Auditor general blasts more than $1B in grants to businesses

The Wynne government is defending its multi-million-dollar program of grants to businesses in the wake of sharp criticism from Ontario's auditor general.

In her report this week, Auditor General Bonnie Lysyk probed the Ministry of Economic Development's grants to businesses over the past decade.  

• Ontario auditor general blames lack of oversight for high hydro costs
• Ontario's auditor general slams Liberal government over litany of problems
• Ontario auditor general says Liberals have made 'little to no progress' on some recommendations

Lysyk examined the $1.45 billion that Liberal governments have pumped into high-tech, manufacturing and automotive firms since 2004 and found the money disproportionately went to big business.

She said the government has no idea if the money actually boosts employment in the long term, and questioned the fairness and transparency of how the grants are awarded.

The Ministry "has not attempted to measure whether the $1.4 billion it has provided to Ontario businesses since 2004 actually strengthened the economy," Lysyk wrote in the report.

She warned that the government "has no information on whether jobs created or retained are long-lasting."

Government figures say the funding has created 12,298 jobs and helped retain another 59,289.

"They have no idea if it has done anything to actually help people who are looking for work," NDP deputy leader Jagmeet Singh told a news conference at Queen's Park on Friday.

But Economic Development Minister Brad Duguid said 94% of the businesses funded through the grants hit their job-creation targets. To defend the programs, he pointed to the auto industry. "That's 500,000 jobs that would've been at risk had we not been a government that partners with the business sector," he told reporters Friday.

The auditor criticized the government for giving away 80% of the funding without an open public process. In her report, she said this system "lacks fairness and transparency."

'Crony capitalism'

 "This is crony capitalism at its best," PC Economic Development Critic Monte McNaughton said Friday at a news conference at Queen's Park. "It was an invite-only process, which I think is disturbing on many levels."

Duguid insisted the grants help attract companies to Ontario.

"We're very strategic when we make these investments. We have to be," he said. "Our business support investments are modest compared to most, but if we don't have them, that puts us out of the game and would make it very difficult to attract those investments.

The auditor found that only four per cent of available funding went to small and medium-sized businesses, although they account for one third of Ontario's GDP.  She also uncovered examples of corporate investments that she says would have happened anyway, without a taxpayer subsidy.

The auditor gave special attention to the single biggest grant of the past decade, worth $264 million. It was awarded through the Next Generation of Jobs Fund "to cover 35 per cent of company's investment to establish video game operations in Ontario." The auditor doesn't name the company, but news coverage from the time of the grant in 2009 shows it was French firm UbiSoft.

Lysyk found the grant "exceeded the Fund's limit of a maximum of 15 per cent of eligible project costs."  She also uncovered that the government ignored the advice of a third-party expert, who recommended against approving the project.

The auditor calculated that taxpayer money sunk into the video-game company so far works out to $130,435 per job created.