Governor Deval L. Patrick
New England Council
Bank of America, Boston
Tuesday, April 3, 2012
Good morning, ladies and gentlemen, and thank you for having me this morning. Bob, thank you for the warm welcome. And for all of you and Anne, thank you for this convening. We appreciate you.
I want to acknowledge my friend and the Council’s irrepressible leader, Jim Brett. Jim is an outstanding leader of the Council and I thank you for your service to the New England Council, and also for your service on the Governor’s Commission on Intellectual Disability as well as the President’s Commission for People with Intellectual Disabilities. Jim chairs both of those commissions I appreciate your work.
The last time we were together, by my reckoning, was in 2009, in the midst of some especially tough fiscal times and some especially tough fiscal decisions. Cutting government spending and programs and head count was necessary, even popular in some quarters. But that was never going to help us grow the general economy. We need growth and for growth we need investment. And while I believe job growth is mainly the role of business, not government, I do believe there are investments government can and should make to encourage and sustain job growth. We pursued that strategy even during the downturn, thanks to the support of our legislature and the support of the Obama administration, and I wanted to talk a little about that growth strategy and why we pursue it. Then we can spend most of our time in conversation.
Our strategy in Massachusetts has three areas of focus: education, innovation and infrastructure.
Education is first because it’s our edge. It’s what we’re best known for around the world. I’ve done business in my private life all over the world and we are well-regarded around the world as a center for top universities, colleges, research institutions, teaching hospitals here in Massachusetts and frankly around the region. Our workforce is well-educated. Brainpower is really our natural resource and our natural advantage in an economy that is in a knowledge explosion. So we invested in the public schools at the highest level in the Commonwealth, even when the bottom was falling out of the rest of the budget. With the help of some of you here, we introduced new rules and tools to classrooms to encourage more innovation, especially in the schools where we have been leaving children behind in achievement gaps – poor children, children with special needs, or who speak English as a second language. We have invested in improved facilities at our public colleges and universities as well.
And I am pleased to say that our students are responding. Our students rank number one in America in student achievement and have for each of the last five years. We rank in the top five in the world in math and science. So, education is the first pillar of this strategy.
Second is innovation. What do I mean by that? There are a handful of industries that depend on the kind of concentration of brain power we have here in the Commonwealth. Add to that a tradition of invention and entrepreneurship over many centuries and we have a platform that makes us especially attractive for the kinds of innovative industries so central to today’s and tomorrow’s economic economy – industries like life sciences and biotech, clean tech, IT, financial services more and more and IT business.
With the help of our life sciences initiative, for example, we have become the global hub of the biotech sector. We have so far invested about $200 million of public money so far to leverage about a billion dollars in private investment and create thousands of new jobs.
The IT sector has rebounded in really interesting and exciting ways with an emphasis on new media, communications, robotics, big data and support for the financial services sector. We have four times the national average of iTech firms here in Massachusetts today.
The clean tech industry is exploding, thanks to a policy framework that has aligned our environmental interests with economic opportunities in this burgeoning field. We are now the number one state in America for energy efficiency. Our clean energy sector saw job growth of 6.7 percent last year. That is expected to double in 2012.
And it is especially exciting to see that we are making more of the things we invent here in the Commonwealth. From pharmaceuticals and medical devices in the life sciences to solar panels and efficiency components in the clean energy sector to robots and smart phone apps and video games in the IT space, precision manufacturing is making a very strong comeback in the Commonwealth today.
So, education is first. Then, innovation. And finally infrastructure. I always describe infrastructure as the unglamorous work of governing, but it supports everything else. Roads, rails and bridges; broadband expansion to the 123 cities and towns in the Commonwealth that are underserved or un-served entirely. We have doubled the level of annual infrastructure investments, spread around the whole of the Commonwealth, and, among other milestones, reduced the number of structurally deficient bridges by 20 percent. And we are trying innovative ways to deliver these projects as well. I don’t know how many of you use I93 up north of the city, last summer we replaced 14 bridges on Interstate 93 in just ten weekends, a project that normally would have taken many years.
We sustained this program in two ways: one by developing an affordability analysis that we vetted with the rating agencies on Wall Street, just to be sure they were comfortable with the bonding necessary to pursue the program; and also with the help of the President’s stimulus funding. And that needs to be acknowledged. Let there be no doubt: over 90,000 people in this state can trace their paycheck to the American Recovery and Reinvestment Act and a lot of those folks are in construction, doing to vital and long-neglected work.
So, education, innovation and infrastructure. That is our strategy. It is very simple. And it’s working.
In Massachusetts today, unemployment is well below the national average. Preliminary reports are that we added about 23,000 jobs in the first two months of this year. The Philadelphia Fed and a number of other sources report that we emerged from the recession faster than most other states.
Business confidence rose again last month, the fourth consecutive monthly increase.
CNBC ranks MA the sixth best in the nation for business (up from the bottom third a few years ago). I find sixth is hard to say. First is easier to say. So that’s where we’re going.
