Payroll rebate program in Nova Scotia reached half its job targets

HALIFAX – A payroll rebate program intended to create up to 12,000 jobs in Nova Scotia has generated about half that figure, a provincial Crown agency says.

Nova Scotia Business Inc. had hoped to hit that job growth target by offering payroll rebates to companies as an incentive to hire.

But the business development agency says the rebate program only helped create about 6,000 jobs after companies started receiving the money between 2002 until 2007, the first five years it was in place.

Payroll rebates were offered to 50 companies in the hopes of creating jobs, usually over a three- to five-year time frame. Of the $142 million in rebates offered, about $53 million was spent, Nova Scotia Business Inc. says.

Nova Scotia Business Inc. provided its figures to The Canadian Press last week after the news agency requested an interview based on records it obtained through freedom of information legislation that showed 5,500 jobs were generated.

Despite falling short of its job targets, the rebate program has been successful in luring private investment to the province, said Peter MacAskill, vice-president of Nova Scotia Business Inc.

“Other jurisdictions are offering much larger incentives to attract international investment,” he said in an email. “The payroll rebate tool gets NSBI in the door and at the table to sell Nova Scotia’s value proposition in a globally competitive environment.”

MacAskill said BlackBerry (TSX:BB) is one example where a large international company was attracted to Nova Scotia, in part through payroll rebates. A spokeswoman for the wireless device maker said the company has about 400 employees in the Halifax area.

MacAskill also cited financial services firm Validus Holdings Ltd., previously Flagstone Re-insurance, as an example of a company that surpassed expectations after receiving payroll rebates. It created 55 jobs with an average annual salary of $98,510, exceeding salary targets, he said.

Donald Savoie, a professor of public administration at the University of Moncton, said the global recession should be considered when assessing the success of the rebate program.

Still, the results could have been better, Savoie said.

“Fifty per cent? I would have thought the number would be higher,” he said. “I’m surprised the number is that low.”

He agreed, however, that attracting the likes of BlackBerry would be the envy of many other cities in Atlantic Canada.

Thirteen companies that created jobs after receiving payroll rebates are now closed or don’t operate in the province, The Canadian Press was able to determine through interviews with Nova Scotia Business Inc. and officials with some of those firms.

Call centres set up by Teletech Inc. in Amherst, N.S., and Halifax had created 704 jobs, but the Amherst centre has since closed. MacAskill said he is unaware of the status of the Halifax operation.

“I’ve heard sometimes they are employed here, and sometimes they’re not,” he said. Calls to the firm’s Colorado spokesman were not returned.

There were also 14 instances where companies that were offered the payroll rebates never accepted them or didn’t create enough jobs to qualify.

All but three firms that signed payroll rebate agreements have completed their contracts.

The rebates were typically promoted with some degree of fanfare, with premiers, cabinet ministers and Nova Scotia Business Inc. predicting millions of dollars in potential wages that would generate income tax revenue for the province.

But when it comes to announcing how the rebates have fared years later, the government is less forthcoming.

While it provided job figures for some companies, Nova Scotia Business Inc. refused to do so in some instances, saying disclosure of such information would harm the competitive interests of those firms.

Savoie said Nova Scotia Business Inc. should provide full disclosure of the jobs created through its rebate program.

“Anyone who takes the taxpayers’ dime ought to accept that taking it will be made public,” he said. “Taxpayers would be better served if this were to become transparent. Is it likely to happen? No.”