To cash in on the coming nuclear energy boom, New Brunswick will need sharp elbows.
There was a long exposé in The Globe and Mail discussing the opportunities and challenges associated with the small modular reactor (SMR) industry in Canada and around the world. The journalist cited multiple initiatives and companies in Ontario, Saskatchewan and in the United States.
The article was a broad-based analysis: as I kept reading through the article, I kept waiting to see a reference to New Brunswick and the pioneering work being done by the companies, organizations and universities involved in the SMR cluster here. I waited in vain. There was not a single reference.
While this was only a single article in one newspaper, I fear it might be a harbinger of the future. New Brunswick was one of the first jurisdictions in the world to recognize the potential of this industry and yet it might be left out in the cold once the cash starts to seriously flow.
Don’t need table scraps
While it goes against our nature, I fear New Brunswick will need sharp elbows if we want to ensure we get even a small share of the economic benefits of this industry in the years ahead.
We will have to insist with our partner, the federal government, that when it comes to this opportunity, New Brunswick doesn’t want to feed from the table scraps.
The heavily federal government funded motion picture and video production industry is almost exclusively clustered in British Columbia, Ontario and Quebec. Even adjusted for size, Ontario generates 28 times and Quebec 22 times more economic activity in this sector compared to New Brunswick.
The motor vehicle and parts manufacturing industry, heavily subsidized by the federal government, is almost non-existent in New Brunswick.
The pharmaceutical and medicine manufacturing sector, growing in importance, is again almost exclusively centred in Quebec and Ontario (although it is nice to see Prince Edward Island elbowing its way onto the national stage in this sector).
Short end of the stick
New Brunswick is a marginal player in the federally funded oceans supercluster initiative and we have the smallest aerospace and defence sector cluster in Canada.
In fact, if you look at the most government subsidized and supported industries across Canada, from agriculture to movie production, New Brunswick is at the short end of the stick for almost all of them.
Statistics Canada publishes data on the level of government subsidization by industry. Subsidies include any direct cash transfers or equivalent support to industry. The most recent data is for 2017 and combines funding from all levels of government.
Per dollar of industry output, the manufacturing sector in Ontario received 2.5 times as much in subsidies as did the sector in New Brunswick. In Quebec, manufacturers received five times as much government support. This province’s manufacturing sector is less subsidized than any other in Canada.
How about agriculture? Per dollar of industry output, Saskatchewan’s agriculture sector receives more than twice as much in subsidies and Alberta’s farmers receive three times as much support compared to New Brunswick.
New Brunswick last in Canada
In 2017, across all industries combined, New Brunswick firms received less government cash per dollar of industry output than any other province. In fact, over an eight-year period from 2010 to 2017, New Brunswick ranked last among the 10 provinces every year for government subsidization.
I don’t recommend that we run out and offer dollops of government cash to all of our important industries. I am actually kind of impressed at the overall lack of subsidization. But when it comes to a new industry like this, one that is receiving massive government support in places like the United States and China, I think we will need government to step up to the plate.
I am not exclusively singling out the federal government here. New Brunswick will have to work closely with other provinces, industry groups and even international organizations. However, the federal government is the one entity, through its funding and regulation, that will have outsized influence on where this industry develops within Canada over the next 20-30 years.
In fairness, New Brunswick is at the table. The province was part of a memorandum of understanding (MOU) signed by New Brunswick, Ontario, Saskatchewan and Alberta that outlines how governments would work together to the benefit of all.
Our share of the pie
But when push comes to shove, it is vitally important that we get our share of the pie. If things go well, SMRs could become another important growth industry for the province, creating thousands of jobs and supporting hundreds of suppliers across the province.
SMRs and new nuclear energy technologies are going to play a vital role in helping the world meet its climate change obligations, and it is happening now. The Chinese are building new reactors and there are efforts underway across North America. Bill Gates is a big fan and investor in the SMR industry. There are some technological hurdles, but investment is flowing in to address them.
There are those who like to throw cold water on the SMR opportunity. They want New Brunswick to stop putting any effort in this sector and abandon the opportunity to other jurisdictions. They tell us that wind and solar energy are better and will create thousands of jobs.
In fact, renewable energy deployment and the development of an SMR cluster is not even comparable in terms of potential impact. Installing wind turbines and solar panels that were manufactured elsewhere and bought from companies that have their head offices and research spending in other countries cannot be compared to the creation of an industrial cluster here that will work on projects around the world.
It is really like comparing apples and oranges. In fact, it is like comparing the impact of a single apple tree in your backyard to a farm with hundreds of acres of orange trees.
There will be some jobs and spending associated with the installation and maintenance of wind turbines and solar panels around the province, but the impact will be limited. With the SMR cluster, we are talking about dozens of firms manufacturing products and providing services to nuclear energy projects around the world for decades to come. We are talking about potentially hundreds of millions in tax revenue over several decades flowing directly into the Government of New Brunswick’s coffers to be spent on health care, education and highways.
New Brunswick was among the first to recognize this opportunity. The province has already invested millions of dollars. We have two world-class developers here and our electricity utility, NB Power, brings a lot to the table. All we want is our share of this opportunity.
David Campbell is president of Jupia Consultants Inc., an economic development consulting firm based in Moncton, and New Brunswick’s former chief economist. This commentary first appeared in the New Brunswick Telegraph-Journal on July 24, 2021. Reprinted with permission of the author.