Investment support feasible?

(This article ran in Mandate West, the Canadian Federation of Independent Business newsletter, November issue.)

Earlier this year the government of the Northwest Territories announced a new Investment Support Program.

Based on similar programs established and operating in the Atlantic provinces, it is intended to attract new investment to the NWT, improve the availability of equity capital for local businesses and diversify the type of financial aid to small business away from debt financing to links with outcomes like job training or market expansion.

Based on our experience and knowledge of these programs in Atlantic Canada, the Canadian Federation of Independent Business is uniquely qualified to evaluate the program offered by the GNWT. Additionally, we have a duty to ensure that the views of small business are taken into account when the program is implemented.

The features of the proposal that relate to promotion of the territory and its business have merit. However, the balance of the Investment Support Program is seriously flawed and will not produce the type of job creation and business growth expected by the territory.

The core features of the program (such as the Corporate Investment Incentive Program) are essentially subsidies camouflaged as economic growth strategies, says CFIB's director for the region, Brad Wright.

The Newfoundland program, while serving as the template for the NWT Welcome Program, has not yielded the number of jobs promised or the economic diversification expected, despite the time and money devoted by the province, explains Wright.

More importantly, says Wright, these programs may serve to distract the government from making necessary structural changes to its operations. Regulatory reform, streamlined government services and a less-intrusive government philosophy are long overdue, he points out. Wright adds that improvements in these key areas, combined with policies that free up capital within existing small businesses, will be far more conductive to business growth and job creation than tax holiday schemes.