The federal Western Diversification office sees itself as a reformed subsidizer, a government support agency riding the wave of public opposition to corporate handouts.
In the beginning, interest-free loans were its main tool for encouraging western economic growth.
Now, it promotes itself as a provider of “integrated services” and a promoter of partnerships with private business.
Yet at its core, the WD bureaucracy still is in the business of organizing government incentive packages to private business.
It co-ordinates federal, provincial and local government efforts to attract potential investors by letting them know what incentives are available from all government levels.
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“Most companies are aware that governments are no longer in the ‘handing out subsidies’ business,” said Maryantonett Flumian, senior assistant deputy minister for WD. “They tend to look more for indirect help, things like tax deferments, training, wage subsidies. I would consider those indirect, but I guess they are subsidies in a different form.”
The “indirect” incentives can range from research funds and promises of trouble-free local regulatory approvals to wage subsidies or other promises of local government co-operation.
And at times, WD does have the flexibility to offer financial help, although not in interest-free loans.
Offer helping hand
Instead, it can help a potential investor with a good business proposal get through the bank door to ask for a loan.
WD has a $60 million investment fund it uses to encourage private lenders to finance business proposals. The fund will cover some of the losses if the business fails and defaults on the loan.
Biotechnology and agriculture value-added projects are two eligible areas.
Flumian said every public dollar offered as risk insurance draws as many as $8 in loans from private lenders.
She said the decision to get out of direct subsidies reflects the public mood against government spending but that doesn’t mean companies do not want or receive government help.
She said WD springs into action when it hears a foreign company is considering a western Canadian site for expansion.
Staff find out as much as they can about the company, its needs and other sites that are in competition for the investment.
They pass the information on to other governments and “organize sessions in all of the communities we might entice that investor to come to ….”
WD officials point to two agriculture industry investments as examples of how the new approach works.
In the late 1980s, American-based Wyeth-Ayerst Laboratories was planning a new plant to complement its facility in Brandon, Man., Ayerst Organics Ltd., where Premarin is manufactured from pregnant mares’ urine.
Premarin is used in estrogen replacement therapy to treat women in menopause.
The company was leaning toward investing in Australia.
Western Diversification helped sell them on a Brandon expansion with a package that included enhanced provincial agricultural extension help with the PMU herd management and a promise from Brandon that the sewage system would be
expanded.
WD also takes some credit for arranging the package of government offers which convinced Belgian-owned Plant Genetics Systems to locate a canola and corn research site in Saskatoon in the early 1990s.
It initially planned to invest in the United States but promises of new custom-designed facilities from the province, federal research help from Agriculture Canada and friendly government biotechnology regulations convinced the company to invest in Saskatchewan.
