Almost $3.8 billion. This is what the generous financial aid granted by the Ministry of the Economy (MEIE) to Quebec businesses has cost taxpayers over the past decade, revealing unprecedented calculations Newspaper.
• Also read: Economic aid: Interest-free loans are exploding
And we haven’t seen anything yet: the bill will only increase with the hundreds of millions of dollars that the Legault government has allocated in recent months, particularly to attract players in the electric vehicle battery sector.
A significant portion of the $3.8 billion cost is related to the $1.3 billion loss Quebec suffered on its investment in Bombardier’s C-Series aircraft program. The investment made by the Couillard government in 2016 was fully written off from the State’s accounts in 2020 and 2021.
JOEL LEMAY/AGENCE QMI
More than $13 billion in aid of all kinds
From 2013 to 2023, the MEIE provided companies with more than $13 billion in financial support – mostly loans, equity investments and grants, according to data compiled by Le Journal. These interventions resulted in net government spending of nearly $3.8 billion.
This bill covers loans and investments lost when companies go bankrupt, fees paid by the government to Investissement Québec for file management, the cost of preferential interest granted to companies and the value of subsidies paid (more in the last year alone than 165 million).
“A third of the loans [du MEIE aux entreprises] is interest-free, so they are already losing an amount,” points out Saidatou Dicko, professor of accounting at UQAM.
Saidatou Dicko, professor at ESG UQAM. Photo from UQAM website
Where did the money go missing?
With a few exceptions, it is impossible to know which companies the government lost money on. Under the pretext of file confidentiality, the MEIE systematically refuses to disclose this information. A situation that Ms. Dicko regrets.
“In general, I think our governments should be more transparent, especially when we have a government that is clearly committed to the economy, that really wants to help businesses more and stimulate more investment,” she says.
If the government were to disclose its good and bad moves when it comes to business aid, it would be better able to “avoid repeating the same decision-making patterns.” [défectueux]the same investment opportunities,” states the governance expert.
“Blank checks to companies, I think that’s a bygone era,” she adds. Unfortunately, this often happens: we give money but don’t ask for much in return.”
As of March 31, 2023, the MEIE held approximately $6.8 billion in corporate investments, 2.4 times more than ten years earlier.
“It doesn’t fall from the sky!”
To finance all this financial aid, the government has to borrow from investors every year. In ten years, the long-term debt of the Economic Development Fund (FDE), the MEIE’s main intervention tool, increased from $2.1 billion to $6.1 billion, a jump of 189%.
“This debt comes directly from the state treasury,” emphasizes Saidatou Dicko. This money doesn’t fall from the sky!”
Last year, the average interest rate on loans granted by the state to companies was just 2.08%, Le Journal noted. However, at the time, Quebec borrowed at an average interest rate of 3.06%.
All indications are that the cost of public support for businesses will continue to skyrocket in the coming years. The government has made significant financial commitments in recent months, adding to the impact of soaring interest rates, the risk of recession and the rising cost of some “forgivable” loans.
Last year, the “release clauses” on these loans, introduced by the CAQ government in 2019, cost the state $76 million, compared to $51 million in 2021-2022.
The biggest beneficiaries since 2013
1. Bombardier/Airbus $2.3 billion (including customer support)
2. Kruger 626 million dollars
Opening of work at the Kruger factory in Sherbrooke in 2022. Photo provided by the Government of Quebec
3. Cellulosic Ethanol Varennes 365 million dollars
4. McInnis cement 350 million dollars
5. Davie Shipyard 310 million dollars
6. Garda World 300 million dollars
7. CAE $228 million
8th. Resolute Forest Products 224 million dollars
9. Nemaska lithium 195 million dollars
10. Kraft Nordic 184 million dollars
Great recent help
1. Northvolt $1.37 billion
2. Davie Shipyard $519 million
3. Ford/EcoProB/SK A 322 million dollars
4. General Motors/POSCO Future M 152 million dollars
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