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The secret’s out — judge lists sweet-deal corporate loan terms

A federal judge ruled terms in one case were so generous …it amounted to an outright subsidy by taxpayers.

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Tax Court records are at odds with terms of confidential federal loans to corporations dubbed “contribution agreements,” Blacklock’s Reporter revealed.

A federal judge ruled terms in one case were so generous — about a third the cost of a commercial loan — it amounted to an outright subsidy by taxpayers.

“The court concludes the agreement does not constitute an ‘ordinary commercial agreement,’” wrote Justice Sylvain Ouimet.

Terms of repayment were so generous they were “significantly lower than the market rate of return for a comparable loan.”

CAE Inc. of Montréal, formerly Canadian Aviation Electronics, divulged terms of a $250 million “contribution agreement” it received from the Department of Industry in a dispute with tax auditors.

CAE received the unsecured loan in 2007 for work on flight simulators.

CAE was granted a five-year holiday from repayments, then required to repay the sum over 15 years with costs offset by federal tax credits for scientific research. CAE calculated the effective rate of interest was 2.75% a year. The Department of Industry put it at 2.5 %.

The court was told a similar quarter-billion loan on commercial terms “should have been higher than 7.15%” over 20 years.

“The contribution of the lender under the agreement had been obtained at an interest rate lower than the interest rate in force in the market,” wrote Ouimet.

One Department of Industry manager testified the loan was an “investment” by taxpayers.

“This is not decisive,” wrote Justice Ouimet. “A ‘contribution’ to research and development can take many different forms, just like an investment in a business.”

Ouimet described the loan as “government assistance” under the Income Tax Act.

The Department of Industry in pre-pandemic years budgeted $5.5 billion annually in corporate aid. Cabinet denied repeated requests to disclose terms of taxpayers’ loans.

“What we do provide to all Canadians on a regular basis is we publish the total amount of investment in companies on an aggregate basis,” John Knubley, then-deputy minister of industry, said in 2018 testimony at the Commons industry committee. “The issue here is there’s confidentiality with respect to individual firms.”

The Commons in 2018 rejected a private Conservative bill C-396 An Act To Amend The Department Of Industry Act that would have required quarterly reporting of all loans, grants and guarantees including terms of repayment.

“This is not corporate welfare or subsidies to big business,” Attorney General David Lametti said in debate on the bill. “This is smart investment in Canada’s businesses.”

Disclosure “could potentially be used by a competitor,” said Lametti. “There are matters of privacy and security.”

“My God, it’s the repayment of a loan,” replied then-MP Maxime Bernier (Beauce, Que.), sponsor of Bill C-396.

“I do not think that is part of a corporation’s trade secrets,” he said.

“I am very disappointed we do not want to give more transparency and let big corporations decide whether or not taxpayers should have information on loan repayments. It’s too bad.”

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Canada joins growing diplomatic boycott of Chinese 2022 Olympics

The countries say the move is to protest the human rights record of the Chinese government, especially when it comes to the minority Uyghur Muslim community.

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First, it was the US. Then Australia. Now Canada has joined the list of countries refusing to send diplomats or high-level officials to the Beijing Winter Olympics next year.

The countries say the move is to protest the human rights record of the Chinese government, especially when it comes to the minority Uyghur Muslim community.

Canadian athletes will still be allowed to compete.

“For months, we have been coordinating and discussing the issue with our allies,” Prime Minister Justin Trudeau told reporters Wednesday.

“As many partners around the world, we are extremely concerned by the repeated human rights violations by the Chinese government.

“This should not come as a surprise” to the Chinese regime, said Trudeau.

“(The athletes) need to have one thing in mind and that’s representing the country to the best of their ability and winning a gold medal for Canada,” he said.

Earlier this year, the House of Commons passed a motion calling the violence directed at religious minorities in China’s Xinjiang province as “genocide.” Trudeau and his cabinet were absent for the vote.

In a statement, the Canadian Olympic Committee (COC) said it “understands and respects” the decision and applauds the effort to “draw an important distinction between the participation of athletes and the participation of government officials.”

Canada’s last Olympic boycott was in Russia in 1980, protesting that country’s invasion of Afghanistan.

The US announced its decision on Monday.

“U.S. diplomatic or official representation would treat these games as business as usual in the face of the [People’s Republic of China]’s egregious human rights abuses and atrocities in Xinjiang, and we simply can’t do that,” White House Press Secretary Jen Psaki said during a briefing.

Chinese officials have already said the US will pay for its boycott.

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Opposition MPs ask government to ‘show them where the money is coming from’

“Say it’s $10 billion by July. There is no accountability for that.”

