Government as banker? The evidence is clear … bad idea!

Government as banker?
The evidence is clear … bad idea!

Ottawa - Saturday, June 8, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation

study
released

Recently the Canadian Taxpayers Federation (CTF) released a study of twelve years of financial assistance authorized by the Canada Economic Development for the Regions of Quebec (CED-Q). Canada Economic Development for the Regions of Quebec is one of four federal regional development agencies. The other three are the Atlantic Canada Opportunities Agency (ACOA), Western Economic Diversification (WED) and FEDNOR for Northern Ontario.

money
to all
Using data obtained through Access to Information the Canadian Taxpayers Federation found that hundreds of millions of dollars were disbursed to profitable businesses, chambers of commerce, government agencies and individuals.

$1.78
billion
The Canadian Taxpayers Federation report on Canada Economic Development for the Regions of Quebec examined funding activities from fiscal year 1989-1990 through to 2000-2001. During this period some $1.78 billion was disbursed through 8,965 separate allocations. From this data, the Canadian Taxpayers Federation determined that:

not
loans

Over $1.4 billion or 81% of all funds disbursed were in the form of non-repayable contributions and subsidies;

$817 million or 46% of all funds were doled out to small, medium and large Quebec businesses including corporate players such as SR Telecom, Johnson and Johnson, Ingersol-Rand Canada, and Siemens;

Transfers to federal, provincial and municipal institutions (some which are not subject to Access to Information or Freedom of Information) accounted for over $149 million;

The biggest recipient of funds was ski destination Station Mont-Tremblant which received $48.9 million in contributions;

Associations, unions, and chambers of commerce receive over $154 million;

Over $119 million was disbursed to tourism initiatives, golf courses, bicycle manufactures, festivals and hotels;

Canada Economic Development for the Regions of Quebec contracts contain a photo-op clause pointing to the political motives that drive funding decisions;

Over $10 million was disbursed through a special program to the ‘fashion industry' and

One-third (33%) of Canada Economic Development for the Regions of Quebec’s $351 million loan portfolio has already been written off.

jobs!
The government says these programs create jobs. But with 33% of all loans already written off, this claim is dubious. And if Company A gets a handout, how many jobs are lost at competitor Company B that does not? The government should not be playing venture capitalist with tax dollars because:

political

Market decisions should be made by the market, NOT by politicians and bureaucrats.

Corporate Welfare is NOT driven by market imperatives. It is driven by regional and political concerns.

Selecting winners and losers is NOT a task to which government officials are well suited. They have neither the knowledge nor the experience to make investment decisions.

Corporate welfare creates a culture of dependency. Instead of seeking out the next market opportunity, our entrepreneurs become “grantrepreneurs” in search of the next government cheque.

Corporate welfare is not a public good. Every dollar given to a business is a dollar taken not available for debt reduction, infrastructure or health care.

should
be
abandoned
Prosperous jurisdictions around the globe have abandoned the regional subsidies approach. Canada should do the same and wind-up Canada Economic Development for the Regions of Quebec and its sister regional agencies in favour of broad-based business tax reductions as a better means of fostering economic growth.

Walter Robinson
Federal Director



Government as banker? The evidence is clear … bad idea!

Ottawa - Saturday, June 8, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation

study released	Recently the Canadian Taxpayers Federation (CTF) released a study of twelve years of financial assistance authorized by the Canada Economic Development for the Regions of Quebec (CED-Q). Canada Economic Development for the Regions of Quebec is one of four federal regional development agencies. The other three are the Atlantic Canada Opportunities Agency (ACOA), Western Economic Diversification (WED) and FEDNOR for Northern Ontario.

money to all	Using data obtained through Access to Information the Canadian Taxpayers Federation found that hundreds of millions of dollars were disbursed to profitable businesses, chambers of commerce, government agencies and individuals.

$1.78 billion	The Canadian Taxpayers Federation report on Canada Economic Development for the Regions of Quebec examined funding activities from fiscal year 1989-1990 through to 2000-2001. During this period some $1.78 billion was disbursed through 8,965 separate allocations. From this data, the Canadian Taxpayers Federation determined that:
not loans	Over $1.4 billion or 81% of all funds disbursed were in the form of non-repayable contributions and subsidies; $817 million or 46% of all funds were doled out to small, medium and large Quebec businesses including corporate players such as SR Telecom, Johnson and Johnson, Ingersol-Rand Canada, and Siemens; Transfers to federal, provincial and municipal institutions (some which are not subject to Access to Information or Freedom of Information) accounted for over $149 million; The biggest recipient of funds was ski destination Station Mont-Tremblant which received $48.9 million in contributions; Associations, unions, and chambers of commerce receive over $154 million; Over $119 million was disbursed to tourism initiatives, golf courses, bicycle manufactures, festivals and hotels; Canada Economic Development for the Regions of Quebec contracts contain a photo-op clause pointing to the political motives that drive funding decisions; Over $10 million was disbursed through a special program to the ‘fashion industry' and One-third (33%) of Canada Economic Development for the Regions of Quebec’s $351 million loan portfolio has already been written off.

jobs!	The government says these programs create jobs. But with 33% of all loans already written off, this claim is dubious. And if Company A gets a handout, how many jobs are lost at competitor Company B that does not? The government should not be playing venture capitalist with tax dollars because:
political	Market decisions should be made by the market, NOT by politicians and bureaucrats. Corporate Welfare is NOT driven by market imperatives. It is driven by regional and political concerns. Selecting winners and losers is NOT a task to which government officials are well suited. They have neither the knowledge nor the experience to make investment decisions. Corporate welfare creates a culture of dependency. Instead of seeking out the next market opportunity, our entrepreneurs become “grantrepreneurs” in search of the next government cheque. Corporate welfare is not a public good. Every dollar given to a business is a dollar taken not available for debt reduction, infrastructure or health care.

should be abandoned	Prosperous jurisdictions around the globe have abandoned the regional subsidies approach. Canada should do the same and wind-up Canada Economic Development for the Regions of Quebec and its sister regional agencies in favour of broad-based business tax reductions as a better means of fostering economic growth.

	Walter Robinson Federal Director