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The Fraser Institut: Canadian Governments Dole Out Billions in Taxpayer-Funded Subsidies to Businesses and Beyond

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/13/14 -- From 1980 to 2009, federal, provincial and local governments in Canada doled out $683.9 billion in subsidies, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, Government Subsidies in Canada: A $684 Billion Price Tag, measures the scope of government subsidies to private businesses, government business enterprises such as Crown corporations, and consumers.

"From Parliament Hill to city hall, governments across Canada continue to dispense taxpayer-funded subsides to a wide range of special interests. It's one thing to subsidize the heating bills of low-income Canadians, but subsidies to big corporations, for example, are something else entirely," said Mark Milke, study author and senior fellow at the Fraser Institute.

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.

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.

"Politicians and policy makers create and maintain these subsidies but ultimately, taxpayers pay the freight," Milke said.

Among the provinces, Quebec spent the most on government subsidies ($115.5 billion) followed by Alberta ($49.9 billion) and Ontario ($46.7 billion), while Prince Edward Island ($1.5 billion) spent the least.

Unlike Alberta and Ontario, where government-mandated reductions in power bills for consumers account for a significant portion of subsidy spending, Quebec mainly subsidizes businesses. In 2009 (the last year data was available), Quebec subsidy spending hit a record high of $7.2 billion.

"In Quebec, subsidies increased almost every year, and the bulk of the subsidies went to private businesses and government businesses-not ordinary consumers. The Quebec government leads the country in corporate welfare spending," Milke said.

Speaking of corporate welfare, Canadian taxpayers spent billions subsidizing private businesses over the decades. For example, between 1961 and 2013, Industry Canada, a federal government department, gave $22.4 billion to private businesses.

"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.

Finally, the study raises questions about fairness and transparency, and the politicization of subsidy spending.

For example, VIA Rail, a Crown corporation, received $4.5 billion in subsidies from the federal government between 1996 and 2012. Pratt & Whitney Canada, a private business, has received $3.3 billion in subsidies since 1970.

"Taxpayers subsidize both VIA Rail and Pratt Whitney, disadvantaging other aerospace manufacturers and bus and airline companies that compete in the marketplace without government assistance," 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," Milke said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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