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[ 23-02-2005 ]
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[ International Relations ]
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[ Canada ]
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[http://www.canoe.ca/Columnists/jenkinson.html
Corporate welfare will make you weep
By MICHAEL JENKINSON -- Edmonton Sun
February 25, 2002
Peel an onion and chances are your eyes will start to well up with tears. Peel back the layers on Technology Partnerships Canada, a program that provides loans to technology and defence companies and your eyes will well up with tears as well. For it is to weep.
The Canadian Taxpayers Federation released a scathing audit last week of TPC, appropriately entitled, "Peeling Back the Onion," the latest in its series of exposes of corporate welfare. This report, like its predecessors which ripped apart Western Economic Development, Atlantic Canada Opportunities Agency and others, show how our federal government blows big bucks every year on grants and subsidies to businesses that produce little or nothing back to the taxpayer.
Technology Partnerships Canada began in 1996 as a successor to the Defence Industry Productivity Program - which over 20 years had shelled out more than $2 billion in grants and loans to defence and aerospace companies and saw less than 20% of that repaid.
TPC supposed to be the same, but different
TPC was supposed to be the same, but different. It too would support research, development and innovation in environmental technologies, enabling technologies (such as biotechnology) and aerospace and defence.
But unlike the aptly named DIPP, TPC was not going to be the usual federal throwing of good money after bad at losers.
Indeed, the CTF report points out that TPC was justified at the time by then-industry minister John Manley, who in one breath admitted that "the problem with government intervention ... is governments can never shake the losers ..." and then turned around and said TPC would be different because "never is it really big money" and "we're picking sectors where Canada has reason to believe we've got some critical mass, and if we marshal our resources correctly, we can become world leaders."
The CTF then turns around and annihilates Manley's statement, pointing out that TPC has approved $947.7 million in loans. Only 2.6% of it, $24.5 million, has been paid back so far, which makes DIPP look like a raging success by comparison.
The loan program also suffers from what the CTF terms "March Madness" - the "use it or lose it" practice that sees government departments frantically blowing the rest of their budget money before the fiscal year runs out in March in order to justify receiving all of that back and more when the new budget cycle starts again in April.
The report notes that in 2000-01, for example, Technology Partnerships Canada authorized 85% of its loans for the entire fiscal year in March. Since 1996, a total of 56% of its loan portfolio has been approved as the final month of the fiscal year.
But wait, there's more. The CTF report also shows that while the program is creating jobs, it's doing so at an incredibly high price. In 2000-01, TPC announced or approved $38.5 million in funding that created a whopping 402 jobs - pricing each job at $95,771.14. That said, the report admits that the cost per job could be even higher than that because it is common elsewhere in Industry Canada to double or even triple-count jobs.
Companies include household names
And some of the companies that get money from TPC are household names and hardly needing subsidization, including Bombardier, Ballard Power Systems, IBM Canada, de Havilland, Pratt & Whitney Canada, and a little outfit called Rolls Royce Industries.
"IBM was the only non-Liberal riding in Ontario when that (funding) announcement was made," says Walter Robinson, CTF federal director. "I find that rather interesting." Indeed, particularly since the Liberals ended up winning that riding in the last federal election.
Robinson says corporate welfare is the perfect issue for any opposition party - including the NDP - to use against the government as a means to build public support. "You're on the side of angels in fighting corporate welfare," he says.
But considering Industry Minister Allan Rock said in the House of Commons last week that Technology Partnerships Canada "has been a success and will continue," the question is posed to Robinson whether the only way Canada will ever rid itself of corporate welfare is to change government.
Without hesitation, he replies, "Yes."
Michael Jenkinson can be reached by e-mail at mj@the-newsroom.com. His homepage is at http://www.the-newsroom.com. Letters to the editor should be sent to letters@edm.sunpub.com
 World Fact Book (CIA)]
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