TPC set for expansion as it answers more charges of corporate welfare and secrecy

Industry Canada is still considering a larger role and significantly increased funding for its flagship Technology Partnerships Canada (TPC) program, but will not make any decisions until the consultation phase of its innovation strategy is completed this fall. Any temptation to move before that will likely be tempered by a recent report that slams TPC as an outrageous example of corporate welfare and calls for its elimination.

Although the recently released Industry Canada innovation strategy document — Achieving Excellence —doesn’t mention TPC by name, it does state that it is considering “increased support for commercialization” in a large number of technology areas (see box). TPC invests in all of these areas, and its executive director says the program is properly positioned to receive new money to fund a reinvigorated mandate.

“That hasn’t happened as quickly as we hoped it would but what we want to do is take advantage of the innovation agenda or innovation strategy and use that to talk with stakeholders and associations,” says Jeff Parker. “We want to find out how effective they think TPC is and whether or not they view it as an important instrument of government policy and one that needs to be either broadened or deepened or provided with more resources.”

Parker says there has been no decision on how much the funding for TPC might be increased beyond the $315 million it receives annually. The bulk of funds are currently invested in aerospace projects, but that could change if an expanded mandate and investment scope is implemented.

Before any changes can occur, however, TPC and the government have to answer a number of allegations raised by the Canadian Taxpayers Federation (CTF) in its recently released report, Peeling Back the Onion: A Taxpayers Audit of Technology Partnerships Canada. The report zeroes in on TPC’s alleged lack of transparency and is highly critical of 26 projects which are funded but unannounced, as well as the fact that it hasn’t released an annual report since FY98-99.

Written by CTF federal director Walter Robinson, the CTF report poses 17 pointed questions for Industry minister Alan Rock before concluding that “TPC should be wound down and eliminated”. “The more prudent and responsible approach to stimulating investment in Canada remains one of further lowering personal, payroll, corporate and capital taxes,” states the report. A similar conclusion was reached in the four previous reports the CTF has released on federal business and regional assistance programs, including Western Economic Diversification, Atlantic Canada Opportunities Agency and Industry Canada financial assistance programs.

The 26 unannounced projects listed in the latest report represent $378 million or more than 20% of the $1.7 billion TPC has invested since its inception in 1996. Parker acknowledges that the data contained in the report are accurate, but he disagrees with the characterization of TPC as a mechanism for corporate welfare and political pork barrelling. He notes that if CTF had contacted TPC during its “audit”

“We’re disappointed that CTF continues to push and harp on the corporate welfare perspective although we do acknowledge that there were some areas that we had not been as transparent on as we should be,” says Parker. “Hopefully we can do a lot better in terms of transparency.”

Those improvements include clearing the backlog of announcements within the next two months — a backlog Parker says is due to a combination of factors including three Industry ministers in three years, availability of those ministers and September 11.

“It became cumulative … and then there was a backlog and not a capacity to be able to deal with that backlog,” he says. “It’s in our interest as an organization and it’s in our interests in terms of being able to inform the public. We’ve got success stories and we’d like to be able to identify what those success stories are.”

The coming weeks will also see TPC release two annual reports for FY99-00 and FY00-01, followed by the FY01-02 annual report in the fall. The delays in their release has compounded the problem with the project backlog, as annual reports are one way to announce new investments if an official event cannot be organized. Once again, Parker points to a series of factors that conspired to thwart their release.

“One is the fact that there was a federal election, so the timing got caught up in that. Then we got involved with a new minister (Brian Tobin), who was taking a look at a big portfolio and trying to judge what was key and critical for him to deal with,” says Parker, adding that the second delayed annual report isn’t officially late until March 31st. “It got buried in terms of communications and information priorities at the time, so unfortunately we couldn’t get the opportunity to get the report released.”

The CTF report is also critical of the amount of money repaid to TPC since it began operations six years ago. Between April/96 and December/01, more than $1.6 billion was invested, but the repayment to date is just $24.5 million or 2.58% of the total.

Parker says the figure is accurate and that it coincides “more or less” with the anticipated rate of return on investment.

“There’s a great deal of difficulty moving from forecasted to actual, because you’re delaying with initiatives and projects that have a long life to them,” he says. “I would say that our forecasting to this point in time is relatively current and relatively accurate. It’s where we thought we would be.”

One administrative reporting requirement that won’t be fulfilled is an interim evaluation of TPC’s operation for its first four years. Parker says the World Trade Organization’s ruling of 1999 prompted a major reorganization and refocusing of the program, complicating the ability to conduct an appropriate evaluation.

Adding to that was a 1999 Auditor General’s report and subsequent follow-up, covering much of the same territory as an interim evaluation.

“We have had the very comprehensive audit by the Auditor General, so basically we’re planning to start our evaluation in the fall of this year,” he says. The evaluation will cover the years from 1999 to 2003 and will be released in 2004.

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