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Saturday, December 15, 2007

Nova Scotia Cost of Living Issues


A feature of the blueknowser blog will be to always reproduce a picture
taken in Nova Scotia demonstrating our natural beauty that we want to
preserve while making this a better, easier place to live. This was a summer
sunset, looking West up the Salmon River at Head of Jeddore just 12km
east of Musquodoboit Harbour from the dock of Salmon River House on
Highway #7.


Cost of Living (COL) expense is often held up by the government of Nova Scotia as a good reason for people to locate to our province, and to stay here. We are told of campaigns in the west to entice people to move back home or relocate here for employment because we have a strong economy and a better COL than other areas of Canada. Through the experience of living in several Ontario cities and Edmonton, and visiting others we know that this is not really as correct as MacDonald's Progressive Conservative administration would have us believe.

There are many ways to look at COL. The more correct is to have a shopping basket of products that represent the average Canadian household's purchases. This shopping basket should be 'priced out' on the same date at representative locations around the country to look at the actual COL. In the basket, it would be fair to have such things as average housing costs (representative mortgage payments on a three bedroom home), fuel, food, household products and so on. We are proposing to set up such a shopping basket COL evaluation system in Canada that does the job more accurately than the various government agencies. A limited example of a shopping basket is below.

This basket was done on a recent trip that Lynnda and I made to the USA, when the Canadian Loonie was trading at par with the US Buck. As one can easily register, there is no reason to believe that there is a reasonable cost of groceries and household products between these two small markets... one in the middle of the State of Maine the other in Halifax. Its a stretch right now to leap to the conclusion that because prices are so different in this instance, they are different between Nova Scotia and the rest of Canada. However, our experience is that these differences do exist inside Canada, and so some extent inside Nova Scotia. We will endeavor, in the months ahead to demonstrate this experience.

We should note that it was impressive that the Home Depot in each location was pricing products very much the same... things like 2" x 4" x 8' spruce, drywall, plywood, nails, cement and so on were similarly priced in both stores so we didn't post them here. Frankly, it did give us pause to recognize that it is possible to consolidate, deliver and market product in the two communities for similar prices... if the retailer is not taking advantage of the customer.

In Nova Scotia there are several 'marketing boards' that control the pricing and distribution of food products. In the areas of poultry, beef and pork meats, milk, and eggs, there are representatives of the manufacturers in collegial relationships with government bureaucracies, who control the pricing of products. In virtually every one of these product areas, Nova Scotia has close to the highest (or highest) prices in Canada, and likely North America. These boards were probably put into place years ago when we needed quality control and some protection to ensure that there was supply. But the world has changed, and we need to recognize that with effective transportation we can now produce in the most cost effective place and move product to the consumer. Also, in a consumer driven capitalist market the quality of product is protected by the buyer and the ability to communicate instantly about product problems. Marketing boards now protect the inefficient producers, and cost the rest of us huge price differentials from other North Americans. The government regulations that maintain these marketing boards need to be repealed... more on this at a later date.

Fuel costs are well known to be different across Canada... why, when we have a large refinery here in Eastern Passage and one in St. John, NB do we have to pay the highest costs for 87 Octane auto fuel, diesel fuel and heating oil? Why does Irving Oil at their consumer stations, charge greater than 30% more on one side of the US/NB border for fuel refined in St. John, NB? In most cases, it is because there are excise taxes that increase pump prices! Again, the interference of our governments in the pricing of fuel is damaging the competitive markets... if we are smart enough to cut our miles driven, the speeds at which we drive, the types of vehicles we drive, we will cut the consumption of our personal fuel. This will reduce the volumes sold and therefore reduce the price due to the competitive nature of a capitalist system... more on this in a later issue.


It is not time to consider the 'why' of the reason for the differences... only to appreciate the magnitude of the issue
.


So where am I going with this COL issue... frankly I believe it is representative of much that is not working well in our province. We are too accepting of the status quo, we don't think anything can change, so we trudge along through life. We are so wrong! These things can change.

We live in a democratic, capitalist society where we can bring about change. We need to have a strategy and be persistent over time in order to change our lot here in Nova Scotia. We have to decide to stand up and say we can do this better. In the case of COL, we can tell our suppliers to become more efficient and accept lower margins with more vertical integration of the supply chain, from source to consumer. We can force the issue by acting like an informed consumer on products that will show our will to change the status quo. We can shine the light of knowledge on product value and pricing so our fellow Nova Scotians will buy from the best source, the most effective product... rewarding the effective producer and distributor with higher sales; while forcing inefficient businesses to either get better, or get out!

