Before the last provincial election in 2018, now-Premier Doug Ford promised to end corporate welfare in Ontario. He has yet to fulfill this promise, but he should.

Corporate welfare occurs when governments give public tax money to private corporations in the form of grants or loans, thereby picking winners and losers in the economy. The government shouldn’t be in the business of propping up businesses, and it’s an expense Ontario can’t afford.

The previous Ontario government doled out corporate welfare through its Jobs and Prosperity Fund, giving billions worth of taxpayer dollars to various corporations such as Cisco, Honda, Ford, OpenText, and Sandbine – a “Waterloo company sitting on a cash mountain.”

Since taking office, Ford has closed all four streams of the former government’s Jobs and Prosperity Fund. However, an official from the Ministry of Economic Development, Job Creation and Trade confirmed in a recent email to the Canadian Taxpayers Federation that all projects from those funding streams “will end by the 2023-24 fiscal year.”

This comes as a shock considering the current government has called this fund “corrupt.” The PC election platform went on to state that the Wynne Liberals used it “to give grants and handouts to a small group of businesses on an invite-only basis.”

Strong words. Why then has the current government opted to continue to disburse these funds?   

The government claims it’s obligated to honour these multi-year agreements and will do so for the sake of providing “business continuity,” but five years is a long time for taxpayers to be on the hook for corporate welfare payments. Instead, this government should stop these payments immediately and legislate an official end to corporate welfare to prevent it in the future because it’s expensive, ineffective and unfair.

Take for example the corporate welfare handed to Maple Leaf Foods in 2018. The Ontario and federal governments jointly gave the corporation $55 million of taxpayer money to go toward a poultry processing facility in London, Ontario.

But Maple Leaf Foods didn’t need $55 million in taxpayer handouts; the company reported a profit of $101 million that same year. What makes this scenario even more unsettling is that the company paid out $65 million in cash dividends to its shareholders that year. It’s as if politicians took money out of taxpayers’ pockets and transferred it directly to Maple Leaf shareholders.

The optics are terrible, but the fault lies with the federal and provincial governments. Politicians are taxpayers’ representatives and it is their duty to be responsible stewards of the public purse.

Sadly, when it comes to corporate welfare in Ontario, the government has a poor track record. In 2018, Ontario’s Financial Accountability Office revealed that the government did not track the performance of much of the $23 billion spent on various business support programs from 2012-2017.

In the case of the Maple Leaf Foods handout, these governments gave taxpayer money to a company that was cutting 300 jobs. To open the new facility in London, Maple Leaf Foods announced plans to close three existing Ontario plants in St. Marys, Brampton and Toronto.

But even the prospect of job creation wouldn’t justify corporate welfare because the practice has other negative effects. When the government handpicks winners and losers, it unfairly distorts the economy. Consider the example of a small grocery store owner in Manitoba bemoaning $12 million of tax money being given to her largest competitor, Loblaws, to buy energy efficient freezers.

Instead of handpicking a few lucky corporate welfare recipients, governments should increase competitiveness in the overall business environment and even the playing field. While Ontario’s current government deserves credit for various pro-business policies including reducing taxes and red tape, it has included “business support programs” as part of its Open for Jobs Blueprint. For a government that campaigned on an explicit promise to end corporate welfare, it will need to explain how these programs will differ. 

To make good on its campaign promise to end corporate welfare in Ontario, this government should both stop payments from the Jobs and Prosperity fund and pass legislation before the next election in 2022 to ensure all future governments are likewise prohibited from handing over tax dollars to private corporations.

Fortunately, there’s legislative precedent from Alberta. In 1996, then-premier Ralph Klein successfully passed the Business Financial Assistance Limitation Act to stop taxpayer-funded loans, guarantees and grants to businesses. In Ontario, similar legislation could protect taxpayers by requiring a public vote if future politicians decide they’d like to hand over tax dollars to some corporation.

This government is fond of reciting the phrase “promise made, promise kept.” Let’s hope it fully keeps its promise to end the costly, ineffective and unfair practice of corporate welfare.