Governments in Canada doled out $684 billion in subsidies from 1980-2009: report

I don't think there are many people out there who think corporate welfare is the best way to spend our hard-earned tax dollars.

Yet — for whatever reason — federal, provincial and municipal governments continue to give away our money in the form of loans, loan guarantees, grants and subsidies.

On Tuesday, the Fraser Institute's Mark Milke released his latest report which, unfortunately, paints a picture of how institutionalized government handouts have become.

Milke analyzed three different data sets — from Statistics Canada, from Industry Canada and from Via Rail. The StatsCan numbers are a little odd in that they include subsidies to consumers for things like hydro rebates. Nevertheless, they're striking.

From 1980 to 2009, Milke claims, federal, provincial and local governments in Canada doled out $683.9 billion in subsidies.

"The $684 billion subsidy bill included $342.6 billion from the federal government, $287 billion from provincial governments, and $54.2 billion from local governments. When broken down into years, total subsidies peaked in 1984 at $34.8 billion, dropped to a low of $11.6 billion in 1998, then rose to $24.4 billion in 2009," notes the report.

"On a per-taxpayer basis, the cost for subsidies in 2009 was equivalent to $1,507, nearly double the 1998 per-taxpayer rate of $797."

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Milke notes that one department alone— Industry Canada — has handed-out $22.4 billion to businesses since 1961. Of that $9 billion was given in grants (ie: money that doesn't have to be paid back).

He even 'outed' some of the largest benefactors which, interestingly, includes some of Canada's largest companies.

"Subsidy proponents argue that taxpayer assistance is required to correct market failure and infuse fledgling businesses with start-up cash, but many businesses that receive corporate welfare are already established, and in many cases, possess more cash-on-hand than the amount received from government," Milke said.

"Subsidies often cater to special interest groups that may support or oppose politicians with an eye on government handouts. At the very least, governments should lift the veil of secrecy that often shrouds repayment records and other aspects of subsidy spending."

And 'here's the kicker, according to Milke: corporate subsidies actually don't create jobs, as advertised.

Milke — who has written extensively about this topic in recent years — notes that virtually all peer-reviewed research on business subsidies conclude that they don't have a demonstrable positive impact upon the economy, employment, or tax revenues because of the substitution effect. In other words, a subsidy meant to "create" jobs in one industry simply shifts intended investment — and jobs — away from another.

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This issue has also become a hot topic in the provincial election campaign in Ontario where Progressive Conservative Party leader Tim Hudak is vowing to replace corporate handouts to 'Liberal insiders' with corporate tax cuts.

"Liberals are big in the crony capitalism business, I understand that, so fancy Liberal lobbyists are making out like bandits while people get laid off — real people," Hudak said at a a campaign event last week, according to the Globe and Mail.

"The only thing worse than big government is when big government gets into bed with big business — that means you lose. I would change that."

Hudak claims that corporate grants cost Ontario taxpayers about $2 billion a year.

(Photo courtesy The Canadian Press)

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