April Fool story -
The joke's on taxpayers on this anniversary of Ottawa's flagship corporate welfare program, which shelled out $3-billion, but recouped a mere 5%
Technology Partnership Canada (TPC) was established April 1, 1996, by the federal government to provide funding support to the private sector. It's been a joke ever since. The TPC program, now 10 years old, replaced the old Defense Industries Productivity Program (DIPP), which had funnelled $2.15-billion in grants and contributions to aerospace and defence firms - including some of Canada's most successful and profitable companies - over 20-odd years. With less than one in four dollars repaid to the federal treasury, DIPP was labelled a failure. It wasted tax dollars on business subsidies and benefited companies with close ties to the government.
When Ottawa unveiled TPC in the 1996 budget, it proclaimed its new program would be better managed. It would ensure the repayment of tax dollars. This was no corporate welfare program: success would be measured in the program's cost recovery.
The public was even told by a succession of Liberal industry ministers that every dollar invested by TPC would return a buck fifty to two bucks to the federal government. This guarantee should have set off alarm bells. With a 50% or even 100% return on investment, why were private investors not lining up for a piece of the action It is because Ottawa's projections were a sham.
Since 1997, the Canadian Taxpayers Federation (CTF) has demanded Ottawa reveal the repayments records of TPC beneficiary companies. Ottawa's reply was always the same, "Trust us, your tax dollars are safe." There was little reason for such faith.
Last summer, as reports and audits of abysmal returns became impossible to ignore, Industry Minister David Emerson (then a Liberal and now a Conservative) came clean. He pegged future TPC repayments at only 80 cents on the dollar. Instead of better management and rich returns, taxpayers were fleeced again.
A target of 80% remains wildly optimistic. Since 1996, TPC has approved more than $3-billion in "contributions," yet according to documents collected by the CTF, the repayment rate is a paltry 5%. The records of individual TPC recipients such as Pratt & Whitney, Bombardier, Rolls-Royce, Honeywell, Research in Motion, Bell Helicopter, IBM, SNC Lavalin, Western Star Trucks and Dupont - among many, many others - have remained unavailable to taxpayers.
That is, until last week, when new Minister of Industry Maxime Bernier unpeeled the cloak of secrecy. His office released documents showing specific TPC repayments from these companies. The information can be found on the department's Web site (www.ic.gc.ca) and is presented in three categories. A group of 42 companies have yet to submit any reimbursements; repayment records for 88 others total $149-million; and another 78 companies repaid a total of $7.4-million but refuse to make their exact repayments public. (It is hoped Ottawa will push the holdouts to disclose these records.)
This represents an important step forward in government transparency and accountability. Mr. Bernier has done taxpayers a favour by finally making such information available. The new TPC data confirms what critics of Ottawa's corporate welfare program have been stating for years: These programs are a sinkhole for tax dollars.
Mr. Bernier's release, however, fell short in two important areas. The first was in not reporting how much individual companies received through the TPC program in the first place. And second, he failed to release the Industry Department's own repayment forecasts. Such data would permit Canadians to know how well - or poorly - industry officials estimate repayment revenue.
Figures collected through Access to Information and publicly available reports provide some insight. Not surprising, the estimates made by bureaucrats are nowhere near the actual numbers. Industry officials had pegged total TPC repayments at $449.4-million at the end of fiscal 2004-05. Has the department hit its projections, it would have recouped 21% of total disbursements (which totalled $2.1-billion at the time), which is on par with DIPP's appalling repayment levels. If only taxpayers had been so lucky. The actual amount collected was far less, ringing it at a measly $110.3-million and 5% of disbursements. So much for a better-managed TPC program.
These figures confirm what opponents of corporate welfare already know. Picking market winners and losers is not a job suited for government officials. Being close works well when tossing a hand grenade, but it is no way to manage tax money.
TPC has not - and will not - achieve its objectives. Even the former Liberal government understood this. In September, 2005, Ottawa announced the TPC program would be shut down. The program's poor financial record and a brewing scandal over illegal commissions paid to lobbyists made it impossible to defend. Yet rather than exit the corporate welfare business, the old government said they would try again by creating another alphabet-soup subsidy fund called the Transformative Technologies Program (TTP). The "new" fund is to be established on April 1, 2006. Amazingly, the program specifically states "its measure of success will not be cost recovery."
