GOLDSTEIN: Corporate welfare is strangling Canadian economy: study
· Toronto Sun
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Corporate welfare by Canada’s federal and provincial governments has more than tripled since 2015 and is strangling economic growth, according to a new study by the Fraser Institute.
It found corporate subsidies totalled $87.7 billion in 2024 alone, with $44.7 billion coming from the federal government and $43 billion from the provincial governments combined.
That more than tripled the 2015 level of $25.1 billion, adjusted for inflation and population growth.
Despite all of this spending, the study said, “an extensive body of research shows there is little connection between sustained, widespread economic growth or job creation and corporate subsidies.”
“The massive recent increase in government spending on corporate welfare should concern all Canadians,” said Alex Whelan, co-author of the study by the fiscally conservative think tank, Eliminating Corporate Subsidies in Canada: An Opportunity to Boost Growth.
“It’s wasteful spending at the expense of Canadian taxpayers and places government in the position of picking favoured businesses. Better policies exist to drive economic growth.”
Gov’t could lower business taxes by more than 80%: Study
The study argues that by eliminating corporate welfare and applying the savings to broad-based corporate income tax relief, the federal and provincial governments could lower business taxes today by more than 80%, removing another anchor on the Canadian economy.
During the total study period from 2007 to 2024, the study found provincial governments spent $474.4 on corporate welfare while the federal government spent $312.9 billion, for a total of $787.3 billion.
It said that while some of this was due to the economic impact of the COVID-19 pandemic in 2020 and 2021, the amount of corporate welfare today far exceeds the amounts given away in pre-pandemic years.
The root problem, the study says, is that instead of improving their goods and services and how efficiently they produce them in order to compete and boost profits, corporate welfare incentivizes businesses to keep seeking government subsidies, known as “rent seeking”, instead of increasing productivity through research and development.
Low productivity has been described as a “break the glass emergency” by Bank of Canada senior deputy governor Carolyn Rogers.
The Organization for Economic Co-operation and Development has warned that if nothing changes, Canada’s real GDP per person — a measure of the standard of living — will be the lowest among its 38-member industrialized countries from 2020 to 2060.
Prime Minister Mark Carney is trying to turn this around by doubling the amount of foreign investment in Canada within a decade, to reduce our economic reliance on the United States.
But it will be a slow process.
Carney presided over the worst record of economic growth in Canada during his first year in office of any prime minister in more than half a century — negative growth of 0.5%, as reported by Bloomberg News.