• Federal Government Handout to Bombardier Tops $1.1-Billion
  
• Less Than 5% of So-Called Repayable Contributions Repaid to Ottawa

Toronto: The Canadian Taxpayers Federation (CTF) reacted today to news the federal government will hand $350-million to Bombardier to develop and manufacture new 110- and 130-seat passenger jets. The Quebec government will provide an additional $110-million to the aerospace manufacturer. The project will cost more than US$2.1-billion and Bombardier's financial plans are contingent on taxpayers paying a third of the cost.

"The Bombardier group of companies has been the largest beneficiary of the federal government's corporate welfare program and Canadians should be aghast with Ottawa's latest giveaway of their money," said CTF federal director John Williamson. "If this is a wise investment there is no good reason for tax dollars to be used. But this is a financial lemon and tax money is being squandered. This is another case of government throwing a lifeline to a distressed company because it has good political connections."

Today's announcement brings Bombardier's total subsidy package to $1.12-billion. According to calculations made by the CTF, using information gathered under Ottawa's Access to Information and Privacy law, Bombardier and its subsidiaries have already received $36-million in grants and $736-million in so-called repayable contributions since 1982. However, the repayable contributions should also be classified as subsidies because these funds have not been repaid to Ottawa and will not be. Click here for the list of direct contributions to Bombardier and its subsidiaries.

"Successive industry ministers have touted Bombardier's so-called repayment record, yet none has ever produced an actual repayment number to confirm their statements," said John Williamson. "In December, Industry Minister David Emerson said the taxpayers of Canada 'haven't lost any money on Bombardier.' If this is true, Mr. Emerson should come clean and release Bombardier's repayment records. But he won't because such transparency will only confirm what taxpayers already know, that Bombardier is a welfare sinkhole."

Records from Technology Partnerships Canada, the federal program administering these contributions, indicate less than 5% of the money it "invested" in business projects has been recouped.

"A recent TPC audit states the money will never be recovered. This is an abysmal record and flies in the face of past assurances from government officials that repayable contributions paid to companies like Bombardier will be repaid in full," added Williamson.

And There is Still More-

The $1.12-billion subsidy figure does not include any loans or financing guarantees provided to Bombardier clients through Export Development Canada. This is because information laws do not permit citizens to know the full extent of Ottawa's support of big business through this Crown corporation. But according to EDC, as of Dec. 31, 2003, the company had $6.5-billion in outstanding loans to the aerospace industry and provides "significant support for Bombardier." A Canadian Business magazine story on EDC entitled Bombardier's Bank (March 29, 2004) reported "of the $6.5-billion in gross loans receivable EDC had outstanding to aerospace customers at the end of 2003, 85 per cent went to Bombardier's customers."

On May 5 - last week - Ottawa provided US$230-million to two subsidiaries of Delta Air Lines from a $1.2-billion fund established by the federal government in 2003 - administered by EDC - to aid Bombardier's regional jet sales. A similar loan of US$150-million was provided to Delta in July 2004 to purchase jets from Bombardier.

Delta Air Lines is currently facing bankruptcy. The company warned this week it will record a substantial financial loss this year, and will be insolvent if cash reserves continue to fall or its lenders seek payments of its debt.

Corporate welfare leads to higher taxes and has a perverse effect of directing scarce resources to less productive investment projects, which slows economic growth rather than enhancing it. Business and individual taxpayers end up footing the bill for Ottawa's $4-billion subsidy programs.

"How can governments justify throwing another half-billion dollars at a new Bombardier jet when it cannot account for past loans This spending should be grounded until taxpayers have all the facts," said Williamson. "This is more proof that governments have an abysmal record of picking winners whereas corporate losers, like Bombardier and its clients, have a stellar record of finding government handout programs."