to require a rotation in rural locations as part of the process and training.

 

Secondly, provincial governments should adopt policies that improve the fiduciary bond between doctor and patient, while empowering patient autonomy with the use of modern technology. This can be accomplished through an increased focus on rural health training and education. It can be facilitated through improvements to ‘telehealth’ services that would allow Canadians access to their own health information, reducing the need for in-person visits and keeping accurate measures of the results of care. Physicians in rural areas should be given a voice in the selection of such health information systems.
Finally, Canada should follow the lead of other countries with universal healthcare systems and healthcare spending at levels comparable to or even lower than ours that have shorter wait times and similar or better outcomes. Successful universal healthcare systems in countries such as Australia, France, Germany, the Netherlands, Sweden, and Switzerland – most of which rank significantly higher than Canada overall, on quality of care, access, efficiency, equity, and healthy lives according to The Commonwealth Fund’s 2014 report – have incorporated simultaneous, supplementary and complementary private for-profit or not-for-profit hospitals and insurers into their policy framework. The examples of these countries offer conclusive evidence that private-sector healthcare is eminently compatible with universal-access healthcare. The fact that we continue to see shortages and lack of access to healthcare in Canada despite high spending suggests that it is time to look for alternatives. Why not see whether some policies being implemented in developed countries around the world can be of use in Canada? Private-sector care could have tremendous upside for the debt-ridden Atlantic Provinces, and it could also improve doctor-patient trust and increase accessibility to health services.

Alberta Budget Plan

By Patrick O’Brien (AIMS on Campus Student Fellow) 

As we enter 2018 many Albertans will be watching for Premier Rachel Notley’s budget plan and the details regarding how it will be balanced in five years’ time. Currently the deficit for end of 2017 Is $10.3 billion, and projected to spike to $42.7 billion in the spring of 2018. As the biggest Oil producing province in Canada, Alberta was severely impacted by the crash in oil prices that began in midyear 2014. Large Oil producers competing in the Industry had to adapt to the steep decrease in prices, by cutting costs to half of what they were when WTI oil prices were roughly $100 dollars per barrel. This event caused many Albertans, and many people from the Maritimes who work in the oil fields to lose the

What are some of the problems that the current administration faces when trying to balance the budget? Low taxes, and high government spending. As United Conservative Party leader Jason Kennedy points out, when comparing Alberta to British Columbia, they spend roughly $2700 more per person, and collect $1300 less tax per person. Looking back at the 2017 Budget Plan, it outlines spending for education, job growth creation through subsidies, and healthcare spending, which total roughly $66 billion. On the other hand, cost cutting seems to be very low with a total less than $1 billion dollar, coming from reducing compensation for Provincial CEO’s, combining/reducing agencies, freezing salaries from Alberta Public Services, and renegotiating employment agreements with Alberta Doctor’s which will save an estimate $400 million.

As noted in the budget highlights for 2017, reducing the deficit will not come from cutting operating costs for the Province alone. New sources of revenue generation from oil projects such as Trans Pacific Partnership agreement, and Line 3 Replacement Program will be the main drivers of debt reduction. With the TPP agreement it will promote increased trade international through reduction of tariffs on exported products. The Line 3 Replacement Program will create jobs in Alberta through the construction of the 1031-mile pipeline that will run through the U.S-Canada border. Not only will this create construction jobs throughout Alberta, it will also create a new entry point for Canadian Crude oil to refinery markets in Chicago, U.S Golf Coasts and throughout Eastern U.S.

Business creation and diversification will be the next big strategic decision to lower the deficit. Through competitive tax credits, and second lowest small business tax rate in Canada at two percent. The province is also offering $500 million in royalty credits for the Petrochemical Diversification Program which will be supporting over $6 billion in private investment in Alberta.

Overall Alberta will be taking a different approach than many other provinces, as majority of their revenue will be generated through investments, leading to job creation and growth. Personal and Business tax rates are very low compared to other provinces, and tax credits for investment, and rebates, such as the carbon tax credit will be an attractive reason for individuals and businesses to relocate in the area. Through these tactics, aggressive oil production, and job creation, there stands a chance to rebalance the budget in 2023.