Corporate welfare is unnecessary
In his March 9, 2018 column in The Telegram, Brian Jones challenged some Newfoundland and Labrador business associations to “produce a list of your members who have received government money, or aid, loans, tax breaks, etc.” He went on to note a “reprehensible hypocrisy” as it concerns government supports for businesses from these associations, including the Canadian Federation of Independent Business (CFIB), which I represent.
It is clear there are some significant gaps between Jones’ perception of CFIB as an organization and the reality.
CFIB is a non-profit organization that represents solely small- and medium-sized business owners across the country, of whom 2,000 are in Newfoundland and Labrador (for context, there are nearly 16,000 businesses in the province).
As an organization, we receive absolutely no government funding of any kind; our revenues are generated from membership fees only. Our advocacy positions are determined through surveying our members using a one-member, one-vote methodology; we do not advocate for direct government funding for businesses.
In fact, it is quite the opposite. For some time, CFIB has advocated, in pre-budget submissions as an example, for governmentfunded supports to business to be eliminated. Our preference is for the government to provide broad tax relief for all businesses, regardless of the sector.
The reasoning behind this position is direct government financing to specific business benefits so few at the expense of so many. Many CFIB members argue government funding distorts the market. They have invested significant amounts of money and spent substantial time building a successful business. All that hard work gets undermined by a governmentsupported business which may end up a direct competitor in as little as two years.
Members also see problems with specific sectoral approach as many sectors are excluded. Government picking “winners and losers” often results in resentment among those business owners who have built something from nothing without any assistance and often in spite of bureaucratic hurdles.
Further, the column failed to make any distinction between small and large business. Small businesses do not receive as much government support as he may think. In fact, more often than not, small business owners get ignored by their member of the House of Assembly, let alone a Cabinet Minister. Large business not so much. They go to government promising jobs in return for tax breaks and it is small business and residential taxpayers who have to pick up the tab.
Jones is right to suggest government support of business is part of Newfoundland and Labrador’s economic culture. If he was to review the government’s public accounts from the 1950s and 1960s, he would be taken aback by the number of businesses on the government teat at the time.
Of course, this direct financial support continues today in one form or another. In 2015, the provincial auditor general concluded the government has little idea how effective many of the financial assistance programs have been in supporting small- and mediumsized enterprises in Newfoundland and Labrador. Given the current state of the economy, intuition suggests any effect is minimal.
The government’s role is not to intervene directly in business, but rather to establish the conditions for a strong economy. While corporate welfare may continue to be doled out, it is not often you will see CFIB members lining up for it. Vaughn Hammond
Director of provincial affairs, Canadian Federation of Independent Business in Newfoundland and Labrador