The conservative Canadian Taxpayers’ Federation says a federal western economic development program has been a $4 billion boondoggle prone to political use.
It studied the results of spending by Western Economic Diversification (WED) since 1987 and concluded many expenditures went to projects that didn’t need the assistance or were supported by other departments. Almost 50 percent of repayable loans have never been repaid.
The analysis found that spending tends to spike during election years.
“Over the years there has been a striking correlation between the department’s spending spikes and the timing of federal elections,” CFT Manitoba director Colin Craig said in a statement released with the study.
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He said many projects give WED the air of being a “political slush fund.”
When the Liberals raised the report in the House of Commons April 29, the minister of state for WED lashed back.
“Western Canadians should be concerned that the Liberal member thinks investing in forestry, mining and agriculture is a waste of money,” Lynne Yelich said.
“Western Canadians should be concerned that the Liberals think economic development in the West is a waste of money.”
British Columbia Liberal Sukh Dhaliwal argued the issue both ways, complaining the Conservative government has cut WED spending while directing the remaining funds to projects such as funding flagpoles and school murals.
“How can the minister justify drastic cuts to funding that would diversify the western economy when she is spending the funds on projects that do not even meet her mandate?” he said.
Regional economic development agencies and their role in job creation and diversification have long been a policy issue, occasionally examined and criticized by the auditor general.
In opposition, Stephen Harper and the Reform party opposed regional economic development agencies, arguing governments used them to shovel politically useful money into the regions.
In government, Harper has not only embraced regional development agencies but created new ones for the North and southern Ontario.
The taxpayers federation, a lobby group dedicated to exposing government excess and pushing for lower taxes and spending, said the WED problem is bi-partisan: “Grit or Tory, same old story.”
Based on documents obtained under access to information rules, the CTF showed a spending increase last year of 25 percent by the Progressive Conservative government before the 1993 election. That’s an almost 300 percent increase by the Liberals in the 1997 election year, an almost four-fold increase in spending to $500 million in the 2000 election year and a three-fold increase in the year Liberals lost power in 2006.
There also was an 18 percent increase by the Conservatives before the 2008 election. In years after the election, spending declined.
The report also said almost 400 lobbyists are registered in Ottawa to ask WED for money, including some from organizations funded by other departments.
“WED’s financial assistance programs have created inefficiencies in government, are plagued by slow and paltry repayments, myths of job creation, riddled with politically motivated objectives and infiltrated by Ottawa’s extensive lobbying community,” the analysis argued.
It said legitimate projects funded by WED could be funded by other departments with responsibility for the same programs.
In response to a question about the connection between spending spikes and election planning, Yelich’s senior communications assistant, Lisa Hutniak, wrote in an e-mail: “Our investments are based on WD’s priorities, not election cycles.”
She said the goal is to help small business, advance research and innovation and increase trade and competitiveness for the West.
