The TJ outlines their recommendations for a makeover of BNB. I would offer one more piece of humble advice to the new Minister of BNB.
I think it is time for a retrospective audit of economic development outcomes in New Brunswick. I don’t think this would be extremely difficult to do depending on how wide you cast the net (scope).
The idea is simple. Look at all the agencies that are funded by government that have as a primary mandate economic development. Think BNB, Enterprise Agencies, Innovation Foundation, IRAP, certain RDC programs, etc. (not to mention the federal organizations ACOA, Industry Canada, IRAP, CBDCs, etc.). Do an audit of every single company that has received support (funding or otherwise) and conduct a simple ROI on the government economic development efforts.
The provincial government alone has spent easily over a billion dollars over the past 10 years directly on economic development (not including loans/loan guarantees and other funds it expects to get back). The exact number would be easy to calculate.
You then conduct a full survey of all the companies that have recieved support to try and determine how many jobs, at what wages and how much tax revenue has been generated as a result of the government support (this is fairly easy to estimate if you ask the right questions). That number over the 10 years should be far more than one billion dollars (or whatever the total spent was) or the economic development effort did not generate a positive return on investment.
Economic development is about the only government spending that can and should be tied directly to a tax generation ROI.
There are those that say that tax generation lags economic develpoment effort (i.e. today’s efforts payoff in three years). Fine. Then add a lag time to your model. There are others that say what about all the good work that doesn’t directly lead to new tax revenue (retention efforts, general promotion efforts, etc.).
That doesn’t cut the mustard. Even if you believe that things like retention are economic development, over time economic development spending by government must lead to a positive return on that investment or what is the point?
Then, after doing the first retrospective audit, I would conduct an annual survey of all companies touched by all economic development agencies in the province each year. This might cost, on the outside $50k per year but it would be well worth it. The IDA in Ireland tracks all of its companies and provides an updated total on job creation, taxes generated, etc. each year. That is what we need because remember, the jobs created at UPS back in 1994 are still generating tax revenue for government. For me, that is fair game to claim on an annual basis. We need a rolling total.
This would achieve at least three powerful results:
1. It would shine a light directly on the system as a whole and help government understand if it is even working at all. Because it is hard to deconstruct the component parts, a system-wide view would be the ultimate measure of success.
2. I think it would show what companies (or more accurately what type of companies) use government support to truly grow and what companies (or more accurately what type of companies) use government support to fund daily operations. I have said here before that there are number of companies in the province that have been accessing various government funding programs for 20 years but are still about the same size they were 20 years ago. We need to use government support as a catalyst for growth – not to help specific companies get through a cash flow crisis.
2. It would clearly define deliverables for the leadership in these economic development groups. If the heads of these organizations know that they will be held to that simple standard (for every million spent on economic development, we expect $1.5 million in new tax revenue) they would be laser focused on generating more tax revenue.