Corporate welfare’s time has passed

Posted on May 18, 2010 in Governance Debates

Source: — Authors: – Opinion – Regional agencies an easy target for funding cuts
Published: Tuesday, May 18, 2010.   John Ivison,  National Post

When the House of Commons is on hiatus, many MPs head for the golf course. But not Lynne Yelich, Keith Ashfield, or Denis Lebel. The three Conservative MPs are Ministers of State for Canada’s largest regional development agencies — the Western Economic Development Agency, the Atlantic Canada Opportunities Agency and the Economic Development Agency for the Regions of Quebec respectively.

Parliamentary breaks see them busier than a hustler working two tables. True to form, Mr. Lebel was in SeptIles, Que., yesterday, handing over $2.2-million to help attract international cruise ships to Quebec’s most northerly big town.

It seems the Conservative government’s enthusiasm for handing out taxpayers’ money, in an attempt to extract votes from Canada’s regions, is undimmed.

Yet just last week, the Liberals were complaining about spending plans for the agencies at an Industry Committee meeting. Good on them, you might be thinking — except, the Grits weren’t arguing that the $2-billion we spend every year on corporate welfare is a waste of taxpayers’ money; rather, they were upset the Conservatives appear to have been quietly cutting budgets for business subsidies.

The newly-released Parliamentary Estimates suggest that, if the Conservatives follow through with their spending plans over the next three years, expenditure on the WED agency will have fallen 48% over their time in office–from $306.6-million in 2005-07 to $160.2-million in 2012-13; ACOA will have seen its funding cut 31%, from $427.3-million to $296-million in the same period; and, the Regions of Quebec agency will have had its budget reduced by 31%, from $334.2-million to $232-million.

Liberal MP Sukh Dhaliwal raised the issue, claiming that Mr. Harper has a “vendetta” against the agencies, citing an eight-year-old interview in the National Post, in which the then-Canadian Alliance leader said he proposed to “dismantle” the economic development agencies and instead pursue lower taxes and less regulation.

In fact, the Liberals may have been getting themselves in a lather over nothing much, since the Estimates do not tell the whole story.

Ms. Yelich told the Industry Committee that core funding has not changed, a statement that seemed at odds with a graph in the Estimates that clearly shows spending sloping downward from left to right over the period of Conservative rule.

However, her deputy minister, Daniel Watson, said that the main reason for the decline in spending is that a chunk of the infrastructure budget has been moved to Infrastructure Canada. In addition, Budget 2010 allocated an extra $20-million annually for ACOA and nearly $15-million each for the Quebec regions and WED that does not appear in the latest set of Estimates.

A spokesman for ACOA said the current government has not cut the agency’s core funding and that the variance shown in the Estimates is due to funding envelopes being shuffled around.

Yet, if that is the case, it’s not too late for the Conservatives to do the right thing. All three agencies are currently subject to a strategic review, aimed at yielding major savings in the next budget.

Canada’s regional development agencies have long been an irritant for Mr. Harper, who promised to get rid of them in the 2004 election. That proved to be unpopular with voters in parts of the country that benefit from Ottawa’s largesse — in 2004, the Conservatives won just seven seats east of Ontario, a number that has risen to 21 since Mr. Harper ditched his pledge to kill ACOA, the Regions of Quebec agency and WED.

The bloody nose the Prime Minister sustained in the 2004 election may have given him pause for thought on the subject — in fact, he has since established two new agencies, in the Arctic and in southern Ontario. But times have changed and, faced with a choice between cuts to public services or to regional development agencies, most Canadians wouldn’t think twice.

Jim Flaherty, the Finance Minister, is looking for savings and corporate welfare represents a relatively easy target. He is known to believe that they hurt Canada’s competitiveness, inhibit free trade and provoke suspicions of pork-barrelling. He should make the case in Cabinet and save the country money that could be used more productively.

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