Below is the shopping basket that needs to be refined and used across the province and in other parts of Canada. I will be working on this project, and start in a few months putting it on the blog. This, along with additional research may start us on the road to knowledge about what is happening to pricing and our COL in general. Certainly it will help us understand that perhaps the government's well publicized campaign to repatriate souls to Nova Scotia is also a campaign of mis-information that they are perhaps hoping will keep resident Nova Scotians from the truth... that this COL is too expensive and that it is partly government interference with the capitalist system that is causing the problem.

Of course, it is somewhat naive to believe that the government is the only reason for COL issues. It is my opinion that the major suppliers of products for our shopping basket are either not efficient and/or not in a competitive consumer driven market. We can do something about both issues by questioning the status quo and demanding better pricing. Among the issues we should explore are these questions:

* is the supply chain efficient... are there too many layers, who are they, why are they there and what can/should be done about it
* are marketing boards forcing unreasonable pricing and allowing inefficient producers to maintain market share at the expense of the greater whole
* what strategies by the individual and collective consumer initiate to force the normal outcome of a democratic capitalist system
* should the value of the Canadian Loonie be reflected in the pricing of product, and when

If you have comments on this blog subject, we look forward to hearing from you. In order to be successful, it is necessary to work together almost as a living organism to make this a better place to live.

Ponderling




Waterville, ME/ Halifax Area, NS Shopping Cart
















PRODUCT NAME DESCRIPTION SIZE (US/CA) WATERVILLE $ US / Unit HALIFAX $ CA / Unit % Difference






Yellow Tail Chard, Shiraz, Cab Australian Wines 750 ml $6.64 $13.40 101.80%






Milk 2% Family Size 3.78 L / 4.0L $4.48 / $1.19/L $6.91/ $1.73 45.40%
Eggs Grade A Large Dozen $1.36 $2.38 75.00%
Butter 4 Sticks / Salted One Pound $2.28 $4.29 88%






Bacon
LB / KG $2.98/lb (0.0066/gm) $7.29/kg (0.0073/gm) 10.60%
Hamburger 85% Lean LB / KG $2.91/lb (0.0064/gm) $9.38/kg (0.0094/gm) 46.90%
Boneless Chicken Breast
LB / KG $9.37/ 3 lb (0.0069/gm) $18.98/kg (0.0190/gm) 175.40%






Lettuce Iceberg Each $1.18 $2.19 85.60%
Tomatoes On-the-Vine LB $2.59 $2.99 15.40%
Potatos Russet 5 LB $3.78 $3.89 2.91%






Flour All Purpose 5 LB / 2.26 KG $1.50 (0.0007/gm) $4.29 (0.0019/gm) 171%
Sugar White 5 LB / 2 KG $2.32 (0.001/gm) $2.35 (0.0012/gm) 20%
Bread White, Sliced
$2.27 $2.19 -3.50%






Coffee Maxwell House 11oz / 311gm $2.82 (0.0091/gm) $4.29 (0.0137/gm) 50.50%
Peanut Butter Jif (US) / Kraft (CA) 1.13KG / 1.0KG $4.18 (0.0037/gm) $3.99 (0.0040/gm) 8.10%
Coke Dozen Cans 12 oz / 355 ml $3.00 (0.0085/ml) $3.50 (0.0099/ml) 16.50%
Philadelphia Cream Cheese Bar 8oz / 250gm $1.54 (0.0068/gm) $3.39 (0.0136/gm) 100.00%
Lay's Potato Chips Classic 368gm / 250gm $2.50 (0.0068/gm) $2.25 (0.0090/gm) 32.40%
Cherrios Whole Wheat Cereal 510gm / 525gm $3.38 (0.0066/gm) $4.49 (0.0086/gm) 30.30%
Canola Oil Crisco/NoName 1.4L / 1.89L $2.42 (0.0017/ml) $5,39 (0.0029/gm) 70.58%
Solid White Tuna in Water Bumble Bee/Clover Leaf 6oz / 100gm $1.18 (0.0069/gm) $2.99 (0.0176/gm) 155.10%






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Blueknowser

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Grad. Saint Mary's University, 1975, got into the medical device business initially in sales, then various management positions up to president, all in Medical Devices. I prefer therapy products over diagnostic, but they are all fun, and in a way have defined my life. I have now evolved, with help from my 35 year partner Lynnda with whom I now share every hour. I am into staying healthy, photography, kayaking, bicycling, gardening and two books a week. I wish I had gotten to this stage earlier!