Gomburg Brown & Co - Full Employment Job Creation Program - January 2011
- Copyright Gomburg Brown & Co, October 4th, 2007
GOMBURG BROWN & CO FULL EMPLOYMENT PROGRAM INTRODUCTION
Program Introduction Go To Tables Table Introduction
This Program is designed to discourage direct political involvement in the granting of taxpayer funds.
The Program is:
1) Universal in application - Program administered by the banks.
2) Requires stability and security and equity.
3) The grants would be provided through forgivable loans.
4) Engages banking system in the approval process.
5) Requires the banking system to assume the first 15% of the risk of any losses.
6) All recoveries go to the taxpayers through the government.
7) The borrower would be required to pay interest during the term of the forgivable loan.
8) The forgivable loan would be forgiven during years eleven to twenty.
9) Government would immediately establish a sinking fund in year one so as to provide the funds when the forgivable period begins in year eleven.
Any individual in any location may create any business or plant. There are no geographic or industry requirements. Geographic location, business/ industry type and limited funds are common restrictions that limit growth in most if not all political jurisdictions. This Program removes these restrictions and essentially removes political interferance.
1)This financing provides the funds up front.
2) The business or industry may begin without delay.
3) Jobs are created and wages being earned for ten years prior to the forgiveness of the forgivable loan.
4) In year eleven when forgiveness begins the current value of the funds is reduced to about $0.53 on the dollar.
5) The Initial up front investment by government is nominal. It begins with deposits in year one of about $59,000.00 per $1,000,000.00 into a sinking fund at 3%. and reduces by year ten to approximately $3,900.00.
6) The total cost of the sinking fund approximates $813,000.00 per $1,000,000.00 grant.
7) When government, on behalf of the taxpayers begins to pay for the forgiven $100,000.00 per year in year eleven to year twenty; they are paying off with discounted funds at approximately $ 0.53 cents on the dollar.
The introductory program provides that the job creation be operated by
the banks. It would include
suggested applicant requirements for providing up to 50% of the funds, the creation of
full time jobs, agreement that in the event of a loss recoveries go to
government.
It further suggests that the participating lender assume the first 15% on
any losses. Applicants could be
required to identify the market they expect to serve.
Canadian lending institutions make business loans daily. They carry all
the risk. An application for the
guaranteed forgivable loan can be designed with options, as follows: 1) An
option that the lender assumes 15% of the risk, and 2) An option to cross out
the assumption of risk and provide reasons for not accepting the risk.
The client would have the option to apply at a competing lending
institution or go directly to the Government Manager responsible for the Program
administration to appeal the refusal.
The 15% risk factor is important and if banks or other lenders are given the
authority to approve these loans on behalf of government then the banks or other
lenders must be responsible. In this case however the significance of
job creation may over-ride the 15% risk factor issue.
The many possible variations in the application of this program are decisions of
government that reflect Federal / State/ Provincial economies, geography and policy. Issues
dealing with the rate of unemployment and possibly geographic issues may be
necessary to manage. High
unemployment areas may require special status for periods of time; these may
relate to geographic districts.
Gomburg Brown & Co will assist respecting the initiation and application of this Program.
Sample Correspondence
Gomburg Brown & Co.
Management Training Consultants
924
Prospect St., PO Box 3132, Sta. B., Fredericton, NB, E3A 5G9
Phone (506) 458-9179 Cell (506)
470-0380 Email
bdoyle@nb.sympatico.ca
P R I VA T E &
C O N F I D E N T I A L
Wednesday, January 06, 2010
Update:
The Gomburg Brown Program.
Savings of 10% are possible while
providing an interest free forgivable loan to a health authority, a municipality
or a business client for infrastructure or the expansion of a commercial
venture. If the total of grants for
job creation and infrastructure in your province ranges around $50,000,000.00
annually it is possibly costing $400,000.00 to $1,500,000.00 a month. Savings
under the Program range from 10% to 73%.
This Program has many
possibilities and can be used for most any financial situation involving capital
investment with a life of thirty years or more.
Tables have been attached relative to the financial aspects of the
program.
Under the Program provisions; new business or industry will be open, the jobs
will be filled and wages will be feeding the economy for a decade prior to any
public funds being delivered.
Provincial and municipal infrastructure construction cost will begin to
experience significant savings. This
impact will be felt in departments and agencies at both levels of government.
The sinking fund will be growing over
that decade and available when required for the forgivable period.
This will generate a long term stabilizing effect in the economy. When
the client pays the interest the final government cost can be as low as 45% and
the clients’ savings over 50%.
Taking the long view, whether your annual grants are a few million dollars, a
hundred million or more; holding the money on account and establishing the
sinking funds will begin to show very favourably in three or four years, even
considering the future forgiveness.
By year eleven, whatever your average value of forgivable loans are, most
of the deposits of the previous ten years will still be on account.
Your annual average value of forgivable loans today will likely be double
at that time. Your forgivable loan
deposits will continue to feed the process. If the process has been focussed on
loans where the client pays the interest or a part of the interest, at the ten
year point the interest on the held balance will become a factor.
The Program is interest neutral. Whatever interest rates are at any given time
will approximate the rates required by the Program.
The percentages of cost and savings will have relatively nominal change
as rates may vary. Government cost
used for comparison is based on simple interest.
Client comparative cost is based on conventional amortization.
If the province has debt, then you are
paying interest on your worst rates.
In light of the possibility of substantial savings; government departments,
agencies, corporations and municipalities should be made aware of possible
savings as soon as possible. There are likely some current projects for which
the program can be applied and departments or municipalities can take advantage.
In all examples you will note the savings available range from 10% to 73%
for government over a direct grant and client savings run from 54% to 100%.
When the balance of loan values is focussed on situations where clients
will pay the interest or pay part of the interest government savings range from
41% to 48%.
Long term planning and investment
fosters stabilization and provides government additional funds for job creation
and infrastructure as it reduces the annual cash flow requirement and the
ultimate cost. The introductory
program is a practical job creation program.
There are almost unlimited opportunities for some involvement in capital
spending on health care, education, transportation and other public services.
Municipalities and many government
departments and agencies will be reducing their cost as they take advantage of
this Program.
I am sure you have many people who can initiate the program and likely
therefore will not require assistance, however; if you do, we are prepared to
assist in any way we can. If you have any questions please call me at
506-470-0380.
Sincerely;
Beverly E. Doyle
BED:pb.
Copies: Attachment; Background Tables.