Feds blew billions on 'corporate welfare' program, falsely claimed 56,000 new jobs

Launched six years ago, the $7 billion Strategic Innovation Fund falsely claimed it would create 56,000 jobs. A 'disproportionate amount' of that funding went to Québec, figures showed.

Feds blew billions on 'corporate welfare' program, falsely claimed 56,000 new jobs
THE CANADIAN PRESS/ Patrick Doyle/Justin Tang
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The Department of Industry has confirmed to Canadian taxpayers what they've known for years — politicians like bailing out corporations for little to no payout. 

Launched six years ago, the $7 billion Strategic Innovation Fund falsely claimed it would create 56,000 jobs. To make things worse, the federal government will only recover less than half a billion, reported Blacklock's Reporter.

A submission to the Senate national finance committee confirmed that then-Industry Minister Navdeep Bains wasted billions. "Of the total Strategic Innovation Fund investments, approximately 40 percent are repayable, and nearly 60 percent are non-repayable," it said.

Of the $7 billion corporate handout, a 'disproportionate amount' of funding went to Québec, figures showed. 

"Of the 110 agreements so far, the Fund is supporting 31 projects in Québec — over a quarter of the program's portfolio," wrote the industry department. 

From 2007 to 2019, the federal government spent $76.7 billion on business subsidies, while the provinces spent $223.3 billion, and local governments spent $52.1 billion.

Among the provinces, Québec subsidized business the most at $79.6 billion — gradually increasing from $6.3 billion in 2007 to $7.2 billion in 2019.

During the 13 years, all federal, provincial and local governments spent more on corporate welfare in Québec ($18,334) than any other province, according to the Fraser Institute.

"Investments have been directed to key sectors such as aerospace where funding is aiding recovery," wrote industry department staff.

According to Jean-Philippe Lapointe, director general responsible for the Innovation Fund, dividing the funds among all provinces and territories is "a constant concern."

After Québec, the subsequent most expensive provincial bailouts came from Ontario ($73.4 billion) and British Columbia ($22.9 billion).

"The Alberta government spent $22.1 billion (inflation-adjusted) subsidizing firms from 2007 to 2019, which does little if anything to stimulate broader economic growth," said Tegan Hill, Associate Director of Alberta Policy at the Fraser Institute.

"These subsidies for businesses — also known as corporate welfare — come with huge costs to government budgets and taxpayers while doing little if anything to stimulate economic growth," she continued.

"Unfortunately, taxpayers ultimately bear the cost of corporate welfare."

Cabinet launched the Strategic Innovation Fund in 2017 with a promise of 56,000 jobs. "Putting Canada at the forefront of innovation will equip Canadians with in-demand skills they need for well-paying, middle-class jobs now and into the future," said Bains.

However, an access to information request revealed the Industry Department faked those figures. "Recipients are not required to report on the number of jobs," said a 2019 memo. 

An industry spokesperson blamed a 'typographical error' for the misleading jobs claim. "The department made a mistake," said Danielle Keenan, now-communications director for the Liberal Research Bureau.

In a subsequent 2020 Industrial And Technological Benefits Policy Evaluation Report, the industry department acknowledged 'guesswork' procured the jobs claim. 

"While one can assume the policy led to economic activity in Canada, it is not known to what extent the Policy alone actually increased the economic activity in Canada," said the Evaluation Report.

"Rather than give preferential treatment to certain companies and industries, governments could reduce business income taxes and help foster a pro-economic growth environment that gives all businesses the opportunity and incentives to succeed," said Hill. 

"Such spending might be justified if it led to widespread economic benefits. However, there's little evidence that corporate welfare generates widespread economic growth or creates jobs."

On March 13, Industry Minister François-Philippe Champagne announced a battery factory for Ontario, claiming it would create thousands of jobs with an expected completion date of 2027. 

The $13.9 billion project — funded entirely by taxpayers — exceeded budget three months after the initial announcement. According to the Parliamentary Budget Office (PBO), the factory now costs $16.3 billion, amounting to $5.4 million a job.

"Shovels haven't even hit the dirt, and the Volkswagen handout will cost taxpayers billions more than the government let on," Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation (CTF), told Rebel News

"Taxpayers don't have $16.3 billion to give to a multinational corporation, and we certainly don't have billions more to give to other companies demanding their handouts."

PBO Yves Giroux said the Volkswagen plant is six times the annual budget for Environment Canada. "[The government is] not demonstrating restraint in its spending," he said. "To spend that much money on one plant is certainly unprecedented, in my opinion."

The total figure for Canada's largest plant is now quadruple all annual federal aid to corporations in Canada, reported Blacklock's Reporter

The Department of Industry, in 2018 testimony at the Commons industry committee, said federal assistance to corporations nationwide averaged $5.5 billion a year.

Hill suggests corporate welfare hurts the economy as "government interference in the market distorts private decision-making and misallocates resources."

"The government's attempt to select winners and losers in the economy generally makes the economy less efficient than if those decisions were left to individuals," she said. "Indeed, the better option is to let [taxpayers] decide where to spend their money and determine what businesses will succeed."

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