A Long Wait For A Short Story
Posted October 2, 2015
The regulations for Invest Nova Scotia are only a page and a half long, but it took a year and a half to produce them.
The principal substantive content concerns who may apply. It can be many different kinds of organizations (but not a for-profit corporation) provided that “the profits, if any… are used for the benefit of the public and not private shareholders.” Any incentive of more than $3 million must be approved by the Treasury and Policy Board. The current year budget is $5 million.
The big news 18 months ago was the shutdown of the Nova Scotia Jobs Fund which, like its predecessors, had been a frequent source of poorly considered, expensive decisions.
The press release in March 2014 told us that the Invest Nova Scotia Board “could provide economic development incentives from the Invest Nova Scotia Fund for sector development or economic diversification, workforce skills for competitiveness, applied research and development and pilot projects, trade, gateway and economic infrastructure, leveraging significant investments in new technologies or expansions and regional development with emphasis on high-unemployment areas.”
As I wrote then, these words could accommodate many of the poor choices made by the Jobs Fund. The long delay suggests that it took the government a while to agree on what, exactly, was the original intent.
As a practical matter, the choices about what Invest Nova Scotia will do have largely been left to the Board, led by former Dalhousie president Tom Traves. They have provided a list of Guiding Principles and Decision Criteria which are mostly warm and fuzzy (cooperation and collaboration, diversity, productivity and competitiveness, sustainability) as well as some that are a bit more clear (expectations of projects and results to be quantified and communicated; projects to be at least $500,000).
The projects must support the goals in the Ivany report, but we are not told which ones. Presumably, it could be any of them.
The notion of supporting projects that create innovations with sector-wide benefits is attractive. Whether much will actually happen remains to be seen. The Invest Nova Scotia Board is unlikely to do any harm, and may do some good.
It must be said that if the only result of the legislation was to end the Nova Scotia Jobs Fund, it was a worthwhile piece of work. The premier has repeatedly said that the days of handing out big cheques to corporations are over, other than a relatively small percentage of the cost of major capital projects—call that the Michelin clause.
The news this week that Daewoo Shipping and Engineering Ltd. may be pulling out of the DSME Trenton operation reminds us of one of the many big cheques which produced disappointing results. The previous NDP government spent close to $60 million on a project that never came close to the original target of 500 jobs, and now looks to be finished.
Interestingly, the experience has not changed the NDP’s views on handouts to corporations. Its caucus office confirmed this week that it would like to see the film tax credit regime restored, and that any industry suggestions for improvements/changes to the pre-April 2013 model should be considered.
Such a program would result in spending the same money as was spent on DSTM Trenton about every two years, with full knowledge that the jobs would promptly disappear if the handouts stopped. Meanwhile, leading recipient DHX media is reporting record profits.
In 1972, then-NDP national leader David Lewis wrote a book denouncing “Corporate Welfare Bums.” Intriguingly, Stephen Harper adopted the expression in 2004, explaining that corporate taxes could only be reduced if corporate grants and subsidies ceased.
Is it an allergic reaction to any policy position that Harper holds that causes Nova Scotia’s NDP to be the new champion of corporate welfare?
As for the provincial Liberals, it appears that they did not have a clear idea what they wanted Invest Nova Scotia to do when they introduced the legislation 18 months ago. Where they have landed is modest, possibly useful, and likely to be harmless.