-- CTF Reacts to Industry Canada $33 Million TPC Loan to IBM, Challenges Corporate Canada to say No to Corporate Welfare --

OTTAWA: The Canadian Taxpayers Federation (CTF) today reacted to the federal government's $33 million 'gift' to IBM Canada Ltd. Under the Technology Partnerships Canada (TPC) program, Industry Minister John Manley will announce a $33 million "conditionally repayable contribution" to the Markham-based computing giant to fund e-commerce technology.

"Our response today is exactly the same as last month when Minister Manley gave a $154 million TPC loan to Pratt & Whitney. The Minister will call this a job-creating or job-preserving investment. Call it what you will, it's still corporate welfare," said CTF federal director Walter Robinson. "Last spring we demonstrated that most of these types of loans will never be repaid given recent history. Indeed, of the $3.2 billion that Industry Canada has lent out over the past 17 years, only 15% has been repaid."

The CTF released two studies (April and June 1998) which clearly show that the record of repayment for "conditionally repayable contributions" is abysmal. In return for investment capital, corporate recipients enter into an agreement with the federal government which guarantees repayment based on royalties and product sales.

"The Auditor General has singled out these types of loan programs for special scrutiny and remarked in 1995 that they are usually based on overly optimistic sales projections and that government bureaucrats have no expertise to judge sales forecasts or ascertain that monies are actually going to their intended projects," added Robinson. "Again, government is playing venture capitalist even though its record is abysmal."

"We reiterate our call for an end to TPC funding and government business subsidy programs in general," concluded Robinson. "It's time we get our priorities straight. Government should not be in the business of financing business. And more of our corporate leaders must step up to the plate and join our calls for an end to corporate welfare. They can't demand tax cuts one day and suck wealth through subsidies the next."