NB premier must put an end to wasteful subsidy grants

NB Taxpayers (NBT) is repeating its call for an end to corporate welfare in New Brunswick after word got out yesterday that the province is considering allocating millions of our hard-earned tax dollars to bail out a fledgling beef processing plant [Atlantic Beef Products Inc.] in Albany, P.E.I. Yes, that's right folks, Albany, P.E.I.

For those who require a bit of a backgrounder on the plant, ABPI [the only processing plant east of Montreal] opened its doors after receiving a slew of subsidy grants from both the PEI and the federal government back in 2004. To be specific, it received $2.4 million in traceability loans, another $920,000 forgiveable loan from ACOA and $1.5 million was invested into the plant from Agriculture and Agri-Food Canada.

Moreover, upon its completion, the plant was to create 65 full-time year round positions in PEI with an estimated total payroll cost of $2.5 million per year. Let's just say this initiative was definitely a win-win for a few scandal plagued Liberal politicians who were up for re-election on the island at the time.

Unfortunately, for taxpayers, both levels of government did not take into account the economic feasibility of this business project as the plant has been reported to be [at least] $10 million in the red, not to mention, it has put an additional $30 million of islanders tax-dollars at risk. All this in only three years of operation.

Recently, the financial situation became so bleak that newly elected PEI premier Robert Ghiz decided to put the plant on notice. (At the moment, it's about 25 days and counting before the P.E.I. government discontinues subsidizing the plant’s operating costs) From CBC New Brunswick:

The beef plant in Albany, P.E.I., is operating on a loan from the Island government that will run out in September. Atlantic Beef Products is losing $500,000 a month, and Premier Robert Ghiz has said he's not willing to put up any more money until other governments in the Maritimes contribute.

Even if more government money is forthcoming, eventually the plant needs to find a way to make money.

Huh? More government subsidies? For what? So that ABPI can continue to squander half a million monthly of our hard-earned tax dollars. I mean honestly, plant managers don't even seem to have a strong grasp of what the total cost or loss will be? Take a look at this excerpt from a full page add published in the Telegraph Journal on August 4th by the board of directors of Atlantic Beef Producers Co-op asking the premier of New Brunswick to contribute financially to ensure the plant’s survival (no link available):

It's not clear how much it will cost to make the Atlantic Beef Producers plant financially viable but we suspect it could be as much as $10 million over the next five years. It could be more. It could be less. New Brunswick's share would be about 35% of the eventual amount required.

So let me get this straight, under the current subsidy arrangement, ABPI wants New Brunswick taxpayers to foot up to 35 per cent of the total costs (which they don't seem to have a grasp on) of the processing plant in PEI – a plant which is located outside the province and has absolutely no New Brunswickers on the payroll. This is obsurd.

Who exactly is representing the interests of taxpayers in New Brunswick? It appears as though ABPI and their board of directors are trying to play the New Brunswick government like a fiddle, drawing them into this black hole subsidy mess that got started by the feds and the PEI government. It’s a race to the bottom where nobody wins, not even the beef producers.

When will corporate welfare recipients like ABPI learn? The reason they don't have a viable meat processing plant in PEI (and Atlantic Canada) is strictly to do with government policy. Their current tax system includes a regressive personal tax, provincial sales tax on business inputs and a high corporate income tax rate. What exactly do they expect will be the result? If subsidization were a successful jobs strategy, then there is no question PEI and the rest of Atlantic Canada would be outpacing the rest of the country in economic growth.

If the government really wants to expand the economy (and help the beef industry), then they should seriously take a look at the fundamentals of taxation and regulation and not throw hard-earned tax dollars at businesses, especially fledgling bottomless pit subsidy sinkholes.

Which is exactly why we are calling on premier Shawn Graham to reject the plea by Atlantic Beef Products Inc. as there isn't a strong enough case for NBers to fork over their hard-earned tax dollars via a corporate welfare loan to ensure the plants short-term survival. The bottom line is that this investment is nothing more than a waste of taxpayers money. Plain and simple. And we should not be on the hook for millions of dollars to a company that has demonstrated year after year that it is not economically viable.