OTTAWA – The federal government is cutting back funding for its western diversification department, changing the rules of the granting game and targeting such agricultural industries as biotechnology and food processing.
Lloyd Axworthy, minister responsible for the Western Economic Diversification office, announced last week that the department will stop its practice of loaning money to western businesses trying to start or expand.
Instead, through co-operation with other private or government lenders, it will help make capital available to high technology or value-adding companies trying to make a go of it.
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It also will make some limited assistance available to companies or associations trying to expand the western economy.
Co-operation encouraged
And it will encourage rural communities to co-operate in efforts to attract new businesses.
In the agriculture and food sector, value-added companies and biotechnology firms will be the main targets for help.
“Our thrust will be to create a business environment in which emerging industries are allowed to grow and prosper,” said Maryantonette Flumian, assistant deputy minister for western economic diversification.
As an example, a coalition of processing companies called Food Beverage Canada is being helped by the department to improve its chances of increasing exports into the United States by improving packaging and researching requirements that must be met if products are going south.
She said department officials also are trying to help the 70 or more agricultural biotechnology firms in the West by working inside government to speed up the approval and registration process for new biotech products.
Eye on the dollar
“There are different strategies,” she said. “Some will cost some money and some will not.”
On the money side, there will be far less to spend in future years.
The government allocation will fall sharply during the next three years, beginning with a 22 percent ($49 million) cut in the fiscal year beginning April 1.
By next year, the department will be expected to finance increasing percentages of its business from repayments on the $600 million worth of unpaid loans owed to the federal agency from loans made in earlier years.
Western diversification started as a loan and grant-giving service to the West more than a decade ago but has seen its funds and scope reduced in a series of recent budgets.
The Reform party argues the office should be abolished.