Two other national studies rank Massachusetts first for the new economy and in technology and science. The Economist magazine in January ranked Boston the 10th most economically competitive city on the planet. Really great stuff.
We are home to a booming start-up community: in 2010 alone, Massachusetts captured $2.37 billion of venture capital investment. And MassChallenge, a public-private business incubator we launched a few years ago, has become the largest accelerator for business competitions in the world. And recognizing that most of our businesses are small, we have cut rates and are cutting regulatory hassle to reduce business costs and make it easier to work here. We have also reduced average health care premiums from over 17 percent two years ago to less than 2 percent this year. And I want to acknowledge Jim and others in this room who have helped us do that.
Meanwhile, we have eliminated the decades-old structural deficit in the state government and, as Bob said, our bond rating is higher than ever in the history of the Commonwealth.
We have more work to do of course. Massachusetts is coming out of the recession faster and stronger than the rest of the country, but it hasn’t touched everyone yet. There are still people out of work. There are still businesses struggling. There are still people who need a way forward for themselves and their families. But I am persuaded by the results that this is a winning strategy that we will continue to focus on.
The wins are not coming by accident. It’s not happening because we cut spending alone. It’s happening because we have a growth strategy in Massachusetts and leaders in government, business, the non-profit sector and the academy committed to working together. Collaboration is key. It’s absolutely essential. And I once heard someone in California describe us as not have a very strong “collaborative gene” in Massachusetts. I think we’ve been developing that gene in important and positive ways over the last few years.
Some of the remaining challenges we can perhaps talk about during the conversation period. I will tell you now that we are working to align our community colleges so they can do more to help us prepare people for the nearly 120,000 unfilled positions that we have in Massachusetts today, many of them middle skills positions. We are working on legislation to sustain the progress we have made in controlling health care costs. We are about a quarter of the way through a project to systematically review nearly 2,000 regulations that are over 12-years old or more. There are nearly 2,000 regulations and we are rescinding the stale ones, updating sensible ones, and looking for ways to make compliance easier and more predictable.
I also believe that we have to continue our efforts to look out and embrace the global nature of the economy. We’ve seen some tremendous response to our trade missions last year to Israel, the UK, Brazil and Chile. More and more international companies are now making Massachusetts their ‘home away from home’ by building headquarters here and growing jobs. We’ve signed agreements for research and commercial partnerships with educational institutions and government entities abroad. That’s important for Massachusetts. We have something to offer, something to settle and some benefits to reap.
President Obama has a very similar strategy for the country. He has also emphasized the importance of investing in education, innovation and infrastructure. We have been fortunate here to have legislative partners willing to give us the tools we ask for to deliver on that strategy – not always on the first asking, but eventually and more often than not they give us the tools that we ask for. The President has not always been so fortunate. He has been asked to fight the recession effectively with one hand tied behind his back.
There are a whole host of examples. The most recent is the failure to reach a long-term deal on the transportation reauthorization bill. And that ought to be concerning to everyone in this room. The Congress can’t get together to agree on a long-term fix. So we’re stuck with another short-term solution, kicking the can down the road instead of making tough calls and the serious investments that we know are necessary to sustain our growth into the future.
We all used to agree that investing in roads, rails and bridges is a smart thing for government to do. That’s not partisan thing, that’s a fact. Building and maintaining state-of- the-art transportation systems sustains a competitive economy and a high standard of living. No private company or individual, no matter how virtuous, takes responsibility for meeting these needs. This is what government must do and do well.
And yet a small but emboldened group in Washington is holding that up. They are more committed to defeating the President, it seems even if it means driving the economy over a cliff, than winning the future. As so as you work to advance our regional interests in DC, I hope you will be willing to call that out and make it clear that subversion is unacceptable. We need to come together to build a better country for all of us.
No one thinks government should try to solve every problem in everyone’s life. And given the global economic reality, governments – like every business and family – have to find ways to do more with less. But there has to be a way to still talk seriously about and work for a better future, to bear our generational responsibility.
I’ve told some of you about a column I remember reading some years ago that compared the Greatest Generation to my generation, the Baby Boom Generation. The writer described the Greatest Generation in terms we have all heard it described before: the generation that fought and won the Second World War and then rebuilt Europe and Japan, that then came home and built great institutions and public universities, created the federal highway system, really launched the modern civil rights movement. Then the author compared the Greatest Generation to the Baby Boom generation and described us as the Grasshopper Generation – because we have been feeding off of that all our lives. It’s time for us, I believe, to turn that around.
I think I am preaching to the choir today. I hope I am. The New England Council has been a voice of reason, a nonpartisan advocate for this region, for 85 years. I think you get this idea of generational responsibility, that we each of us in our time old-fashioned notion that we are supposed to do all we can to leave things better for those who come behind us. I want to thank you for what you do in that regard and urge you to keep at it – we need voices like yours now more than ever.
I look forward to the conversation. Thank you for having me.