Lamont: Forget Amazon, Help Manitoba Businesses Create Jobs Instead

September 12, 2017

 

Liberal Leadership Contestant Unveils Cornerstone of Economic Policy: A Bank Dedicated to Manitoba Entrepreneurs & Business Growth
 

WINNIPEG - Dougald Lamont, who is running for Manitoba Liberal Leader, says that while he understands the appeal to the province and city of attracting Amazon’s headquarters, it would be better to invest in Manitoba-owned businesses and start-ups to create new jobs rather than provide corporate welfare to international corporations.


Lamont said as Leader of the Manitoba Liberal Party and Premier, "...we would create a Manitoba Business Development Bank (MBDB) to provide financing and investment to small- and medium-sized Manitoba businesses and farms, to start up or expand."


The MBDB is the cornerstone of Lamont’s economic platform. A Manitoba bank for Manitoba entrepreneurs that would pump funds into the economy and create thousands of new private sector jobs across the province, exclusively for new and existing Manitoba-owned businesses.


Lamont says that creating good jobs across the province is the key to revitalizing our rural communities, renewing neighbourhoods in our cities, lifting people out of poverty, attracting newcomers, encouraging our youth to stay and - ultimately - balancing the budget.


“This is about grassroots economic development: we are Manitobans that will invest in Manitobans so they can grow their own jobs.  Our vision for growth is bigger than a government that buys jobs from Amazon” says Lamont. “If a small town wants to build dairy, a northern community wants to develop local manufacturing or tourism, or a young entrepreneur wants to develop an app, the MBDB can help make that a reality.”


Because the bank’s focus would be exclusively on growing Manitoba-owned businesses and Manitoba job creation in the private sector, it marks a completely different approach to job creation and economic development for the province.


Lamont said that for years, NDP and PC provincial governments have tried to attract investment from companies outside Manitoba in ways that have hurt both workers and our local businesses.


The Manitoba NDP spent over $20-million attracting IKEA and an outlet mall to south Winnipeg, and lowered oil regulations to the point that the only North American jurisdictions with weaker regulations were Alabama, Mississippi, Kansas, Arkansas and Saskatchewan.


The PCs have sought to make Manitoba “competitive” on low wages, weak regulations and tax breaks and as a result, Manitoba’s private sector wages are some of the lowest in Canada, cementing our position as a have-not province.


The PC and Manitoba NDP’s desperate deals mean Manitobans get low-paying jobs, while profits leave the province, and big chains get breaks that undermine our own local, small- and medium-sized businesses.


Lamont said that while Amazon’s pitch of billions in investment and thousands of jobs for a new headquarters sounds tempting, it also sounds too good to be true and Manitobans should be wary. Amazon’s founder, Jeff Bezos, has a net worth of nearly US $90-billion. Amazon is also notorious for avoiding taxes, even though the company has received more than a $1-billion in “incentives.” It set up its global headquarters in Luxembourg, a tax haven, and some analysts have suggested it destroys as many or more jobs than it creates, especially in local “brick and mortar stores.”


“Many people think that Amazon and other tech companies have an advantage because of technology or efficiency, but this is not true,” said Lamont. “Tech companies are often able to undermine local businesses because they are near-monopolies avoiding all the costs those local businesses have to pay: decent wages, benefits, royalties and taxes. That is something we should be challenging, not subsidizing.”


“We would rather help 5000 Manitoba businesses create 50,000 jobs for Manitobans than buy 50,000 jobs from Amazon." says Lamont
 

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Backgrounder
The Manitoba Business Development Bank would be publicly owned and operated 
as an independent Crown Corporation.

Examples of successful publicly owned banks include North Dakota and Alberta. Alberta’s ATB has over $45-billion in assets and offers full banking only to Albertans. Ontario also had its own bank, which was profitable but was shut down by the PC government there.

