Province grants advised to be cut

Government consultant recommends to reduce certain funding by 10 per cent

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A consultant hired by the Pallister government to help it control costs recommends reducing grants to business by 10 per cent.

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Hey there, time traveller!
This article was published 06/10/2017 (1819 days ago), so information in it may no longer be current.

A consultant hired by the Pallister government to help it control costs recommends reducing grants to business by 10 per cent.

In a massive multi-volumed report released by the government this week, KPMG also urges a cut in funding to economic development agencies by 10 per cent — in cases where services overlap between groups.

WAYNE GLOWACKI / WINNIPEG FREE PRESS The Manitoba Fiscal Performance Review volumes.
The report further says that “boutique” tax credits that are narrowly focused and directed at a small group of companies should be reduced and, in some cases, eliminated.

It recommends government consider eliminating or phasing out the long-standing Cultural Industries Printing Tax Credit and the Book Publishing Tax Credit (combined cost $1.8 million). It says the Film and Video Tax Credit has been enriched in recent years “without demonstrated evidence of significant growth in the sector” and could be scaled back to levels offered by other provinces.

The report says the dozens of existing business support programs need to be streamlined. It says the delivery and administration of direct business support programs occupies the equivalent of 70 full-time staff in the Department of Growth, Enterprise and Trade alone. It said a streamlining of business grant programs could allow the department to function with seven fewer positions at a savings of $500,000.

KPMG says a positive business environment and a competitive tax regime are “significantly more influential on market growth and job creation” than program supports.

“A review of grant recipients revealed many of the same companies receiving funds year after year, and also to some large multinational companies that are not based in Manitoba or with relatively little investment in Manitoba,” the consultant says in its report.

Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce, said while the government may be justified in consolidating some grant programs, the process should be carried out as part of an economic development strategy.

“We don’t want government just throwing money at economic development,” he said. “We want government making strategic investments tied to a strategy — to say this is where we’re going to be able to leverage the best strengths of the private sector to achieve (particular) outcomes.”

Indiscriminate reductions in supports to business could hurt the province, Remillard warned.

“We may be saving some funds and reducing funding to some of these organizations and effectively rendering them ineffective as a result,” he said.

Jonathan Alward, director of provincial affairs in Manitoba for the Canadian Federation of Independent Business, said while he is encouraged that the government is looking for savings, he is concerned about the possible impact of reducing tax credits and slashing certain business supports.

WAYNE GLOWACKI / WINNIPEG FREE PRESS files President & CEO Winnipeg Chamber of Commerce Loren Remillard wants the government making strategic investments for the private sector.
“We’re obviously concerned that the government is going to make Manitoba’s tax environment less competitive for our small businesses,” he said.

Dayna Spiring, president and CEO of Economic Development Winnipeg, said she had no problem with the government addressing overlapping funding to organizations such as her own.

She said the matter has come up in discussions with the province for some time.

“I believe there is overlap among economic development agencies. I think we have to do better as a community. We have to be more collaborative. And we have to ensure that we’re all kicking in the same direction,” she said.

The Progressive Conservatives have been in possession of KPMG’s fiscal performance review since December.

It helped inform decisions announced in the spring budget, which included the elimination and reduction of some tax credits.

However, the government did not release the report until this week.

KPMG says current spending on business support programs “may no longer reflect local employment conditions.” It notes that Manitoba has a stable labour market, steady economic growth and a very low unemployment rate compared with other provinces.

It said Manitoba already provides small business with about $320 million a year in corporate income tax relief. Between 1999 and 2010, Manitoba reduced its corporate income tax rate on small business (defined as having an income of less than $450,000) from eight per cent to zero.

The consultant’s report lists 70 support programs for business, worth more than $100 million a year, offered by the Department of Growth, Enterprise and Trade alone.

It says this is not an exhaustive list as business supports are offered by other government departments as well.

KPMG says its recommendation for reducing direct support to business excludes tourism grants, “which have been identified as a strategic priority” by government.

larry.kusch@freepress.mb.ca

Jonathan Alward, Canadian Federation of Independent Business
Larry Kusch

Larry Kusch
Legislature reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

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