N.S. Incentives Similar to Competing Jurisdictions

ECONOMIC DEVELOPMENT--N.S. Incentives Similar to Competing Jurisdictions

The financial incentives offered to companies under Nova Scotia's payroll rebate program are in line with national benchmarks, the province's minister of economic development said today.

"We compete with jurisdictions across Canada and North America for new investment, and we do so with a close eye on the bottom line," said Gordon Balser. "Our rebate program is a fiscally responsible way of attracting investment. A media report that Nova Scotia has set 'national records' in this area is, quite simply, wrong."

Convergys Corp., for example, will be entitled to a payroll rebate of about $2.8 million if it creates a minimum of 265 jobs at a new customer-care centre in New Glasgow. That works out to about $10,400 per job based on a $26,000 annual salary, which is in line with similar rebates offered by other jurisdictions.

"That's a far cry from the numbers reported in the media today," said Mr. Balser. "In order for the company to receive a rebate of $6.5 million, it would have to create 625 jobs from Day 1."

Another agreement cited -- with EDS Corp., to create a 900-person call centre in Sydney -- works out to about $6,000 per job in provincial investment over the life of the contract. Other portions of the incentive package involve federal dollars.

Mr. Balser reiterated that the province's financial incentives are in the form of a payroll rebate that requires the company to create the jobs before receiving reimbursement.

"The province must first receive the tax revenues from the jobs created, and then, at the end of each year, it rebates a portion of the tax revenues paid," he explained. "The money paid to the company is only a portion of what Nova Scotia earns upfront. Without those jobs, those revenues would not exist. The bottom line: the taxpayer always comes out ahead."

Government designed the payroll rebate program as a strategic investment tool that allows the province to stimulate economic growth, particularly in rural areas facing high unemployment. It is to be used if an investment would not otherwise take place.

Of five such agreements reached in the past two years, the province has committed to rebates of about $15.8 million if the minimum employment requirements of 1,800 jobs are met. That works out to about $8,800 per job.