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July 14, 2015

Improving on Nova Scotia Business, Inc.

Laurel Broten, president and CEO, at Nova Scotia Business Inc. said in the Chronicle-Herald that a year of talks with the Royal Bank produced the following deal:

NSBI will provide payroll rebates of $22,000,000 over 10 years if RBC's new cheque processing centre produces 500 new jobs.
Here's the math:
$22,000,000 / 500 / 10 = $4,400/job/year

If RBC creates 500 new jobs in the next 10 years, the company would add an estimated $240 million in salaries and benefits to the Nova Scotia economy, according to Nova Scotia Business Inc.
Here's the math:
$240,000,000 / 500 /10 = $48,000 average salary (this depends a little on how fast jobs are added and the nature of benefits, but it's a useable estimate).  
Annual provincial income tax on $48000 = $4608
Net gain to province = 10 yrs * ($4608 - $4400) =$2,080
$2,080 * 500 employees = $1,040,000

Here's some more math:
Broten's salary is $210,000/year, so over the life of the Royal Bank deal. we'll be paying her $2,100,000 - a little more than twice the savings to taxpayers.  Not much of a deal for us, eh?

Contrast that with my plan for incentives to employ workers with disabilities receiving assistance, which nets $14,133 per job in new revenues and program savings.  Depending on how you spend that, it's something less.  I was thinking $7,133 in savings was a nice round number.

Oh, and that's ANNUALLY, so $71,330 per job.  A lot more if you only incentivise the first year.
Here's the math:
Net gain for Laurel / Gus' net gain for each new disabled worker = How many disabled workers you'd need to hire to be better than Broten's deal with Royal Bank.
$1,040,000 / $71,330 = 14.58
Hiring 15 Nova Scotians with disabilities is a better deal than hiring 500 Royal Bankers.  People with disabilities would say this is obvious.

I freely admit that my plan does not create NEW jobs, but because it eliminates large government expenses and doesn't involve subsidies, each new hire has a much bigger impact. 

Like Broten's plan, there is little risk:
We prefer this arrangement because no rebate money is paid unless and until a company first meets employment and salary targets. This guarantees that we have a positive return on investment (ROI). In other words, Nova Scotia gets paid first.
Unlike Broten's plan, mine estimates a 10 year return of over a billion dollars.  Roughly 1000 times better.  And it is completely scalable - it works for 10 or 100 or 1,000 or 10,000.

My estimates rely on my interpretation of aggregate data.  The actual numbers are not available to mere taxpayers, but Laurel would have them.  I've been wrong before, but never by a factor of 1000.  If Broten is interested in real savings, real change and real innovation, she should take a look.

I know this is threatening to vested interests.  As an experiment, let's try it out on 15 people without delay.

Gus Reed

PS  James McGregor Stewart, after whom this society is named, was a director of the Royal Bank.  He saved their bacon on many occasions, proving that a person with a disability can be useful as well as ornamental.....

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