04/16/2015 08:34 EDT | Updated 06/16/2015 01:12 EDT

Oil-dependent Newfoundland and Labrador lacks competitive edge, study says

ST. JOHN'S, N.L. - It has come a long way economically in the last 15 years but oil-dependent Newfoundland and Labrador needs innovation and a workforce influx to compete in future, says a new report.The Conference Board of Canada released Thursday a study comparing the province to nine of its main competitors, selected for similar exports among other factors. They include Norway, the United Kingdom, Texas, North Dakota, Alberta, Saskatchewan, Quebec, Nova Scotia and New Brunswick.It ranks the province's gross domestic product and labour productivity in the middle of the pack."However, growth of these indicators over the past five years has been slow, indicating that overall competitiveness is slipping," it says.The 108-page report commissioned by the Newfoundland and Labrador Employers' Council was written by Jacqueline Palladini, a senior economist.She assessed competitiveness based on innovation, investment, human capital and the business and policy climate.Newfoundland and Labrador has a quickly greying workforce with scores of retirements expected over the next decade, Palladini said from Ottawa. "It is the oldest economy that we looked at in our study."This will pose a profound challenge for the province as it has to compete against these other jurisdictions that are frankly doing better at attracting migration and skilled workers."Newfoundland and Labrador heavily relies on mining and oil sectors that expose it to price volatility.Finance Minister Ross Wiseman has said the province is on track for a $916-million deficit when the spring budget is tabled by the end of this month."The current fiscal situation is not sustainable," says Palladini's report. "Expenditures have outpaced revenues through most of recent history and net debt is increasing."Newfoundland and Labrador also lags on all innovation indicators, including research and development spending and patent applications, it says."In terms of human capital, the province ranks below average on the education and skills indicators and its labour market underperforms relative to its competitors."Richard Alexander, executive director of the Newfoundland and Labrador Employers' Council, said the report is a reality check. The province ranks in the bottom half for 21 of 32 comparators ranging from education to research and development investments."We've come a long way as a province but there is definitely room to improve and room to move."About one-third of government revenues come from finite offshore oil resources. Some of that cash should be set aside as a matter of policy, Alexander said.North Dakota, Norway and Alberta are among oil producers that have all established such trusts for the future and as a buffer against sudden price drops, he said."It's time for us as a province to start thinking about putting away money for the next generation."Wiseman has said higher spending over the last decade was in response to pent-up demand for new schools, roads, health services and other needed projects.Follow @suebailey on Twitter.