Estevan’s 8 Million Dollar Man
Do you trust the City of Estevan to spend $8 million in coal transition funds?
Last week the City of Estevan announced they were spending $350,000 of Municipal Coal Transition Program money to pave a road. Click here for full story
And that’s on top of (and who knows what else): $465,000 in Canada Coal Transition Initiative for a traffic light at Pine Avenue and King Street Click here for full story These incidents should raise some serious questions; first and foremost, how do any of these to anything to help transition coal miners or the community? We need a full public accounting as to how this money is being spent. Economic development is a crucial aspect of urban planning, aimed at promoting long-term growth and prosperity in a city. While there are various strategies that cities can use to promote economic development, cash subsidies to businesses have become a common approach used by many cities. This article explores the arguments against providing cash subsidies to businesses as an economic development scheme, and highlights alternative strategies that cities can use to promote sustainable economic growth. Subsidies for economic development can be seen as bad for several reasons: Is the City of Estevan over-promising and likely to under-deliver? Subsidies dished out to business to relocate or start up in a city often do not deliver on their promised benefits. While cities may hope that subsidies will lead to job creation and increased economic activity, the reality is that there is often little evidence to support this claim. In fact, many companies that receive subsidies do not end up creating as many jobs as promised, and some even end up laying off workers or moving their operations elsewhere. Additionally, there is often little accountability for companies that receive subsidies, with few strings attached to ensure that they deliver on their promises. Does the City of Estevan lack expertise? When it comes to evaluating economic development projects, cities may not have the same level of expertise or experience in certain industries. For example, if a city is focused on developing high-tech industries, it may not have as much experience evaluating projects in traditional manufacturing or retail industries. This lack of expertise can make it difficult for the city to identify high-quality projects and evaluate them effectively. Moreover, the lack of expertise can limit the city's access to data, research, and best practices, which can further hamper its ability to make informed decisions. Without access to the latest research or best practices from other cities, the city may not be able to develop effective strategies for attracting businesses or promoting economic development. Additionally, when cities lack expertise in evaluating projects, they may be more susceptible to manipulation by businesses seeking subsidies. Businesses that are experienced in applying for and receiving subsidies may be better equipped to make their projects appear more attractive than they really are. This can lead to the city investing in projects that are not truly viable or that do not align with the city's long-term economic development goals. Is the City of Estevan attracting companies that are just after the money? Businesses that seek out and prioritize a city’s subsidies over other factors, such as access to talent or infrastructure, may not be the best fit for the local economy. For example, a city may prioritize the development of high-tech industries, but if the subsidies offered by the city are more attractive to low-tech or traditional industries, the city may end up attracting businesses that do not align with its economic development goals. Secondly, businesses that seek out these subsidies may not be committed to the local community in the long term. Rather than investing in the community, these businesses may be focused on short-term financial gains and may be more likely to leave the city. Is there a lack of transparency and accountability with the City’s process? Subsidies can lack transparency and accountability, which can create significant problems for economic development efforts. When subsidies are awarded without sufficient transparency or accountability, it can be difficult for citizens to understand how their tax dollars are being used, or whether those tax dollars are being used effectively. Lack of transparency can create opportunities for corruption or favoritism. Businesses that have close connections to government officials may be more likely to receive subsidies, even if their projects are not the most promising or beneficial for the community as a whole. This can create a perception of unfairness, and erode public trust in government and economic development initiatives. Furthermore, when subsidies lack accountability, there may be little incentive for businesses to deliver on their promises. If there are no strings attached to the subsidies, businesses may be less motivated to create the jobs or make the investments that they promised. This can be particularly problematic if businesses end up laying off workers or moving their operations elsewhere, after receiving substantial subsidies from the city. Lack of transparency and accountability can also make it difficult to evaluate the effectiveness of subsidies in promoting economic development. Without clear metrics or benchmarks, it can be difficult to determine whether subsidies are actually contributing to job creation or economic growth. This can make it difficult to adjust policies or strategies to improve outcomes. Has the City of Estevan got blinders on? Subsidies can be harmful to the overall economic health of a city. By focusing on attracting new businesses with subsidies, cities may neglect other important areas of economic development, such as workforce development, entrepreneurship, and small business support. Additionally, by focusing on large, subsidized businesses, cities may miss out on the benefits of a diverse and vibrant small business ecosystem, which is often a key driver of economic growth. Is the City of Estevan Causing Distortions in the Economy? Subsidies can create distortions in the market by favoring certain politically popular industries or companies over others. This can lead to inefficient resource allocation and a misallocation of economic resources, which can undermine overall economic growth. Subsidies create an uneven playing field for businesses. By providing financial incentives to some companies but not others, cities are essentially picking winners and losers in the business community. This can lead to resentment among businesses that do not receive subsidies, as well as distortions in the market as subsidized businesses may have an unfair advantage over their competitors. Additionally, businesses may become dependent on subsidies to stay afloat, which is not a sustainable long-term strategy. While subsidies may be a tempting way for Estevan to attract businesses and boost economic development, they can be counterproductive in the long run. To build a thriving and sustainable economy, cities should focus on attracting businesses that align with their long-term economic development goals and that are committed to investing in the local community. This requires a strategic and thoughtful approach to economic development that goes beyond simply offering financial incentives. Saskatchewan Coal Transition Centre