GOVERNMENT GRANTS - THE KISS OF DEATH 

Financially backed by socialist sponsors, many African countries, initially or eventually, became victim of corrupt, stagnant, ignorant and grossly inefficient dictators. One man, one vote, one time, became the law.

Before the cessation of such huge financial input, in relation to their own meagre resources, many of these leaders treated such foreign financial support as their own personal treasury. They were not alone. The story will rerun. Taxpayers here and in other countries will be paying for these bills for years to come.

With globalization a similar effect is now occurring within inefficient, government-supported companies in the west who have depended either on outright government grants, dream-time funding, and forgivable or unrealistically low loan interest rates. Backed by government guarantees, of course. These government-owned companies or government-supported will suffer the same fate as countries where the discipline of the marketplace -- and today this means the global marketplace -- takes control.

This is happening right now to segments of the former U.S.S.R. (in effect a totally government-owned country), Africa, Cuba and Papua New Guinea (where half of the national budget comes from an annual Australian donation!).

Government companies, in North America, especially in Canada, have a very sorry record of success. Decisions all along the line were based not on whether the grants and loans improved company efficiency but on how many jobs politicians could boast of having created with taxes that even the unemployed will be paying for years to come.

In Canada it all started about three decades ago when about $20 million went to modernize Canada's only aircraft carrier. Within weeks after the money had been spent (to protect a Quebec shipyard) the carrier was ruled obsolete and scrapped.

It hasn't stopped since: Petro-Canada which received government grants, loans and guarantees totaling billions is closing 1,000 retail gas stations, and is closing or selling three refineries this year. Petro Canada isn't worth 25 cents on the dollar invested. The loss will be horrendous. That's Calgary's contribution. Cape Breton's has been going on for decades. Sydney Steel, the fiasco of the Cape, has absorbed $1.5 billion. It won't recover $100 million.

Boeing learned fast. They purchased DeHaviland of Canada, the aircraft manufacturer, mostly with Canadian government funds. They found out even faster it couldn't make money even then. Now they have unloaded to Bombardier, the Quebec maker of snowmobiles (that received millions for their original project). Again, not with a major funding by the purchaser, but with more government loans from both the Ontario provincial government and the feds -- another $500 million into the cesspool.

Want to know where our tax dollars have been going? How about: Massey-Ferguson (Toronto) $200 million; Canadair (Montreal) $2 billion; White Farm Equipment (Brantford) $19 million; Co-operative Implements Ltd. (Winnipeg) $50 million; Minaki Lodge Resort (Ontario) $45 million cash; Clarke Irwin (Whistler Village, BC) $1.5 million plus $20 million investment (may cover investment cost); Canada Cycle and Motor (Toronto) $20 million; Electrohome (Kitchner, Ontario) $15 million; Consolidated Computer (Ottawa) $125 million; Maislin Industries $34 million. Dome Canada? Still being hidden. At least billions. More: Churchhill Forest Industries $71 million; Bricklin Motors (New Brunswick) millions. Quintette Coal (B.C.) pushing a billion and Deuterium of Canada $425 million.

It does not end. As this column was being prepared the closure of the Cassier Mine in British Columbia was announced. Another $20 million loaned by the provincial government in cash and $15 million in loan guarantees have been lost. The true victims, the taxpayers, will be hit again to cover this latest bit of bad judgement. Governments do not make decisions on a business basis but only on how many votes it will bring them today. Not smart thinking. The economic hangover has hit.

According to Globe & Mail columnist Terence Corcoran, who did a great job cataloguing these examples, "The drain on the economy has been enormous. The accumulated cost, based on compounded interest costs and current values, would run to the tens of billions of dollars, perhaps as much as $100 billion, or about one-quarter of the current national debt."

Corcoran forgot Telidon, the supposed hot-shot of the communications age. Telidon withered on the vine, after a couple of hundred million was scattered among government friends and because someone else, in another country, not flush with government handouts, produced basically the same thing for a fraction of the cost. Asians are watching what we are doing with government money and are producing the same thing for pennies on the dollar compared to our investment. In the global marketplace, guess who wins? You have to be hungry to win.

The reasons do not matter. The Canadian public has to realize their federal and provincial Government cannot successfully run businesses, never mind trying to manage any operation larger than a one-person coffee stand. Really, wouldn't you have done better with your portion of this thrown away tax money? Why do you put up with it? Why did you vote for them? Did you learn this in school? Don't blame the Japanese, who could come in now and buy the whole coastto-coast package for a dime on the dollar.

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