Seven firms have received money from ACOA for 20 consecutive years

The Canadian Press ~ The News
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HALIFAX - For 20 years in a row, six companies and a university-affiliated corporation have secured money from the Atlantic Canada Opportunities Agency, raising concerns from some policy analysts who say the flow of funds indicates a preference toward a select group of repeat users.

The seven firms have received a total of $41.1 million in two decades, according to a list obtained by The Canadian Press under access-to-information legislation.
They received $15.7 million in grants or contributions they didn't have to repay. Another $15.7 million was in the form of repayable loans that the agency says don't require security nor accrue interest.
In addition, $9.6 million was provisionally repayable, which means the firm only repays the money if certain milestones are met, such as achieving profitability.
"They know how to write the application so that it gets some kind of positive review," said Sunny Marche, a management professor at Dalhousie University.
"They know what the right language is ... and they've cracked the code around the relationship with ACOA."
Eighty-two other firms received cheques from ACOA for at least 10 of the last 20 years, for a total of $203 million.
Richard Gauthier, a spokesman for ACOA, said it's important to note that the agency looks at each application for funding on its own merits, and doesn't consider how often the client has used the agency.
"ACOA does not have a policy of refusing applications based solely on the number of projects already undertaken with a particular client," he said in an email.
"Furthermore, ACOA strives to help businesses through the various cycles of their existence, from pre-startup advice, to startup, expansion, modernization, export-readiness, research and development, and workforce training and expertise."
He said the agency's main goal is to provide assistance to Atlantic businesses with viable projects, and to help them leverage other funding from various sources, including venture capitalists.
But Mark Milke, a research director with the Frontier Centre for Public Policy in Winnipeg, said the figures show that such subsidies often go to repeat users, rather than startups.
"What the list shows is the folly that this is about seed money for businesses that wouldn't otherwise get it," said Milke, whose think-tank generally favours reduced government intervention in the economy.
"This is about a regular subsidy to particular businesses ... The folly of this is that it's not really about economic development, it's about job redistribution. It's about favouring one company at the expense of another business."
The companies that received the $41.1 million include Nova Scotia's Oxford Frozen Foods Ltd., which has received $12.4 million since 1989 - half of which came from no-interest loans.
John Bragg, the company's owner, defends the role of ACOA as a long-term supporter of his firm. He noted that in many instances the money is funding joint research with colleges and universities.
"Through the Atlantic Innovation Fund we've been very involved with research at the Agricultural College in Truro, and we sponsor research chairs in the blueberry business and in carrots," he said.
Bragg also said that without ACOA, it's uncertain that conventional bankers would have stepped in to finance rural projects.
Traditional bankers often won't finance manufacturing outside of urban areas, he said.
"Cash is not readily available for a frozen food plant in rural New Brunswick on the Acadian Peninsula," he said.
"Traditional bankers don't see this as the greatest security in the world.
"It's different from building an apartment building in downtown Halifax."
The other firms that received the money are:
- the Genesis Group Inc., the technology commercialization arm of Memorial University of Newfoundland, with $6.8 million
- Marwood Ltd., a wood products firm based in Fredericton, with $6.7 million
- Biovectra Inc., a manufacturer of pharmaceutical ingredients based in Charlottetown, with $6.7 million
- Oceans Ltd., of St. John's, N.L., a weather forecasting service, with $3 million
- Terra Nova Marine Company Ltd., a manufacturer of electrical panels and switchboards based in Mount Pearl, N.L., with $2.6 million
- Abco Industries Ltd., which received $2.1 million to assist in manufacturing engineered metal products in Lunenburg, N.S.
Marche argues that an alternative way to assist business is through a lower tax regime in the region.
But Bragg said that won't succeed in manufacturing sectors in rural areas, where taxes paid by firms are often low in any case due to the depreciation of their assets.
"Most small companies would rather have access to capital ... than they would a tax break," he said.
ACOA was established in 1987 to promote economic growth in Atlantic Canada.

Organizations: Atlantic Canada Opportunities Agency, Agricultural College, Canadian Press Dalhousie University Frontier Centre for Public Policy Oxford Frozen Foods Atlantic Innovation Fund Genesis Group Memorial University of Newfoundland Marwood Biovectra Terra Nova Marine Company Abco Industries

Geographic location: HALIFAX, Winnipeg, Nova Scotia Truro New Brunswick Fredericton Charlottetown St. John's Mount Pearl Lunenburg Atlantic Canada

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