Over Half of $7B in Subsidies to Support ‘Innovative Projects’ Won’t Be Recovered: Federal Records

The Canadian flag flies near the Peace Tower on Parliament Hill in Ottawa on June 17, 2020. Adrian Wyld/The Canadian Press

Over half of the billions paid out under a corporate subsidy program to support “innovative projects” in Canada will not be recovered, according to a written submission to the Senate national finance committee.

In its submission on June 19, the Innovation, Science and Economic Development Canada (ISED) told senators that more than half of the $7 billion spent under its Strategic Innovation Fund (SIF) was “non-repayable.”

“To date, of the total SIF investments, approximately 40 percent are repayable, and nearly 60 percent are non-repayable,” said the department, as first reported by Blacklock’s Reporter.

The SIF was launched in 2017 by then-ISED Minister Navdeep Bains to provide “major investments in innovative projects that will help grow Canada’s economy for the well-being of all Canadians.”

The submission was in reply to questions raised to Jean-Philippe Lapointe, director general at ISED when he appeared before the senate committee on April 25. Senator Clément Gignac had asked Lapointe, who is responsible for the innovation fund, to provide a breakdown on “how much was grants as opposed to repayable loans.”

“As a rule, we only make contributions, which may or not be repayable,” Lapointe said at the time. “There can also be conditions as to the amounts to be repaid.”

“The terms are fairly flexible on the whole, and I would say the non-repayable portion is based on the public benefit to the country,” he added.

‘Made a Mistake’

According to the government’s website, non-repayable contributions will only be considered for projects that have “significant benefits for Canadians.” One of the benefits mentioned includes “transforming our economic and environmental landscape by reducing greenhouse gases and growing the use of clean, sustainable technologies.”

Another criterion is whether the projects “align with government investment priorities.”

Lapointe said even companies that agreed to repay loans could reduce payments if they adhere to the “Net Zero Initiative” by the Liberal government.

“We concluded agreements on greenhouse gas reduction, he said. “The companies under contract that meet their targets will be eligible for a non-repayable contribution for a portion set out in the contracts.”

The ISED previously said projects funded by its SFI would “create nearly 56,000 jobs.” To receive the funding, one of the conditions set for applicants was to submit the number of jobs their projects would create in order for the department to “exercise their discretion as to which projects to fund.”

A 2019 memo, which was obtained by Blacklock’s Reporter through an Access to Information request, found that is not the case.

“Recipients are not required to report on the number of jobs,” the memo said.

Blacklocks obtained a statement from Bains’ spokesperson at the time who attributed the jobs claim to a typographical error.

“The department made a mistake,” said Danielle Keenan, now-communications director for the Liberal Research Bureau.