Implementing Ivany Needs Political Leadership

Dramatically better economic development is a central theme of the Ivany report. The strategy revealed by the Liberals last spring has had an underwhelming launch. It would help if economic development had a full time minister working on the right issues.

Innovacorp has become the sole source for venture capital investments and these are to be small early stage placements. That is a big improvement. Nova Scotia Business Inc. (NSBI) will no longer be involved in venture capital, but it has a number of troubled files to work through.

NSBI was without a permanent CEO for 18 months, which makes it difficult for the organization to establish new long term strategies. Laurel Broten, author of the Tax and Regulatory Review completed in November, was appointed last month.

The central change announced in April was the termination of the Nova Scotia Jobs Fund, to be replaced by Invest Nova Scotia. The press release gave a rather vague mandate but the key provision that distinguishes Invest Nova Scotia from its predecessors is that money can only be spent if approved by an independent board.

The regulations necessary to bring this project to life were expected within a few months, but have yet to appear. What might be taking so long?

One potential source is the breadth of Michel Samson’s responsibilities. He is Minister of Economic Development and Tourism and the related crown corporations, Minister of Acadian Affairs, and Government House Leader. Since December he has also been covering the Energy and Communications portfolios.

But there is more to the problem. Since coming into office the Minister has spent enormous amounts of time managing the Yarmouth Ferry. He has had to do so because Nova Star, the operator, is inexperienced and has no working capital. The Minister is effectively the CEO.

The ferry is reported to have generated $13 million of expenditures by tourists last year. That is less than 1% of $2 billion in revenues claimed by the tourism industry, which in turn is a small part of the province’s economy. Accommodations and food services represent 2.4% of provincial GDP.

The economics on ferry subsidies—past, present, or future—are dreadful. As noted in previous articles the subsidy in 2014 amounted to perhaps $2,600 per room night from the additional travellers resulting from the ferry.

Even if the $13 million allotted for 2015 proves to be sufficient and traffic soars from 59,000 to 100,000 the subsidy will still amount to $750 per room night. These are not the choices that make sense for any province, let alone one that needs to clean up its finances.

At the end of this year we will have spent $41.5 million on a project with no enduring legacy other than the need for further subsidies if the government chooses to continue the service. Does that make sense?

Which brings us back to Invest Nova Scotia. The basic structure contemplated for it involves knowledgeable people making fact-based evaluations of a business proposition. The money for the ferry would never pass such scrutiny.

The problem for the minister is that he has been so deeply involved in managing the project that it is very difficult for him to acknowledge how awful the economics are.

The virtue of independent boards making these kinds of decisions is not only the clear-eyed view they can take. It is also that they keep the minister and the rest of cabinet out of the weeds so that they can advance major policy initiatives affecting the whole economy, not just one small part of it. Those are the initiatives that should be occupying cabinet.

This week marks the first anniversary of the Ivany report. What has been happening?

The One Nova Scotia Coalition, a group of worthy citizens plus the premier and opposition leaders, is working away at building a plan to be ready by the end of the year. Yet the evidence of political leadership and support for their work is sparse.

Diverse voices who want Ivany to succeed have expressed concern. John Bragg, a member of the Ivany panel worries that the effort has lost momentum. Clearwater CEO John Risley likewise expresses disappointment. Students Nova Scotia director Jonathan Williams complains that there has been no progress on youth employment, retention, and attraction. David Wheeler, leader of the report on fracking urges a return to more consensus-based energy discourse instead of former Energy Minister Younger’s efforts to shut down the conversation.

It is particularly disconcerting that the communications from the OneNS coalition do not include comments from the premier nor did his remarks in the State of the Province address convey a sense of ownership or urgency on strategies to fulfill the Ivany economic development goals.

The premier needs to show that he is a leader of the process, not a spectator. And he needs a full time minister working on the big issues in economic development.

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