Ottawa will not disclose whether companies that received subsidies have kept their job-creation promises, and internal documents suggest bureaucrats do not even track the information, which some experts say raises accountability concerns.
The federal government gives out billions of dollars each year to companies using a variety of programs, often through the Department of Innovation, Science and Economic Development. Corporations that accept the funding sign contribution agreements that ostensibly hold them to meeting certain criteria, or they have to repay the funds.
The Canadian Taxpayers Federation (CTF) filed a series of access to information requests to obtain data on federal subsidies. They received spreadsheets that contain information such as a company’s name, the program under which it was funded, how many jobs the company promised to create and how many jobs were actually created. The CTF later shared these documents with The Globe and Mail.
For most of the almost 200 subsidies listed, the number of jobs created is said to be “0,” with an explanatory note on the file that it was not a mandatory field in the government’s database.
“For many of the programs listed, recipients were not required to report on the number of jobs,” the note said. “As a result, in jobs fields, zero may designate information that is not available.”
Franco Terrazzano, federal director of the CTF, said the lack of transparency and accountability was unacceptable.
“We know taxpayers are on the hook for billions in subsidies, but in many cases the government records can’t even show if a single job was created,” Mr. Terrazzano said.
The Globe asked Ottawa to verify that it does not keep track of job creation as part of its monitoring of these agreements.
A government spokesperson at first said the number of subsidy programs at issue was too large to have an answer, and so The Globe agreed to focus on the Strategic Innovation Fund (SIF). That fund is a centrepiece of the Liberal government’s innovation strategy and was created in 2017, consolidating other programs such as the Automotive Innovation Fund.
After weeks of e-mail exchanges and phone calls, the government provided an unsigned four-page statement about jobs created as a result of SIF.
The statement said that after a contribution agreement is signed, department officials monitor progress by reviewing reports and claims submitted by the company, as well as making occasional site visits.
If non-compliance situations are found, the contribution agreement could be renegotiated; if not, the project could be cancelled and the company may need to repay the funds, the statement said.
The statement also points to the SIF website, which contains a database that lists companies, how much money they received under the program and how many jobs they promised to create.
Neither the statement nor the website lists the number of jobs created, as reported through the government’s monitoring. The statement did not say if any funds had been repaid.
An SIF progress report, published online in March, said projects funded through the program had more than 4,600 employees, of which 40 per cent were newly hired. However, the report does not say how that compares with the number of jobs expected to be created.
The government did not explain why it could not disclose the number of jobs created, if it says it does keep track of that information.
The Globe reached out to several companies that received SIF funding who were included in the database retrieved through access to information. Some companies provided their job numbers when asked.
CAE Inc. CAE-T, a Montreal-based maker of flight simulators, signed an agreement in 2018 to receive $150-million in federal funds through SIF, along with $47.5-million from provincial funds, for Project Digital Intelligence, a new training program.
The agreement said CAE committed to creating 400 new jobs and maintaining 3,900 existing jobs through the funding. Spokesperson Anne von Finckenstein said that CAE had created 500 jobs and maintained 4,300 as of March 31, 2022.
Toyota Motor Manufacturing Canada received $110-million in 2018 through SIF to support the retooling of factories to make a new generation of the RAV4 automobile. The company committed to create 450 new jobs and maintain 8,000 others. Scott MacKenzie, Toyota’s director of corporate and external affairs, said in a statement that the new-job target was met and a total of 8,500 employees are now working across three plants.
Linamar Corp. LNR-T, a manufacturer based in Guelph, Ont., received $49-million through SIF in 2018 to help fund the creation of a new Innovation Centre. Mark Stoddart, Linamar’s chief technology officer and executive vice-president of marketing, said in a statement that the company met the “majority” of its commitment on job creation, which was negatively affected by the pandemic.
Maple Leaf Foods Inc. MFI-T received $20-million from SIF and $34.5-million in provincial funds in 2019 to support construction of a poultry-processing facility in London, Ont., and create 300 new jobs, while maintaining 1,300 existing ones.
The company said in an unsigned statement that the project created an average of 368 construction jobs a year during the three years of active construction, and more than 1,600 permanent jobs were maintained by moving the employees to London from facilities in other parts of the province.
However, John Lester, a fellow-in-residence at the C.D. Howe Institute and a former economist in the public service, said the economic literature suggests that government subsidies do not create a net increase of jobs. But they can provide incentives to move people into more productive industries and those people may earn higher wages than they would have otherwise.
He said he was concerned by the lack of transparency in tracking job creation. But he said he was even more concerned that the government did not evaluate the economic benefit of these programs to see whether they were a good use of fundamentals in the first place.
“Even if the number of jobs they say they will create do get created, there’s no guarantee it’s going to be a good investment.”
Chris Hannay