Corporate Welfare Unrepaid, Bureaucrats Unrepentent

Frontier Centre, Media Appearances, Role of Government, Taxation, Uncategorized

And the pork barrel fills again..

Back in April of this year, the Frontier Centre for Public Policy released a report chronicling the abysmal loan repayment record of Industry Canada.  The report found that since 1982, "Industry Canada has authorized almost $21 billion in "assistance" to various recipients, paid out $18 billion, and collected under $1.9 billion under all past and present assistance programs, or just over 10%."

Fast-forward to August 2010. According to data obtained by the Canadian Press through an access-to-information request, the ten-per-cent rule appears to now also apply to the Atlantic Canadian Opportunities Agency (ACOA).

In 2000, former Prime Minister Jean Chretien announced a raft of provisional loans by ACOA, totalling $33.2 million, to be disbursed to 17 companies. As of April 2010, only $3.2 million of those loans have been repaid, mostly by two businesses. $4.7 million in loans have been written off, because the three recipients went bankrupt. Another four companies are in default. Of the ten remaining businesses, five have not made any payments as of April 20, 2010.

And lest one get the impression that all of these were no-name start-ups in need of cash, think again. One of the recipients is none other than pulp and paper giant (and general Maritimes colossus) J.D. Irving Ltd, who reportedly received $700,000 in taxpayer cash for a "forestry initiative".

So how does ACOA view its track record? Apparently, very differently:

"Michele Bernier, a spokeswoman for the agency, said research companies typically take up to 10 years to "reach maturity," and therefore it is too early to expect the level of commercial success that triggers repayment.

Bernier said the agency considers the fund successful because of the scientific expertise and inventions that it generates.

"Raising the level of research and development and innovation is fundamental to increasing Atlantic Canada’s competitiveness and closing the region’s productivity gap with the rest of Canada," she said in an email."

Hmm. One starts to see why Prime Minister Stephen Harper is sceptical – ok, make that downright dismissive – of the federal bureaucracy.

Now if Mr. Harper would only put taxpayers’ money where his mouth is, and mothball corporate welfare, then that would really make a statement. Sadly, in a possible election year, the PM is about as likely to do that as to return Helena Guergis to the Conservative caucus. This government is all too happy to dole out regional cash, whether through Canada’s Economic Action Plan or outright make-work projects (witness last week’s announcement of a payroll centre in Miramichi, New Brunswick to replace jobs lost there if the gun registry goes belly-up).

So where does this leave Canadian taxpayers? Playing angel investor to businesses that don’t pay back money, while bureaucrats crow about their "success" – and the government turns a blind eye.