Home › Policy Articles: Fiscal & Budgetary: Business Subsidies

This survey, authored by Liv Fredricksen, presents a “report card” to governments regarding their mining policies. It takes into account several public policy factors, including taxation, regulation, labour issues and political stability, and then measures the effect of these factors on “attracting and winning investments.” The survey covers 45 jurisdictions, including all of Canada, numerous US states, as well as several other countries. Several Canadian jurisdictions finished near the top of the index, with Alberta taking the highest ranking. British Columbia finished last within Canadian jurisdictions, tying Russia with a score of 23 out of a possible 100.

Nathalie Elgrably begins her economic note by explaining several categories of subsidies to business: 1) direct subsidies in the form of unconditional or conditional transfers; 2) tax expenditures, which are tax advantages such as exemptions, deductions, lower tax rates, and refundable or non-refundable tax credits; 3) interest-free or low-interest loans; 4) loan guarantees; 5) financial involvement in a commercial company through shares or units; and, 6) non-monetary assistance such as consulting services.

Robert Sopuck’s report Ethanol: The Promise and the Peril argues that the Government of Manitoba should not subsidize the Province’s ethanol production industry. Sopuck begins by explaining how wheat is fermented to produce ethanol, which is then used to make ethanol-blended gasoline. There is controversy, he claims, over the economic and environmental effects of this production.

This Frontier Centre Backgrounder, reprinted from an article published by the Federated Farmers of New Zealand, discusses the elimination of farming subsidies in New Zealand. In the mid-1980s New Zealand farmers faced the unexpected removal of all government subsidies and support. The article concludes that these farmers are now stronger than ever after being forced to face market conditions. According to the introduction to the article, authored by Robert D. Sopuck of the Frontier Centre, such positive results demonstrate that farmers need not rely on “state charity.” Sopuck claims, furthermore, that the elimination of subsidies should be explored for Canadian farming.

Cathy Holtslander, writing for the Canadian Centre for Policy Alternatives, explores how industrial livestock operations have come to dominate Saskatchewan’s hog industry. Holtslander points out that, from 12,000 hog farms in 1976, Saskatchewan’s hog industry is comprised of only four major producers today.

Although Canada’s dairy industry received a reprieve after World Trade Organization (WTO) talks in Hong Kong in December 2005, Valentin Petkantchin contends the industry’s supply management system needs reform over the longer term.