Budget hiked, FedNor could be extended.

Budget hiked, FedNor could be extended

At a time when a number of federal departments are tightening their belts, one program aimed at Northern Ontario has seen its budget grow.

The federal minister responsible for such programs as FedNor (the Federal Economic Development Initiative in Northern Ontario) and the FBDB (Federal Business Development Bank) has announced a 26-per-cent increase in FedNor's budget.

"In view of the successful results of the program and the tremendous amount of enquiries, cabinet has agreed to provide the additional 26 per cent," said Tom Hockin, minister of state for small business and tourism, during an interview at the Sudbury office of Northern Ontario Business. "It's important to note the decision was made at a time when the government has cut back on everything."

Since its introduction in 1987, FedNor has provided $20 million in funding for 330 businesses and has helped create more than 1,300 jobs. More than $57 million in private-sector funds have also been committed through the program.

"You must remember the whole purpose of FedNor is diversification," Hockin said. "With the number of businesses which have been created under the program, communities in Northern Ontario aren't as resource-based as they were before.

"We can't get caught in the trap that Northern Ontario is resource-based only."

He added that the advent of the facsimile machine and GST credits for transportation capital costs will result in location becoming less important for some companies. He pointed to the relocation of Mirolin Industries to North Bay as an example of major companies recognizing the potential of the region.

The recent budget increase, which was formally announced in Sudbury last month, totals $14 million during the remaining two years of the five-year program. Hockin hinted during the interview that the length of the program could also be changed in the future.

"Right now, it (an extension) is under consideration," he said.

The increase came less than two months after Finance Minister Michael Wilson's budget called for a restructuring of the grant system for businesses. However, the move had little effect on FedNor, according to Hockin, and he criticized opposition politicians who said the move meant the end of FedNor.

"What really annoys me is to have the member from Kenora-Rainy River saying we are scrapping FedNor," he said. "It's nothing but mischievous nonsense and (Robert) Nault is feeding this view."

Under the changes, FedNor contributions of more than $100,000 must be repaid, while contributions below the benchmark will remain non-repayable. Hockin said approximately 90 per cent of the contributions made by FedNor will be non-repayable.

"It virtually exempts the rural small business component and the Canadian aboriginal development program," he said.

In addition, the 10 per cent of the contributions which must be repaid to the program will be subject to a number of flexible repayment options. Hockin said that, pending approval from the Treasury Board of Canada, such options could include instalments based on a percentage of sales or seasonal instalments for businesses in the tourism industry.

"It still has to be worked out with the Treasury Board," he said.

MICRO SOLUTION

Despite the success of FedNor, Hockin said the program isn't the answer to the myriad of economic woes facing communities in Northern Ontario.

"FedNor is just a micro-by-micro-by-micro solution to a mega problem," he said.

With the closure of two Rio Algom Ltd. mines and the downsizing of Denison Mines' workforce, Elliot Lake is facing a major problem. Hockin said FedNor, in much the same way as it did in Timiskaming last year, will place a committee in the community to analyze and co-ordinate efforts to solve the town's potential unemployment problems. The Timiskaming effort resulted in the creation of more than 12 businesses which helped mitigate the effects of mine closures in the area.

"We're going to be using the same model that we used in Timiskaming," he said. "However, FedNor cannot be a mega solution."

CHRIS KREJLGAARD Staff Writer