Canadian Manufacturing

Nova Scotia eliminating taxpayer-funded grants for business

Premier Stephen McNeil said legislation has provisions for other contributions like government-owned land

April 24, 2014  by Keith Doucette, The Canadian Press

HALIFAX—A new funding board would replace a controversial business loans program in Nova Scotia under legislation introduced by the government that the Liberals say keeps a campaign promise to end corporate handouts.

Economic Development Minister Michel Samson said the government believes the public wants a fresh approach that allows the private sector to drive the economy, which would be achieved by replacing the Jobs Funds with the Invest Nova Scotia Board.

“They recognize that government has a role to play in fostering the conditions for entrepreneurs and businesses to be successful, but that government itself should not be picking winners and losers,” said Samson.

The board would target sectors of the economy, regional development and research in keeping with recommendations made in recent reports done by the Ivany commission on the rural economy and by Tom Traves on government funding initiatives, he said.


Samson said while the board would remove cabinet’s role in giving economic development money, the government’s Treasury and Policy Board would still have the power to confirm whether the fund has the capital available before each project approved by the new board is finalized.

The board’s independence would not be compromised by what amounts to a government veto, he added.

“We are trusting them to make decisions on behalf of Nova Scotians,” Samson said. “We will provide guidelines, but at the end of the day they will be responsible for their decisions.”

The opposition parties described the change as cosmetic.

“What we learned today is we’re just exchanging the NDP chequebook for a Liberal one that comes with a fancy co-signer,” said Progressive Conservative Leader Jamie Baillie.

Baillie wants to turn the fund over to the government’s arms-length development agency, Nova Scotia Business Inc., although Samson ruled that out by saying the agency has enough work to do.

Interim NDP Leader Maureen MacDonald said while there shouldn’t be a “free lunch” for companies, Premier Stephen McNeil’s promise on the use of public money isn’t realistic in the current economic climate.

“There have to be strings attached to public money,” said MacDonald. “However, public money is a piece of what governments have to offer companies as an inducement to either locate or expand in any particular jurisdiction.”

McNeil said the new funding board would not hand out grants, but there is a provision in the legislation for contributions, such as government-owned land.

He defended the approach the government is taking in light of a promise he made during last fall’s election campaign, when he committed to end direct taxpayer grants to businesses.

“We will lay out very clearly the rules and regulations so that they (the new board) can invest taxpayers’ dollars,” McNeil said. “One of them will be there will be no free grants.”

The Nova Scotia Jobs Fund, formerly the Industrial Expansion Fund, was introduced by the previous NDP government two years ago and was a major target of McNeil’s during the election.

A $304-million deal struck with Irving Shipbuilding Inc. to help it prepare for the $25-billion federal shipbuilding program was a particular lightning rod.

Samson said that and other loans made under the former fund would be honoured through the life of the deals, although the fund itself would be discontinued.

The Economic Development Department says the fund has a total liability of about $683-million in outstanding and non-advanced authorizations.

It estimates money from the fund is expected to be paid out for about another 28 years, mainly due to the 30-year contract with Irving.

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