Social Policy in Ontario

NationalPost.com – Opinion/Editorial
Published: Monday, May 03, 2010.

While Rahim Jaffer may not have successfully extracted money from government financing programs, plenty of other businesses have. And apparently, they are terrible at paying it back.

A report just released by the Frontier Centre for Public Policy reveals: “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%.”

We have heard many corporate welfare horror stories over the years, notably from the Canadian Taxpayers Federation and the Fraser Institute. But in this latest accounting of the failure to recoup these “investments,” author Mark Milke not only cites the usual large companies benefitting from government largesse, but a list of smaller enterprises at the trough, including an ice cream parlour, an autobody shot and a tire store.

Why on earth is the taxpayer lending money to these small businesses? Shouldn’t they have simply sought a loan from their local bank branch? Perhaps they couldn’ t qualify, but if they’re not a worthy risk for a financial institution, then the public shouldn’t be funding them either.

By handing out loans to these businesses, the government is disadvantaging their competitors. Instead of competing on an even playing field, funded by local financial institutions if need be, they now have to contend with the preferences of bureaucrats in Ottawa, hundreds or thousands of miles from their place of business.

It therefore shouldn’t be a surprise that taxpayers get so little back for their “investment” buck. They invariably end up funding projects of dubious viability, more often for “regional development” (also known as regional vote buying) and other such feel-good programs, by which the government can both curry favour with businesses and claim to be “doing something” about the economy.

Sadly this trend has shown no sign of abating under the current government. Worse yet, the report cites several examples from 2009 where ministers obfuscated when announcing these loans by publicly employing the term “repayable investment” (which makes it appear as though the company will have to repay the money) while privately (in their contract with the company) using the term “repayable contribution,” which is defined by Industry Canada in the following manner:

“Conditionally repayable contributions are contributions that all or a part of become repayable, if conditions specified in the contribution agreement come into effect.”

In other words, the recipient may or may not have to pay it back, depending on other variables (raw materials prices? demand? a poor harvest?). And taxpayers are none the wiser.

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