I used to spend a fair amount of time searching through U.S. SEC filings for clues about company expansion potential and then pass that on to a client. I don’t do that work anymore but I had ocassion to be in the EDGAR database today and came across the Government of New Brunswick’s 18-k filing. This is a filing similar to the 10K filing that companies need to make if they are looking for investment dollars (or publicly traded) in the U.S.
It is interesting for a variety of reasons: 1) because it is a public filing it has limited spin (I say limited because there is always spin). For example, they actually show a chart stating that New Brunswick’s GDP growth has been well below the national average for the past five years.
Another interesting statistic – that I have never seen before is found on page 28. I have to point out that the U.S. government sets the parameters of what needs to be disclosed in these filings and may be requiring this. The NB government actually shows how much it spends on economic development each year. Now you may ask why is this significant – doesn’t that information show up in the Main Estimates each year? No, economic development spending is rather cleverly distributed among several departments – I suspect to not reveal the full extent of the spending each year (you would have to ask them to find out the reason). But in this 18k filing, we get it.
For a wonk like me this is very interesting. In the notes to the table it states “Budgeted Economic Development expenditure of $178.6 million represents 2.5% of the total budgeted expenditure for the fiscal year ending March 31, 2010 and is made up of the Departments of: Business New Brunswick ($56.1 million), the Regional Development Corporation ($73.5 million), Tourism and Parks ($29.0 million), and a portion of General Government ($20.0 million).”
Essentially, they have put numbers here that you won’t see anywhere else (at least I haven’t found them). We now know the government spent over $212 million in 2009 just on economic development. Throw in ACOA and we are over $300 million per year on economic development. Did we get an ROI on that $300 million? Go ask BNB.
Of course the next logical step is to compare New Brunswick to other provinces. I don’t have time to compare them all but I did pick Nova Scotia. In its 18k filing, we have this note:
The Province is engaged in a wide range of resource and industrial development activities, including direct assistance grants, development and maintenance of natural resources, and consulting services to industry (Agriculture, Economic Development, Fisheries & Aquaculture, and Natural Resources). Expenses from the Consolidated Fund in these areas totaled $270.2 million for the fiscal year ending March 31, 2008, and are estimated to be $243.3 million in fiscal year 2008-2009. The Province also provides loans directly and through agencies to assist the primary, manufacturing, and services industries.
So not including loans (and I suspect NB’s numbers don’t include loans either but I don’t know for sure), Nova Scotia tells us they are spending $243 million per year or just about the same as New Brunswick on a per capita basis. Throw in ACOA and Nova Scotia is over $350 million in economic development spending. Did they get an ROI on that $300 million? Go ask them.
Please note: this NB/NS data is not directly comparable. New Brunswick has not included natural resources or agriculture in its figures. Getting an objective comparison of economic development spending is very hard.
I think this is the kind of stuff that needs to be transparent and tracked religiously. There is a lot of cynicism about economic development in Atlantic Canada and part of this cynicism is tied to the reality that we don’t have any good data to compare. Governments are selective with what they publish and rarely show anything like a return on investment (ROI) calculation on their E.D. spending. If we had this we could a) evaluate the success or failure of e.d. efforts and b) have the information needed to decide if we need to change things.
If we spend $300 million a year to generate $100 million in incremental tax revenue or less – why spend the $300 million? You are out $200 million on a net basis. I think this level of dicussion needs to take place in the public square.
You know I am the biggest cheerleader for economic development around but I have always said we need to tie it tightly to hard tax and employment targets. Otherwise we are just spending money for the sake of spending money.