- Industry Canada's industrial subsidy budget cut 40%

OTTAWA - The Canadian Taxpayers Federation (CTF) responded to the federal government's revamped industry subsidy program. Details of the Strategic Aerospace & Defence Initiative (SADI) were revealed by Industry Minister Maxime Bernier and Public Works Minister Michael Fortier today in Montreal. The new corporate welfare fund replaces the discredited Technology Partnerships Canada (TPC) program.

TPC was Ottawa's flagship corporate welfare program and authorized $3-billion in payments since its inception in 1996. Taxpayers were originally told every TPC investment dollar would return $1.74 in repayments from businesses. To date, only $169-million has been recouped by the government. This is a repayment record of less than 6 per cent.

SADI is budgeted to spend $900-million over the next five years to fund Canada's aerospace and defence industries. This amount is 40 per cent less than the amount on offer under TPC, which was $300-million a year. The industry minister will also publicly identify companies that default on repayment obligations and publish all repayments received from recipient companies twice annually.

"Today, the federal government tacitly acknowledged that many of the criticisms repeatedly raised by the Canadian Taxpayers Federation over the past decade are indeed valid," said CTF federal director John Williamson. "Ottawa's corporate welfare budget is reduced by 40 per cent and disclosure requirements on Industry Canada, as well as on recipient companies, will ensure taxpayers are informed how tax dollars are being used."

He continues, "While these changes do not make the practice of using tax dollars to support businesses good public policy, it does narrow the program. Moreover, we believe the rigid disclosure requirements, if fully enacted by the minister, will ensure corporate welfare remains a discredited policy in the eyes of most taxpayers. Simply put, it will be possible to monitor how poorly industry department officials 'invest' tax money. We will continue to chronicle the repayment records."

Why Does the Aerospace Industry Need Government Support

According to the Industry Canada news release, the aerospace sector had sales of $21.8-billion and exports of $18.5-billion in 2005.

"Why does this industry need to be subsidized," Williamson asked. "The industry's own financial figures make the case that business is strong and taxpayer support is not indispensable. Outside of military contracts, there is absolutely no need for government to be funding profitable ventures."

-30-