Minority Report
Submitted by: Councillor Jeff McLaren
Co-chair of the KEDCO Review Committee
June 14, 2016
Minority Report
The KEDCO review committee, a diverse group of people dedicated to improving Kingston’s economic development, worked long and hard, in often thankless and unpleasant situations, with a challenging mandate to review Kingston’s economic development organization.
Our scope was huge and often community driven. The committee considered the advice of experts and what the community believes is important. Given our mandate, the public demands, and the short time constraints, the committee made serious considered choices to prioritize the most important elements within its mandate. On these elements there was considerable debate and discussion.
I believe the Review Committee’s report is generally well done but missing a few critically important elements. Among these elements are what constitutes economic development, its ethics, values, highest and best practices and the focus of where to put our resources for the best benefit to the whole community.
I believe these elements of economic development are too important to get wrong or to be left unspoken. I worked on the committee throughout the process and as an elected representative, I need to go on record with my minority report in order to best represent what I believe are the best interests of our community.
Economic Development Must Benefit All Our Community
If economic development is a good then it must be good for all in our community not just a privileged group. When people can find acceptable and affordable housing, enough healthy food, work at a living wage or higher and are becoming economically better off then economic development spending has been successful.
When income inequality is increasing, more people are doing worse economically than their parents, people are working harder for less then economic development spending has being misdirected.
RECOMMEDATION 1: Economic development decisions funded by public funds should be evaluated through an explicit and socially acceptable ethical lens to procure the greatest benefit for the largest number of people.
Economic Development Must Increase Community Wealth
In order to provide the greatest benefit for the largest number of people both real individual income and real community aggregate income must increase over time. There are three strategies to increase the disposable income in our community:
1) Bring in more income from outside our community
2) Improve circulation of income within the community
3) Reduce income leakages leaving the community
First, to bring in more income from outside we can attract enterprises and/or people. Attracting new enterprises is an unlikely long shot for at least two reasons 1) it runs against every macro-economic trend in the world right now; and 2) we are competing against everyone else in the world. However attracting people is a competitive advantage we have. Good policy will support tourism and the elements of Kingston that are attractive to tourists and in-migration. Spending resources chasing the remote possibility of bringing in new public or private enterprises is likely misdirected – but if the opportunity comes we should be prepared and able to adapt.
Second, improving income circulation in the community means we need better small businesses that can start, develop, thrive and hopefully expand internationally. In other words we need businesses that can successfully meet the needs and desires of people efficiently enough to stay in business long term.
Third, to reduce income outflows we need to support and promote the economic advantages of buying locally, producing locally, hiring locally and vacationing locally. Every expense is someone’s income. Therefore anytime we spend income outside our community we contribute to another community’s economic development. Any effort to reduce outflows and increase circulation within Kingston by replacing dollars spent outside with income for someone inside (who then ideally, can spend that income locally too) generates ever increasing circles of positive local economic influence.
RECOMMEDATION 2: KEDCO should be broken up into three pieces to pursue each of the three strategies with singular focus. One piece should be a tourism agency charged with attracting people to Kingston. Another, the Small Business Development Centre should entirely focus on improving the circulation of money in our community through small business development. The third, focused on the reduction of income outflows (with the possibility of supporting new incoming enterprises if the opportunity arises).
Any Economic Development Agency Must Account For All Spending
It is unfortunate that the committee did not have time to do an opportunity cost analysis of KEDCO over the last few years. Going forward, the three new economic development agencies should be prepared to account for every nickel spent and to demonstrate a highest and best use of funds through an opportunity cost analysis. Any dollar that enters the community helps – that is it has a positive economic impact. That dollar can circulate for 1 iteration or 30 or more iterations. A dollar that circulates 30 times has much more economic impact than a dollar that circulates once. Spending justification must not rely solely on economic impact statements because they are always necessarily positive. An opportunity cost analysis compares the economic impact of several uses of the funds and determines which spending option will likely generate the greatest benefit for the largest number of people.
RECOMMEDATION 3: There must be a complete annual account for all taxpayer dollars spent on economic development and an opportunity cost analysis (not simply an economic impact statement) should be used to justify future economic development investment before Council approves a budget.
Economic Development Work Must Respect Diversity and Community Values
Skills should be at the service of values. To be successful any economic development agency board must be sure to represent our community’s diversity and values. Any organization benefits from respect for and the encouragement of diverse points of view, experience, knowledge and values.
Diversity and representation on a board is improved by larger numbers. A board that makes too many unanimous decisions or in which there is no conflict is not maximizing its potential and likely suffers from group think, apathy, or too much trust. Different values generate discussion, argument, and new thoughts and in the process the widest range of considerations are debated.
RECOMMEDATION 4: Governance boards and committees must be large, diverse (in as many categories as possible), value based, chosen by the City’s Nominations Committee with diversity as the primary criterion (but not necessarily the only criterion) and a rigorous board education must be developed to ensure new board members understand their value based governance role and their responsibilities to the board and the community.
Conclusion
My colleagues on the Review Committee worked hard to make decisions and articulate a way forward for Kingston’s economic development agency. There is much I support in the Review Committee’s final report; however, the points made above are too important to be left unsaid.