Tuesday, April 3, 2007

Corporate Welfare

Sean Silcoff's column in today's Financial Post points out that for all the corporate welfare the Canadian government doles out, national R&D remains lower than our peer countries:

The aerospace industry insists it needs the money, as its peers the world over benefit from heavy state aid, and without a level playing field, it's toast. That may be true. But a far more effective way to foster overall economic growth would be to bring in broad tax cuts and make Canada a more appealing place to invest. Despite the fact Canada hands out money generously to industry, R&D as a share of gross domestic product lags our OECD peers, by a rate of 1.07% to 1.53% in 2004. "The Canadian approach has been to give with one hand, by providing generous tax credits targeted at R&D, and to take with the other, by imposing high taxes on the fruits of innovative activity and entrepreneurship," a recent C.D. Howe Institute report said.

We need to get with the times. Would multinational companies rather do their research and development on their foreign sites or on their Canadian sites? Free money in a bad economic environment is only going to encourage companies to the extent of the free money.

Minister Maxime Bernier, we expected more of you.