The Premier’s new chief of staff is talking economic development as his number one priority so I’ll give him the same tip I gave the PCs when they came into office and the same tip I gave the Liberals and the NDP. It’s also the same tip I gave the folks in Nova Scotia.
It’s not about the bank.
In New Brunswick we have something like a dozen different government funding departments or agencies that act as a bank for business – mostly SMEs across the province (ACOA, CBDC, DEC, INB, NBIF, NRC-IRAP, BDC, etc.). Each of them has sales guys/gals out pitching financing programs. Each has financial officers reviewing business plans. Each is assessing and managing the risk associated with their loan portfolios.
How many of them are doing economic development? Hard to say. My own view is that it would be generous to say that 10 percent of the spending is actually directed at trying to find incremental economic development opportunities.
Even when we give out loans to help firms expand – if they could get that money from the private sector it’s hard to say this was ‘economic development’. It was likely just displacing private sector investment.
Let me reiterate I am not against public funding into private firms if there is a) a clearly defined need and b) a clear payback on that public investment in the form of incremental tax revenues. But I never liked our singular focus on the banking function.
We need to spend 90 percent of our effort trying to figure out how to foster economic development. Where are the new sector opportunities? How do we truly foster more exports in a much more competitive world? How do we become a place where highly ambitious entrepreneurs want to set up and grow (compared to the relatively risk averse lifestyle small business owner)?
No government in my lifetime has figure this out. The closest was Frank McKenna but even he essentially stumbled upon his greatest industrial success – the customer contact centre sector.