I read the AG’s report on BNB’s largest financial assistance program this morning. It’s an interesting report but there isn’t much in there that is new. There is some interesting data on the number of financing programs/dollars over the past few years (not including the most recent years).
But a few things stood out to me:
The first is the AG’s conclusion that there is no integration of financial assistance and the department’s strategic objectives. As strange as that seems and I would fully agree.
She concludes BNB doesn’t “report publicly the results of the FAIP against its three measurable areas, job creation, job maintenance and leveraged capital investment”. I have said this many times.
She recommends publishing measurable targets. Amen.
Where it gets interesting is on page 25 where she talks about the province’s ‘payback calculation’ on grants/forgiveable loans. I have talked about this before. BNB will determine an estimated amount of new tax revenue to the provincial coffers from the new job creation and base their assistance on a payback on that assistance (for example a $1M grant will be paid off in three years from incremental tax revenue from the project).
She thinks this could be done better but doesn’t go as far as making this public (at least I didn’t read this going through it this morning).
I have said and continue to insist that we must go even further and determine an incremental tax measure for economic development efforts as a whole. It’s not enough to calculate this just on loans or grants. The overhead associated with economic development must be included as well. In other words, for every taxpayer dollar invested in economic development, we get $x more back in incremental tax revenue. This is the one sentence measurement that would radically alter the face of economic development in this province.
I would say that a majority of folks I talk to about this are very wary about such a measure but I don’t see any other way. What else would we measure? When you spend on health care, you get health care services – which are more or less measurable. When you spend on education, transportation, etc. the same. What is the delivery from economic development?
It must be about growing the economy and it must be about generating incremental tax revenue to support public sector spending.
The common retort to this is “even if there isn’t an economic ROI, without us it would have been worse”.
So that’s the objective for economic development in New Brunswick “It could have been worse”?
Not very ambitious, folks – but at least it gives us a replacement for our driver’s license. New Brunswick: It could be worse.
I have said that there will be good years and bad years but over the longer term, economic development must be about growing the economic pie or don’t make the expenditures at all.
To me that is the greatest failure of the AG’s report. She looks at one program of BNB in isolation and runs it through a auditing calculus like any other department review. It would have been very helpful for her to at least make some comments on the effectiveness of economic development. Particularly as we are now embarking on a reform agenda.
I’ll leave this for now – I could write all day on this but I have a day job.