The Fraser Institute: Industry Canada Handed Out $22.1B in Business Subsidies, aka "Corporate Welfare," Since 1961
Marketwired
CALGARY, ALBERTA--(Marketwired - Jul 23, 2013) - One federal department, Industry Canada, alone provided $22.1 billion in taxpayer-funded subsidies to business over the past five decades, calculates a new report from the Fraser Institute, a non-partisan public policy think-tank.
Of that amount, $8.8 billion was offered in grants (not expected to be repaid) and $13.3 billion in loans (expected to be repaid).
"Corporate welfare is rampant in Canada. Politicians argue that business subsidies lead to economic growth and job creation, but international peer-reviewed research proves those claims are bunk," said Mark Milke, Fraser Institute senior fellow and author of Corporate Welfare at Industry Canada since John Diefenbaker.
"Unfortunately, going all the way back to the early 1960s, successive federal governments demonstrated the same chronic pattern of handing out taxpayer money to companies both large and small."
Broken down by decade, the most corporate welfare occurred in the 1980s ($9 billion) compared to $1.8 billion in the 1970s, $5.4 billion in the 1990s, $5.5 billion in the 2000s, and $49.5 million in the 1960s, though Milke cautions that only information available in electronic form was surveyed. The Department may well have paper documentation that would increase those figures.
Using data from an Access-to-Information request to Industry Canada, Corporate Welfare at Industry Canada since John Diefenbaker examines payments made by Industry Canada (or its predecessors) to business between 1961 and 2012, with figures adjusted for inflation to 2012 dollars. The numbers exclude all other federal departments and provincial/municipal subsidies to business, as well as the 2009 automotive bailout to General Motors and Chrysler.
The data reveals which companies regularly received taxpayer dollars from Industry Canada, and in what amounts: Since 1961, the top 25 recipients received almost $11 billion, nearly half of the total $22.1 billion disbursed. Montreal aerospace manufacturer Pratt & Whitney Canada Corp. received the most money at just under $3.3 billion spread over 75 payments between 1970 and 2012; Bombardier Inc. received the second-most corporate welfare, having accepted just over $1.1 billion across 48 payouts since 1966. The third-highest recipient was De Havilland Inc. with $1.1 billion over a 24-year period.
In addition, the report shows that smaller enterprises, too, have received taxpayer cash from Industry Canada. Contributions broken down by industry reveal $66,194 in subsidies to hot dog enterprises since 1961, $856,570 to ice cream shops, and $1.3 million to pizza businesses. Between 1982 and 2006, 379 separate contributions totaling $15 million were provided for gas stations or convenience stores.
"Importantly, the three Canadian companies with the most employees - Onex Corp., George Weston Ltd., and Loblaw Companies - have received no corporate welfare from Industry Canada," Milke said.
"Clearly, business subsidies are not necessary to increase employment, and politicians' claims to the contrary are a weak argument to justify crony capitalism."
The data also show that since the Conservative government assumed power in 2006, longstanding recipients of corporate welfare and some of Canada's best-known companies have received or continued to receive taxpayer money: Toyota Canada Inc., aerospace company CAE Inc., aerospace company CMC Electronics, and the Ford Motor Company, with two payments having occurred since the Conservative government was first elected.
"Canadian governments continue to shower businesses large and small with taxpayer-funded subsidies. Our aim is to show Canadian families just how much of their tax dollars are earmarked for corporate handouts," Milke said.
Top 25 recipients of corporate welfare from Industry Canada, 1961 to 2012 (adjusted 2012 dollars)
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org
