--> Getting It Right: Paying Us Back

Monday, January 22, 2007

Paying Us Back

If the Government of Canada were a bank, do you think they would stand for only 17% of their outstanding loans being repaid or would you expect to have some heavy handed knocking on doors demanding the money be returned?

Over the past 23 years, more than $18 billion has been loaned to various corporations and businesses – and only 7% of that total has ever been recouped. It is important to understand that this $18 billion does not include distributions through other
departments, or the three primary federal regional development agencies in Atlantic Canada Quebec, and western Canada, or through other government sources.

This $18 billion comes solely from Industry Canada.

The first question is why have successive governments lent almost a billion dollars per year to business?

Now, in fairness, some of these transactions take place as loan guarantees for Canadian companies operating abroad and some of this grand total is for grants that are not expected to be recouped.

Loan guarantees shouldn’t cost taxpayers a cent, unless the Canadian company defaults.
Grants are a policy decision by government to encourage certain behaviours, like locating to a certain province or hiring unemployed workers.

But with both of these out of the mix, we are still left with $7.1 billion of payable loans handed over to corporate Canada, of which just over 17% has been returned to government coffers.

The worst offended is a program called Technology Partnerships Canada (TPC), which the Liberal government formed in 1996. In ten years, it has given out $3 billion and seen only $169 million returned – less than 6%. When TPC was formed, the government of the day predicted that $1.74 would return to Ottawa from every dollar doled out.

The Canadian Taxpayer’s Federation (CTF) calls the whole scheme “Corporate Welfare” in a scathing report issued last week. The report is a stunning tale of handouts gone terribly wrong and a general lack of accountability and oversight – all things, of course, that were brought to light in the 2005 SponsorGate scandal that help to topple the Liberal government.

According to the CTF, the Technology Partnership Council requires loans over $10 million be authorized by Treasury Board. Their report reveals that just about 10% of the funds distributed fall suspiciously under this threshold and therefore don’t require political approval.

In the words of the John Williamson, the National director for the CTF: "By getting out of the subsidy and regional development business, Ottawa could reduce the corporate tax burden. Savings of $2- to $4-billion could be realized annually if Ottawa recognized that corporate welfare was not a suitable role for the government.”

You can read their full report at: The 30-page report can be viewed at:


At 3:29 p.m., Anonymous Anonymous said...

Funny how the CRA can beat up on working Canadians for a few bucks in owed taxes but ignore billions lent to corporations with many assets?(real conservative)

At 3:38 p.m., Anonymous Anonymous said...

Nice to see somebody else posting about this. The current policy of high corporate taxes and "targeted" assistance through grants, loan guarantees and also special-purpose tax breaks is as stupid as it is corrupt. Unfortunately it doesn't attract much criticism - sadly, not even from conservatives.

At 12:13 a.m., Blogger Robert W. said...

I've long said that corporate welfare is no different than poverty welfare. In fact, it's worse because it's much less needed and it completely distorts the market, often cramping innovation.

But sadly, on this file, most all politicians are in the pocket of someone. :-(

At 1:53 a.m., Blogger YVRpilot said...

I just wanted to thank you for re-opening your blog.

I know it takes some degree of courage to put yourself back in a position where you may receive a few unscrupulous comments from individuals.

Kudos to you, my dear friend! :)

At 9:42 a.m., Blogger Erin Airton said...

Thanks "YVR"...

Let's see what happens!



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