REGINA — The latest Fraser Institute report, released Tuesday, focuses on government spending on corporate welfare, and it shows those subsidies have steadily increased over the past two decades.
According to the report, titled Eliminating Corporate Subsidies in Canada: An Opportunity for Growth, the authors noted that federal and provincial spending on corporate subsidies went up from 2007 to 2024. From 2007 to 2015, spending on subsidies went up from $22.2 billion to $25.1 billion in inflation-adjusted dollars, a difference of 12.8 per cent.
But from 2015 until 2019, spending on corporate subsidies went up another 44.2 per cent. Then came the pandemic, with spending on corporate subsidies increasing to the point that, by 2024, the inflation-adjusted level of spending stood at $87.7 billion — a far cry from the original $22.2 billion.
Alex Whalen, director of the Atlantic Canada Prosperity Initiative at the Fraser Institute and co-author of the report, noted that Saskatchewan is also part of the trend.
“Specific to Saskatchewan, Saskatchewan spent $2.3 billion last year in business subsidies in the province,” he said. “That’s more than a five-fold increase since the first year of data that we had in 2007, when the number was $492 million. And again, I must emphasize that that is after you adjust for inflation. And so the use of corporate subsidies in Saskatchewan mirrors the story that we’ve seen across the country, which is one of a massive increase.”
Whalen said they also looked at the available tax relief by province, and Saskatchewan “actually had the second-highest level of available tax relief from eliminating corporate subsidies. So, in fact, Saskatchewan could eliminate all of its business income taxes if it eliminated corporate subsidies. So I think that’s a striking finding for Saskatchewan.”
The massive increases are happening across the country, he said. At the federal level, it is a five- or sixfold increase from 2007 to 2024. In Ontario, it is closer to a tenfold increase from 2007 to 2024.
“But like I said, we’re seeing substantial increases in every single province, even outside of the COVID period, when governments were spending very freely. And we see in the data that corporate subsidies peaked at that time. But when we look at the post-COVID years of data, 2022, 2023, 2024, we’re still seeing a massive increase in the use of corporate subsidies.”
Whalen said these increases come at a time when economic growth is basically flat in Canada.
“We’re in a period of economic stagnation in the country,” Whalen said. “And part of the argument we make in the study is that governments have a golden opportunity to eliminate spending on corporate subsidies and redirect that to broad-based business tax relief.”
The reason for doing so, Whalen said, is because “business tax relief, particularly in a higher-tax country like Canada, can actually drive economic growth because it involves treating all businesses equally.”
“So first off, that has more of a growth-inducing effect because businesses and consumers and investors are making decisions rather than the government. But also it’s a much more fair situation so that government doesn’t have to pick out winners and losers in the economy.”
As for the key takeaway for Canadians in terms of addressing this increase in government spending, he said governments in Canada have been massively increasing their spending on corporate welfare, that this spending is completely wasteful and that “governments have an opportunity to eliminate corporate subsidies, redirect that spending to broad-based business tax relief in a way that will grow the economy and will benefit business and workers alike.”
