WHEN North America was in the throes of the Great Depression nearly a century ago, some economists and political leaders — U.S. president Franklin Roosevelt chief among the latter — believed that using government cash as an economic stimulus was the only way to revive businesses and thereby stave off massive unemployment.
For some, this “prime-the-pump” approach, as it came to be known, became synonymous with job creation, although its original intent was to deal with an economic crisis, not run-of-the mill commercial enterprise.
One of the legitimate criticisms of pump-priming in its current form is that it is often very difficult to quantify how many jobs are actually created after taxpayer funds that otherwise could have been spent on public roads and hospitals have been doled out to private businesses.
During the 15-year term of Ontario’s previous Liberal government, the Northern Ontario Heritage Fund Corp., continued a long-time practice of padding select businesses, who applied and received substantial grants sometimes worth hundreds of thousands of dollars. Competitors that may have been irked by this blatant unfair advantage created by the fund could have also applied, but that was little consolation: even government largesse has its limits. Many candidates just as worthy didn’t receive a cent.
In one memorable case in Northwestern Ontario, a private business received about $200,000 to expand a barn. What did the neighbouring farmers, whose barns also may have been need of expansion or repair, think of that?
Global Sticks, which made specialty wood items like ice cream sticks and tongue depressors in a plant near Thunder Bay, failed in 2012 after getting $7 million in NOHFC funding.
Earlier this month, the new Ford Conservative government continued the dubious tradition by doling out about $1.4 million for two medium-sized forestry business west of Thunder Bay. The societal dividend? Ten jobs.
While 10 jobs is nothing to sneeze at even when local economies are relatively robust — compared, say, to the 2008 recession — what if only five of the 10 forecast actually materialize and remain for the long term? Would the recipients be required to give a portion of the grant money back? Not likely.
Since Doug Ford has become premier, there has been much talk about ending what some have dubbed “corporate welfare.” A review of the current NOHFC might be a place to start.
The agency also has another purpose that provides taxpayers with a much better bang for their buck: funding municipal parks, the arts and other tourism-related projects that people can see and feel. A case-in-point was Monday’s $1-million announcement for a new arts centre in Kenora.
That practice, which benefits all and not just selected private business, is worth continuing.