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Monte Solberg brings home the bacon

What happened to the Tory promise to scrap corporate welfare?

Matthew Johnston - May 28, 2008

Flexible Solutions International (FSI) has friends in high places. In February, the company received a $1 million, zero-interest loan from the Agri-Opportunities Program, a fund set-up by Agriculture and Agri-Food Canada to encourage the development and enhancement of agri-business in Canada.

Trading on the American Stock Exchange, FSI is primarily an environmental technology company involved in the research, development and manufacturing of products that save water and energy. The $1 million loan is being used to pay for some of the cost of the company’s aspartic acid facility in Taber, Alberta. This pilot project will produce polyaspartic acid, an agriculture yield enhancing product.

FSI’s chief executive officer Dan O’Brien shrewdly took advantage of the loan to “prevent dilution to FSI shareholders.” Rather than issue new shares in order to raise money in the financial markets, the company got the money from the government. With the support of Agriculture Canada and a robust agriculture sector, FSI announced first quarter earnings in 2008 that were significantly above expectations.

Government support for FSI will not end with a $1 million, zero-interest loan. While the company is Victoria-based, its operations in Taber are in the riding of Conservative MP Monte Solberg, who will announce additional money for the company at a press conference at the Taber Heritage Inn tomorrow morning.

FSI shareholders are likely pleased by this news, but what about taxpayers? And what happened to the Tory promise to scrap corporate welfare?

A 2007 report on corporate welfare by the Canadian Taxpayers Federation reveals that in a speech to the Toronto Board of Trade during the 2004 federal election, then-Opposition leader Stephen Harper criticized the practice of corporate welfare and promised instead to cut business subsidies and use the savings to lower business taxes: “We will only reduce business and corporate taxes further to the extent that we can reduce corporate welfare over the next term. I call it the free enterprise versus the Canada Inc. approach.”

The CTF report concludes that “Mr. Harper wisely pledged to lower business taxes for all, reform regional development agencies and ‘get out of the grants and subsidies game.’ With the Conservatives now in government, they have sent mixed messages on their intentions with regards to business subsidies.”

Libertarian Party leader Dennis Young doesn’t like these “mixed messages” on corporate handouts. “The Conservatives promised to eliminate the capital gains tax. This would encourage more private investment in the equity markets and in companies like Flexible Solutions International,” said Young. “We don’t need or want corporate welfare. It’s bad for business and bad for taxpayers -- and I’m surprised we’re still seeing this from Harper’s team. Some things never change in Ottawa.”

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