Small business works with incentive policy
Terry Halifax
Northern News Services
Yellowknife (Mar 05/01) - With Northern business facing a new economic future, the GNWT recently released a discussion paper on the Business Incentive Policy (BIP), to seek public input on how they may change the policy.
The BIP allows a five and 15 per cent bid adjustment to "level the playing field," for Northern businesses to compete on contracts with southern competitors. Bonita Melvin, manager of the BIP said the program needs to be updated to meet the changing role of business in the North.
"There is a need to revise the purpose of the BIP, to support the current economic vision goals of the government," Melvin said.
She said the policy has been a boon to many Northern businesses and she has been very impressed by the comments made towards the policy.
"The BIP program has allowed many of them to be in business today," she said. "I was deeply touched by the sincere sharing from each business person who came here and shared their business experiences with us."
The nature of business is changing in the North, Melvin said. Where many companies once relied on government contracts, they are now seeking work outside of the government tenders.
"Over the past several years there has been a 60 per cent reduction in capital spending," she said. "We have to look at how we can position those businesses for other economies -- other markets."
She said the government has recognized a need to change the policy to bring it in-line with the new regime's policies and projections. Five areas that need clarification in the plan are:
-easier calculation of program costs and benefits
-restrictive tendering consistent with GNWT economic direction
-the bid adjustment to reflect true northern operating costs
-accountability
-definition of a Northern Business
In defining a Northern business, Melvin said a business must be at least 51 per cent owned by Northerners, however, if it has been operating in the North for ten years, it may also be eligible for the BIP.
She said two options to improve the policy may be to offer small business tax reductions and labour rebates. Lower taxes would also be an easier way to administer incentives and would attract new business to the North.
"The labour rebate would have the advantage of being directly linked to actual Northern employment results," she said. "It would allow an easy calculation of costs and benefits."
Newly-elected president of the Hay River Chamber of Commerce, Doreen Farrants said the meeting was well-attended by local business and the dialogue was mostly positive.
"Generally speaking, everyone is in favour of BIP," Farrants said.
"They think it works to build capacity and protects Northern business."
Farrants said there are many issues that came out mostly concerning small business.
"BIP was never intended to hurt small business and there are instances that it has," she said.
"Particularly the requirement that businesses should have to wait a year before they can be BIPed."
She said there was some discussion where the individual should get the approval and not the business.
"A year for a business can be an awful long time -- especially for a sole proprietor," she added.
Farrants said the policy needs clarification in defining northern business and northern workers and also needs some form of enforcement.
"It needs to be monitored and it needs some teeth," she said.
"If someone is dishonest on an application or bid, there should be some kind of penalty imposed on that business.
"Just tell us what the rules are so we know how to play the game," Farrants said. "And if someone doesn't play by the rules, there should be some kind of penalty."
Melvin said there are about 1,200 BIP approved businesses in the NWT who employ 6,300 residents. Business owners were are all asked to provide input on how the program can be improved.
