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Does it take Tory pork to process pork?

A federal loan to a Quebec pork processor has the Canadian Taxpayers Federation accusing the Conservatives of vote buying, and animal rights group, PETA, demanding an end to taxpayer-funded cruelty.

Matthew Johnston - August 21, 2008

The Minister of Canada Economic Development, Jean-Pierre Blackburn, announced on August 18th a $195,000 zero-interest loan to Charcuterie L. Fortin Ltd. The Quebec-based delicatessen has been in business for 40 years and is the largest pork processing plant in the Saguenay–Lac-Saint-Jean region.

The federal loan is a small part of a $1.5 million investment in Charcuterie L. Fortin that will pay for the expansion and automation of the company’s pork processing facilities.

John Williamson, the federal director of the Canadian Taxpayers Federation, thinks the loan is another example of corporate welfare and Conservative vote buying. “There is only one way to describe a zero-interest government loan to business and that is corporate welfare. And with a possible fall election, I think it is safe to also call this vote buying in la belle province," said Williamson.

The loan does raise a number of questions? For instance, why does a company with a 40 year proven track record need a $195,000 loan from taxpayers? If Canadian banks are not doing a good job lending to businesses like Charcuterie L. Fortin, perhaps the Conservative government needs to open the sector to more foreign competition. And what about private investors? Charcuterie L. Fortin has shareholders, so why not bring in a few more? It may be hard to find investors in this market, but what if the Conservatives scraped the capital gains tax as they promised in 2006? That would surely help attract more investment in seemingly sound business ventures like Charcuterie L. Fortin.

Libertarian Party leader Dennis Young argues that “there is a lot the federal government can do to improve Canada’s capital markets to make it easier for deserving businesses to get money. Remove the barriers to foreign bank competition, let people roll their capital gains into new investments tax free and leave more money in the hands of investors with a low, flat income tax.” Young added that “the Harper government’s inaction is forcing business people to choose between a government handout or a cash-starved business. I don’t blame [Charcuterie L. Fortin] for taking the money; I blame the Conservatives for not fixing the underlying problems.”

If the federal government does insist on being in the business of corporate lending, why not charge interest? It costs money to lend money. First, there is the cost of administering the loan. Let’s not forget the opportunity cost of not being able to lend that money elsewhere, or even the cost of not being able to use that money to pay down the national debt. And, of course, with Canada’s central bank expanding the money supply at 12%, there is the cost of inflation. $195,000 is worth more today than it will be 10 years from now. Most importantly for taxpayers, there is the risk of not getting the money back.

A senior media spokesperson with Canada Economic Development was contacted about the terms of the loan for Charcuterie L. Fortin. She didn’t know and didn’t provide the information as promised before press time. It seems sloppy for Canada Economic Development to announce a loan without providing the interest or amortization terms of the loan, which would be of interest to taxpayers on the hook for the government’s generosity. Minister Blackburn was careful, however, to highlight that the Conservative government has “made available a budget of $86 million over three years to help Quebec firms like Charcuterie L. Fortin....”

This type of corporate welfare is not exclusive to Quebec. A Western Standard news report recently covered a $1 million loan to an Alberta agribusiness in Taber, for instance.

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