What the MBDB would do:
Provide loans, and equity investments to Manitoba-owned SMEs, both in the start-up phase as well as SME’s looking to expand. It would not provide mortgages or personal banking: the purpose of this bank is to help launch and grow “real economy” businesses in Manitoba.

Why is it needed?

  • Manitoba Entrepreneurs have the skills and the vision to create jobs and grow their business in Manitoba - but our province faces a shortage of venture capital.

  • Entrepreneurs who want to stay in Manitoba may have to leave because they can’t obtain financing.

  • This is a problem across Canada: Big Banks are unwilling to invest in small business: we are filling an essential gap.

  • Small businesses create the most jobs when they are start-ups - but 50% of businesses fail in five years. One of the most common reason for business failure is a lack of capital - and banks are letting small businesses down.


Benefits

For Business:

  • Entrepreneurs can get financing and loans without having to mortgage their house

  • The MBDB will also offer equity (buying shares in a company). This has multiple advantages because it significantly lowers risk and increases the likelihood of success for the entrepreneur. For business, an equity investment counts as an asset, not a liabilty, which means businesses can use it to grow further. It is a long-term investment with returns over many years, not the short term, and the public can benefit either from dividends or from the sale of shares.

  • The entrepreneur can buy out the government’s shares.

  • Because it is a bank, the finance and investment will be fair and independent of any political considerations (which may be the case with more direct government grants).

  • We can partner with local mentors who can assist entrepreneurs with business development, marketing, sales, and a more.


For Communities:

  • More jobs, and economic growth at the local level across Manitoba.


For Manitoba:

  • More jobs, and economic growth

  • Businesses whose owners are part of the community

  • Local ownership

  • Higher revenues for government from income and business taxes

  • Job creation and business expansion can occur all over Manitoba at once, not just ”mega projects“.

  • Businesses and communities do not have to turn to investors from outside of Manitoba for financing or investment. Finance payments, dividends, business growth and job creation all stay in the province.

  • The bank’s profits can return to the government as revenue.

  • It will encourage Manitobans to stay in Manitoba

  • It will encourage newcomers to move to Manitoba

 

It works:

  • Manitoba and the BDC already have programs that allow for equity investments in small business.

  • Apple Computer was aided (pre-IPO) by a $500,000 equity investment from a government-owned small business development agency.


Why this isn’t Crocus
From the outset, Crocus was an ill-conceived venture: it expected small investors saving for retirement, who could not afford to lose their stake, to engage in high-risk investments over the short term: 3-5 years.
True innovation may only see a return over 15-20 years, and it is often only government that has the resources, 
capacity and patience to see it through.

The failure of Crocus has been a scar on the Manitoba economy. It has left government and investors a like 
gun shy.

In many ways, the Crocus fiasco was a precursor to the disastrous investments of the global financial crisis.

Investors were misled; high-pressure sales tactic were used; there was phony accounting; after a crash in prices, substantial sums in public money went to bail out investors, there was no investigation to see what went wrong, and no one was ever held to account.
The NDP and the PCs were always reluctant to have a Crocus 
inquiry, because the fiasco was the financial equivalent to Murder on the Orient Express: (spoiler alert for those who don’t know the story) everyone was responsible.

The purpose of the MBDB is to finance locally-owned Manitoba businesses - whether in Winnipeg, Brandon, rural or northern Manitoba.

It will be politically independent and transparent in its operations, with a board composed of a broad range of non-partisan appointees, including experts in business, 
finance and entrepreneurship.

It will be limited to lending to entrepreneurs, 
SMEs
and farms, especially in the so-called “real economy.” This can include social enterprises. This is for a number of reasons. We do not want to compete with banks or credit unions, and we do not want to engage in the financing of mortgages, which tends to drive up the price of existing assets, creating “real estate bubbles” and making housing unaffordable.

Our goal is to grow the Manitoba economy with new jobs, and new businesses, all over the province - not just shift wealth or income from one person or business to another.

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