The dismal records of TPC and DIPP did nothing to dissuade the Liberals from throwing good money after bad. Can taxpayers expect more of the same from the Conservatives
Technology Partnership Canada (TPC) was established April 1, 1996, by the federal government to provide funding support to the private sector. It's been a joke ever since. The TPC program, now 10 years old, replaced the old Defense Industries Productivity Program (DIPP), which had funnelled $2.15-billion in grants and contributions to aerospace and defence firms - including some of Canada's most successful and profitable companies - over 20-odd years. With less than one in four dollars repaid to the federal treasury, DIPP was labelled a failure. It wasted tax dollars on business subsidies and benefited companies with close ties to the government.
When Ottawa unveiled TPC in the 1996 budget, it proclaimed its new program would be better managed. It would ensure the repayment of tax dollars. This was no corporate welfare program: success would be measured in the program's cost recovery.
The public was even told by a succession of Liberal industry ministers that every dollar invested by TPC would return a buck fifty to two bucks to the federal government. This guarantee should have set off alarm bells. With a 50% or even 100% return on investment, why were private investors not lining up for a piece of the action It is because Ottawa's projections were a sham.
Since 1997, the Canadian Taxpayers Federation (CTF) has demanded Ottawa reveal the repayments records of TPC beneficiary companies. Ottawa's reply was always the same, "Trust us, your tax dollars are safe." There was little reason for such faith.
Last summer, as reports and audits of abysmal returns became impossible to ignore, Industry Minister David Emerson (then a Liberal and now a Conservative) came clean. He pegged future TPC repayments at only 80 cents on the dollar. Instead of better management and rich returns, taxpayers were fleeced again.
A target of 80% remains wildly optimistic. Since 1996, TPC has approved more than $3-billion in "contributions," yet according to documents collected by the CTF, the repayment rate is a paltry 5%. The records of individual TPC recipients such as Pratt & Whitney, Bombardier, Rolls-Royce, Honeywell, Research in Motion, Bell Helicopter, IBM, SNC Lavalin, Western Star Trucks and Dupont - among many, many others - have remained unavailable to taxpayers.
That is, until last week, when new Minister of Industry Maxime Bernier unpeeled the cloak of secrecy. His office released documents showing specific TPC repayments from these companies. The information can be found on the department's Web site (www.ic.gc.ca) and is presented in three categories. A group of 42 companies have yet to submit any reimbursements; repayment records for 88 others total $149-million; and another 78 companies repaid a total of $7.4-million but refuse to make their exact repayments public. (It is hoped Ottawa will push the holdouts to disclose these records.)
This represents an important step forward in government transparency and accountability. Mr. Bernier has done taxpayers a favour by finally making such information available. The new TPC data confirms what critics of Ottawa's corporate welfare program have been stating for years: These programs are a sinkhole for tax dollars.
Mr. Bernier's release, however, fell short in two important areas. The first was in not reporting how much individual companies received through the TPC program in the first place. And second, he failed to release the Industry Department's own repayment forecasts. Such data would permit Canadians to know how well - or poorly - industry officials estimate repayment revenue.
Figures collected through Access to Information and publicly available reports provide some insight. Not surprising, the estimates made by bureaucrats are nowhere near the actual numbers. Industry officials had pegged total TPC repayments at $449.4-million at the end of fiscal 2004-05. Has the department hit its projections, it would have recouped 21% of total disbursements (which totalled $2.1-billion at the time), which is on par with DIPP's appalling repayment levels. If only taxpayers had been so lucky. The actual amount collected was far less, ringing it at a measly $110.3-million and 5% of disbursements. So much for a better-managed TPC program.
These figures confirm what opponents of corporate welfare already know. Picking market winners and losers is not a job suited for government officials. Being close works well when tossing a hand grenade, but it is no way to manage tax money.
TPC has not - and will not - achieve its objectives. Even the former Liberal government understood this. In September, 2005, Ottawa announced the TPC program would be shut down. The program's poor financial record and a brewing scandal over illegal commissions paid to lobbyists made it impossible to defend. Yet rather than exit the corporate welfare business, the old government said they would try again by creating another alphabet-soup subsidy fund called the Transformative Technologies Program (TTP). The "new" fund is to be established on April 1, 2006. Amazingly, the program specifically states "its measure of success will not be cost recovery."
The dismal records of TPC and DIPP did nothing to dissuade the Liberals from throwing good money after bad. Can taxpayers expect more of the same from the Conservatives