government subsidies

From the welfare state to the entitlement state

Question: If someone made $62,000 last year, had $187,000 in their bank account, and yet sought a $5,360 subsidy from government, what would the common sense response be?

Governments go subsidy-wild with $684 billion spent on subsidies since 1981

Ever wonder how Canada’s net federal debt reached $671 billion by 2013? Or how net provincial debt among the provinces ended up at $509 billion that same year? Wonder no more. It’s partially due to massive subsidies to corporations, government businesses and even consumers that over three decades amounted to $684 billion.

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This study attempts to measure the scope of government subsidies in Canada using three data sets.

The first is from Statistics Canada from the 1981 to 2009 fiscal years. This data shows that between April 1, 1980 and March 31, 2009, federal, provincial, and local governments spent $683.9 billion on subsidies to private sector businesses, government business enterprises, and consumers. The federal government spent the most, with $342.6 billion spent between 1981 and 2009 on such subsidies. The province of Quebec was next, where subsidies have increased in almost every year with few exceptions and where subsidies went mainly to private and government business: $115.5 billion between 1981 and 2009.

The second set of data is from Industry Canada. Between 1961 and 2013, the federal department of industry disbursed $22.4 billion to businesses. As many of these corporations or their parent companies are large and well established, the justification for such subsidies appears to be weak.

The third dataset is derived from VIA Rail annual reports. The company has received $4.5 billion in operating and capital subsidies from the federal government between 1996 and 2012.

On the specific question of subsidies to business, governments should support international efforts to end subsidies, including strengthening bilateral and multilateral free trade agreements to more clearly prohibit such subsidies. It is in Canada?s interest to reduce rules against our imports and to be able to compete with non-subsidized companies from other jurisdictions.

Rewriting the script for Canada's cultural policies

The CRTC’s recent reprimand of three Toronto-based X-rated channels for failing to meet the required 35 per cent threshold for Canadian content became fodder for Internet humor; however, Canadian content regulations are no laughing matter for cultural nationalists. Indeed, one of the oldest shibboleths of Canadian public policy is that domestic cultural industries need regulatory protections and taxpayer financial support to promote and sustain the Canadian identity.

Islanders Should Take Less and Contribute More

Souris Mayor Dave MacDonald recently told the Premier's Council on EI that recent changes to the federal EI program are killing his town.

Unfortunately, Mr. MacDonald did not note that Islanders receive three times as much as they contribute to the EI program. This was a subsidy in 2010 of about $150 million from citizens living elsewhere to people living on PEI.

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Equalization is a federal transfer program that is explicitly designed to subsidize provinces with weak own-source revenues and to be politically unifying. However, the flip in Ontario?s status from a ?have? to a ?have-not? province has had, and will continue to have, profound consequences for the country as a whole.

This essay focuses on three results that have evolved since 2008/09, the year before Ontario became a ?have-not? province: First, Ontario?s shift means the majority of Canada?s population now live in equalization-receiving provinces; second, a ?have-not? province (Ontario) has higher average living standards than two ?have? provinces (British Columbia and Newfoundland & Labrador); third, all four remaining ?have? provinces are relatively rich in resources while no other province is.

As part of an on-going equalization research program, this essay highlights the above three results of Ontario?s ?have-not? shift.

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