A pot of cash set aside to attract outside businesses to Newfoundland and Labrador went virtually untouched in 2011-12, and will see its allocation reduced by nearly half this year.

The province spent just $443,645 of the $29 million allotted to its flagship business attraction fund last year.

That translates into 98.5 per cent of the available cash not being used.

Innovation Minister Keith Hutchings says competition is tough in the job-luring field, with many jurisdictions in the hunt for outside investments.

'There is risk in business attraction, but [we’re] ensuring that we limit the risk as best we can.'  —Innovation Minister Keith Hutchings

"It is a challenge, quite frankly, in terms of the process of business attraction," Hutchings told CBC News. "But it still is important."

He said the department reviewed past budgets — how much was set aside each year, and how much was actually spent — and decided to cut this year’s allotment for the business attraction fund.

It will drop to $15.5 million from last year’s $29 million.

Hutchings says the province gets many requests for financial assistance, but opts not to participate after carrying out due diligence.

"There is risk in business attraction, but [we’re] ensuring that we limit the risk as best we can," Hutchings said. "I mean, there’s some projects we just don’t go with, because we think the risk is far too high."

More reductions

Other funds previously run out of the now-defunct Department of Business will also be reduced or discontinued this year. The department was folded into the larger innovation portfolio last fall.

The aerospace and defence fund will see its allocation halved, to $1.5 million from $3 million. Less than 20 per cent of that $3-million amount was actually spent in 2011-12.

Grants for the province’s air access strategy are down to $1 million from $1.7 million — less than a third of which was actually spent.

And the sun set on an oil and gas export development fund last month. Just over half of last year’s $2-million budget allotment was paid out.

The lack of business-attraction action recently caught the eye of Auditor General Wayne Loveys.

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The province's business-attraction efforts recently caught the eye of Auditor General Wayne Loveys. (Auditor General's Office)

In January, Loveys questioned why so little has been spent, given the importance of diversification to the provincial economy.

Loveys reported that the government budgeted $137.4 million for business-attraction initiatives in the five-year period from 2006 to 2011, but spent less than 15 per cent of that total.

And as CBC News reported last month, what was spent resulted in only modest returns.

Since 2004, the Newfoundland and Labrador government has funnelled more than $20 million into grants, loans and the direct costs of business-attraction initiatives.

The return, according to a CBC News analysis of government data, was fewer than 100 net new jobs — a quarter of them seasonal.

The province prefers to use another job figure — 348 jobs "created or maintained" by business-attraction efforts.

Most of that number is comprised of positions that already existed before a dime in taxpayer cash changed hands.