Hay River (Feb 2o/06) - The Department of Industry, Tourism and Investment is on the verge of a colossal blunder if it drops the Business Incentive Policy (BIP), according to one prominent Northern entrepreneur.

Jack Rowe, president of Rowe's Construction, said there's no way the government should eliminate the Business Incentive Policy, which levels the playing field for Northern firms bidding against southern competitors on territorial contracts. - NNSL file photo

The policy works just fine as it is and it shouldn't be tinkered with, said Jack Rowe, president of Rowe's Construction.

The long-standing BIP allows businesses that have been based in the territories for a minimum of 10 years or that have at least 51 per cent NWT-ownership to bid up to 15 per cent higher than southern competitors and still win government contracts.

"It has a very positive impact on Northern business," said Rowe. "It helps to employ people."

Rowe is worried that businesses from the south could come in and undercut Northerners on any number of contracts thanks in part to lower labour costs. Not only would Northern firms lose out on the bids, southern firms that operate subsidiaries in the NWT could suddenly pull out, resulting in a double hit to both the job market and the economy.

"For some companies, if they take away BIP, then there is no incentive to stay in the North and do business," he said.

Killing the policy wouldn't necessarily result in increased southern competition, said Industry, Tourism and Investment Minister Brendan Bell.

"There are many established businesses in the North who know the challenges and can provide the services," he said.

If the policy is removed, the minister said the government would cut the current small business tax in half to two per cent from the current rate of four per cent.

The tax cut would be balanced off in part by the savings of $300,000 Bell said the government currently spends annually administering the policy.

"We're interested in hearing from businesses," he said. "If they are less interested in the tax cut, then we wouldn't necessarily remove the BIP."

The NWT Chamber of Commerce is leading the charge to keep the policy in place. The $200 million worth of contracts issued by the territorial government last year, the premium paid to BIP-eligible firms only amounted to $270,000.

"Now it's not the dollars that count, it's the psychological impact," said John Carter, executive director at the Chamber. "BIP encourages commerce between the government and businesses in the North."

The group is calling on firms to complete a survey on its website to let the government know whether they prefer a continuation of BIP or a tax cut.

The survey on the NWT Chamber of Commerce website will run until March 12 if responses continue to flow, otherwise Carter said the results could be submitted to the government sooner.

As of the morning of Feb. 15, 34 businesses had answered the Chamber's call to action.