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The Liberal’s latest pandemic relief plans may actually be billions of dollars higher than estimated, says Blacklock’s Reporter.

The Department of Finance was in a “continued race to push money out the door,” said one MP.

Bill C-2 proposes benefits including lockdown subsidies for employers and workers estimated at $7.4 billion. The cost covers payments retroactively from October 24 to next May 7, though the bill allows cabinet to extend subsidies to July 2.

“The issue of course that we’re looking at here is accountability,” said Conservative MP Greg McLean (Calgary Centre) at the Commons Tuesday finance committee.

“If there’s an obvious extension, how do we hold the government accountable for that extension when it’s more money going out the door, more on top of the $7 billion you’re already planning to spend?

“Say it’s $10 billion by July. There is no accountability for that.”

Department of Finance managers said they did not know the cost to taxpayers if the program runs to July 2, 2022.

“I can’t answer that at this stage,” said Max Baylor, senior director with the department.

“It would presumably depend on the parameters.”

“I don’t know if it’s because things have been lax during COVID but this is something you need to get right for the country,” said McLean.

Bill C-2 was “just a blank chequebook,” he said.

“I know the government has had a blank chequebook for far too long,” McLean said.

Conservative MP Pierre Poilievre (Carleton, Ont.) questioned the bill’s impact on deficit projections.

“My question relates to the cost,” said Poilievre.

“How is the government paying the $7 billion associated with this proposal?”

No official answered, though 10 departmental witnesses appeared before the finance committee.”

“If they have anyone over there who is concerned about where the money comes from, that person could speak up,” said Poilievre:

  • MP Poilievre: “Clearly they’re getting the money from somewhere. Anyone here from Finance Canada?”
  • Director Baylor: “I can provide a high-level response but I’m afraid I won’t be able to answer directly…”
  • MP Poilievre: “Where is the money coming from?”
  • Director Baylor: “That is within the government’s broader macro-economic framework and I’m not responsible. I can’t speak to that.”
  • MP Poilievre: “You don’t have anyone? It’s just that we’re being asked to vote in favour of another $7 billion in spending. The obvious question is, where is it coming from?”
  • Director Baylor: “I appreciate the question, but I can’t answer that question.”

New Democrat MP Daniel Blaikie (Elmwood-Transcona, Man.) called the testimony “a waste of time” and complained the finance committee could not get straight answers to its questions.

“We’ve been here almost four hours and I haven’t gotten one thing I would classify as an answer to a question,” said Blaikie.

“I’ve asked for a breakdown of the budget. I don’t know if they really don’t have that answer or are on a mission of obfuscation.”

“You have to conclude that our civil servants who ought to be treating the legislature with respect aren’t being upfront about some of these questions, or you have to conclude the people who are running the country never bothered to ask them. Neither one is a very good outcome for Canadians.”

Finance Minister Chrystia Freeland called Bill C-2 the last emergency appropriation for pandemic relief spending. Freeland is to release a fiscal update on deficit figures next Tuesday.

Parliament last May 5 voted to increase the federal debt ceiling to a record $1.831 trillion. It represented a 57% increase from the previous $1,168,000,000,000 limit under the 2017 Borrowing Authority Act.

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Flights from Vancouver to Kamloops priced more than $1,200 over Christmas

BC flight prices have skyrocketed over the Christmas season following flood damage to highways.

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Following substantial flooding in November, which led to savaged highways and infrastructure, many of those planning to visit family out of town for Christmas are forced to fly — and some will be paying exorbitant prices for it.

For example, a WestJet round trip — listed on Expedia — from Vancouver to Kamloops, BC on December 22, with a return flight on December 27 is listed at $1,264 as of Wednesday morning.

The normally 30-minute flight includes a nearly four-hour layover in Calgary.

On TripAdvisor, the same round trip is priced similarly.

Those planning a round trip from Vancouver to Kelowna, BC on the same dates will save a few hundred bucks in comparison to those headed for Kamloops. For example, one round trip with WestJet from Vancouver to Kelowna — December 22-27 — is listed at $741 on Wednesday, although it includes a six-hour layover in Edmonton.

Normal flight times between the locales are 55 minutes.

Prices on WestJet’s website are comparable. On Air Canada’s site, all are currently sold out for the aforementioned dates and locations.

However, those travelling between Vancouver and Kelowna can find cheaper trips on Swoop if they fly out of Abbotsford, BC. On Wednesday morning, a non-stop round trip from Abbotsford to Kelowna, departing on December 22 and returning on December 29, is priced under $300.

Reid Small is a BC-based reporter for the Western Standard
rsmall@westernstandardonline.com
Twitter.com/reidsmall

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