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Report On Business No projects yet approved for Ottawa manufacturing fund after 18 months

Gary Goodyear, the minister of state responsible for the Federal Economic Development Agency for Southern Ontario, says applications to the program are still under review.

Dave Chan/The Globe and Mail

It was one of a clutch of spending programs rolled out in the Conservative government's austerity budget of 2013 – $200-million to spark innovation in Ontario's hard-hit manufacturing sector.

But 18 months later Ottawa has yet to approve a single project from its Advanced Manufacturing Fund, even as the government continues to credit its investments in manufacturing for creating jobs and growth in Ontario.

The government confirmed that none of the money has actually been spent, in a response to a written question put forward by NDP industry critic Peggy Nash.

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"Applications are still under review and no contribution agreements have been executed for the Advanced Manufacturing Fund," said Gary Goodyear, the minister of state responsible for the Federal Economic Development Agency for Southern Ontario (FedDev).

The government talks about jobs, growth and innovation, but it isn't delivering, Ms. Nash complained in an interview.

"It's another example of money announced with tremendous fanfare on multiple occasions, but not spent," she said. "It seems that these announcements are strictly PR. They know it sounds good and they understand it's a priority for people."

A spokesperson for Mr. Goodyear suggested that at least one contribution would be made in the "coming weeks."

Because the projects are large, complex and may involve outside partners, applications take time to put together and analyze, Erica Furtado explained.

"Our government is ensuring that these complex and multipartnered applications undergo rigorous review under the due diligence process," she said. "FedDev Ontario will continue to work with stakeholders and partners to make strategic investments in Southern Ontario."

The five-year program was intended to fund "large-scale, transformative manufacturing activities," as well as encourage commercialization and spur the adoption of cutting-edge technology. The government hoped the program would become a model for similar initiatives across the country.

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But business groups say the rules are too restrictive to make the money attractive to many manufacturers.

"It's not because there is no appetite for it," insisted Jayson Myers, president and chief executive of the Canadian Manufacturers and Exporters, which lobbied for the fund's creation. "What I'm hearing from manufacturers is that the structure of the fund made it difficult for them to use it."

Mr. Myers said the fund is focused mainly on getting companies to develop breakthrough innovative products and manufacturing techniques, rather than using cutting-edge technologies developed by others, such as 3-D printing.

"It's the adoption of the technology that's important, not the development of the technology," he argued.

Mr. Myers said the fund still has merit, but he said the government may need to modify the rules to get "money out the door."

He rejected Ms. Nash's suggestion that the government is purposely sitting on the cash. "They really see it as an important initiative," he said.

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Under the current rules, repayable loans are available to companies as well as manufacturers working in partnership with colleges or universities. Loans can cover up to half of projects worth a minimum of $10-million, with the rest covered by the private sector. Initial applications were due by the end of October. A second round of applications is due next year.

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