$13.7B in ‘corporate welfare’ since 1982: Fraser Institute
No payment expected by Industry Canada for nearly half.
CALGARY — Industry Canada spent $13.7 billion on business subsidies since 1982 with almost half of that – $6.3 billion – given away with no expectation of repayment, reports the Fraser Institute.
The Vancouver-based think-tank, which obtained the information through an Access to Information request, said the rest, $7.4 billion (or 54%) was distributed under contracts requiring repayment.
Mark Milke, a Fraser Institute senior fellow and author of Corporate Welfare Bargains at Industry Canada, found interest payments of just $9 million have been made to Industry Canada on billions of dollars of outstanding loans since 1982.
On loans to be repaid, just $2.1 billion of $7.4 billion (28.8% of expenditures in that category) came back to the department. An additional $236 million was spent after government-guaranteed loans went sour.
The federal Industry Canada department oversees subsidy programs for a range of “strategic” industry sectors such as aerospace, automotive, forestry, high-tech and shipbuilding.
A 2005 analysis prepared for Industry Canada about the Technology Partnerships Canada (TPC) program said “for a variety of reasons, repayments are typically less than originally forecast.”
Milke says according to that report, original estimates of repayments were later written down by $1.9 billion after the TPC contracts were signed.
“Peer-reviewed research on business subsidies does not support the oft-heard claims that corporate welfare is responsible for widespread economic growth or job creation,” Milke said.
“Just as bad, in contrast to the interest rates paid on loans obtained by consumers and businesses in the private sector, little interest has been paid on Industry Canada’s taxpayer-financed loans to corporate Canada.”
Milke noted that while Industry Canada did not provide a breakdown of which loans and which programs charged interest, only $9 million in interest has been paid to Industry Canada over the 30-year period.