Transparency in economic development

I had to chuckle when I read the media reports of Donald Savoie’s ‘transparency’ and ‘openness’ in government report. It’s my experience – based on my limited exposure – that much is done to try and hide stuff. A couple of years ago I was hired to do a comparative analysis of economic development activities and results of over a dozen provinces/states. It was almost impossible to get any real data on the jobs, wage rates, investment levels of the ‘economic development’ in New Brunswick.

Sure, BNB published a number 4,532 or some such thing – the jobs created and ‘retained’ by their efforts. But a breakdown of the companies, the wage rates, the investment levels? Nada. In fact, in the reference period that I was looking at, there were 4-5 press releases announcing about 500 new jobs. I couldn’t find a whiff of where the other 4,000 were created (retained).

The best practice jursidictions that I looked at actually published the jobs – the time it would take to ramp up the jobs – the starting wages, the wages at full ramp and the total investment.

I don’t remember a press release from the government of New Brunswick actually mentioning wage levels in years. I have to admit that I don’t read every one but when I did that review, nada. And this week’s ATCON announcement? No mention of wage rates at all in the government press release.

It is incredibly important for the government to be open and transparent about the wage rates of companies they are attracting to New Brunswick. The Self Sufficiency plan calls for an overall 20% increase in wage levels and if they companies they bring in are below average, the public should no.

Now, there is one reference that I can find to wages regarding the ATCON project. Tt was in the Times & Transcript:

Dorothy Innes, communications director for Atcon, said depending on the position the jobs will pay anywhere from $45,000 or more. About 25 per cent of the jobs will be welding positions, she added.

This is a bit obtuse to say the least. Will secretaries make $45,000? Sure, the IT guys will make $45,000 but will the welders? I suspect the answer will be yes – but I am not clear from this comment.

It is likely, the overall wage levels will be lower than the UPM Mill. I don’t have a problem with that per se. But I think the public has the right to know.

I talked with a guy this week who knows someone working at the mill in Nackawic. Apparently the overall remuneration package is considerably lower than it was under the previous owner. Again, that should be front and centre.

I mentioned it before but it is worth repeating. A few years ago – I believe it was on the same day but I may be romanticizing it a bot – Bernard Lord was in a rural town announcing 50 new call centre jobs (he never mentioned the wage rates but we know they are around $9/hour). At the same time, Jeannot Volpe was announcing in Fredericton that because of his great work, all New Brunswickers making less than $15,500 would not pay any income taxes.

Now, $9/hour working 37 hours per week = annual salary of $17,500. Essentially, the Lord government was paying upwards of $7,500/job in tax dollars to create jobs that generate no income tax dollars for the government.

Now, how is that for an economic development strategy? Create jobs that don’t pay any taxes? It’s no wonder our need for Equalization has skyrocketed.

So, in closing, a note to the government. Be very transparent in your economic development activities. Be clear in your reporting. Be open about wage rates/benefits offered by firms. Be clear about the duration of the jobs (if it is a contract). Be clear about the investment amount. Be clear about how much taxpayer funding is going into the firm.

And to the media, why not ask the question? Please tell us the number of jobs by category and your expected wage rates? This should be a precursor to any public funding.

Otherwise we’ll be in the Volpe dance again where we are attracting jobs (and by the way there were at least 3,000 jobs under the Lord/Volpe regime in the $9/hour range that were funded with taxpayer dollars) that will never generate any payback on the tax dollars invested.

At least half of the jurisdictions I studied had some form of wage threshold to be eligible for incentive programs. In most cases it was something like the wages had to be 25% higher than the average full time wage in the broad sector (like manufacturing).

That might be a good model.