New Brunswick promoted as IT jobs haven – but is there a downside?

Looking for an opportunity to spread your wings and give your IT career a lift? Scouting for that perfect location to set up you tech business?

New Brunswick might just be the place for you – at least that’s the message a high-powered team from that province wants to communicate to you.

Barely a month after its capital city Fredericton was named among the Top Seven Intelligent Communities in the world by the Intelligent Community Forum, a delegation from New Brunswick led by Premier Shawn Graham has come to Toronto to drum up investor and IT workforce interest in the province.

The focus on attracting new business to the province, however, could backfire, warns the head of a Halifax-based think-tank on public policy.

While applauding the provincial government’s move to build the buzz around New Brunswick, Charles Cirtwill, president of the Atlantic Institute for Maritime Studies (AIMS) interjects a note of caution.

Providing incentives for new businesses, without strengthening existing ones could result in native industries stagnating, said Cirtwill.

The New Brunswick team that landed in Toronto this week included representatives from the provincial health department and from businesses in the online marketing, financial, video games and animation industries.

“The response in Toronto has been very positive,” said Greg Byrne, minister of business for New Brunswick.

He said more that 1,400 people registered at a mini job fair they held in Toronto on Wednesday and a numerous businesses have expressed interest in New Brunswick when Graham met executives at the Toronto Stock Exchange.

Similar campaigns launched by New Brunswick late last year attracted around 1,000 IT jobseekers in Ottawa and another 1,000 workers in Montreal.

New Brunswick is aggressively building its technology base but the small province also needs to boost its pool of IT talent.

“We’re losing population and we’re currently employing immigration and repatriation strategies to attract more people,” said Byrne.

The province’s population is estimated at 750,000. Officials intend to bring in another 6,000 people by 2009 and increase the population by some 100,000 by 2026.

For potential employees, Byrne said, New Brunswick offers several attractive advantages: The province’s cost of living is 20 per cent lower than the national average but firms offer salaries comparable to those provided by Toronto-based companies; and homes sell at prices nearly 25 per cent less than the national average.

Tech companies in the province are growing and they offering perks for employees. For instance, a number of firms in Fredericton’s Knowledge Park – the city’s technology cluster area – provide subsidized daycare for workers.

Byrne said IT professionals would probably appreciate the slower pace in New Brunswick. “[They] often tell us this is the only place where they can walk home or play with their dog at the beach [during] lunch.”

Technology companies can also benefit from a significantly lower cost of business, he said. “We have a very competitive tax regime. For example we do not have payroll taxes.”

KPMG International, the Swiss-based global audit firm, recently ranked New Brunswick as the third least costly place to set up a business from a roster of 95 locations in G7 nations.

The province is currently focusing on developing opportunities for technology rich operations such as data centres, help desk and contact centres, shared services facilities, back office operations, 3D animation, video games and e-learning.

Cirtwill of AIMS, however, believes the New Brunswick government is running the risk of destroying struggling industries in the province.

By pumping money and incentives into a select group of industries or incoming businesses, he says the province might be creating an unsustainable artificial environment for these firms that could potentially choke other companies.

Cirtwill said a similar scenario occurred when Ontario supported the auto manufacturing industry.

Heavy employment in the auto industry eventually set up auto parts makers, car manufacturers and dealers for massive losses when the economy took a downturn, he said.

Governments often resort to this strategy because it is easy to communicate and readily measurable, Cirtwill said

“Governments often get in trouble when they pick winners and losers because they are not very good at it,” the analyst said.

For instance, he said, New Brunswick is offering tax incentives for companies to set up shop in the province but last year it raised taxes on local small and medium seized businesses (SMB).

“If you are a local SMB, how would you be able to compete under these conditions?”

He said the province should follow the example set by Ireland which prepared an underlying infrastructure for industries across the board before it embarked on an effort to boost its tech industry.

Cirtill said Ireland targeted for improvement areas such as public infrastructure, healthcare and education and reduced taxes for multiple industries.

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