The Conservatives are tone deaf in this province. Either they have no idea what resonates with Quebecers or they just don’t care if their policies wind up offending people here.
The decision to abolish the federal gun registry was one example, the regime to treat young offenders was another. Both moves ran counter to public opinion in this province.
And the government has stumbled again in its new budget, announcing measures that have been widely panned in Quebec.
The federal decision to change the way job training is delivered steps all over existing provincial programs and was announced without prior consultation with the province or the private sector.
Worse was the move to phase out the 15-per-cent federal tax credit to labour-sponsored venture capital funds such as the Fonds de solidarité FTQ and Fondaction CSN. The tax credit will be eliminated by 2017.
The measure smacks of total improvisation. It’s already stirred up a hornet’s nest of opposition on Facebook and Twitter, where the Fonds de solidarité is urging its 600,000 depositors to make their voices heard.
Quebecers have poured $8.8 billion into the Fonds since its inception 30 years ago and another $1 billion into Fondaction.
Both labour funds have become key players in Quebec’s economy, helping to support existing businesses and finance new ones. That fact seems to have escaped the Conservatives, who clearly didn’t do their homework.
Astonishingly, the government is promising consultations after the fact. “We’re going to talk and take a really good look at the impact,” Conservative cabinet minister Christian Paradis said this week.
The Tories argue there’s no rational case for subsidizing one kind of venture-capital fund over another. There’s plenty of such investment capital in Canada and no need to favour one subset of funds, they say.
They’re right from a purely ideological perspective.
The problem is that the Fonds de solidarité and Fondaction work well as currently structured. They invest money in companies that can’t get financing elsewhere, that might have to shut their doors or that are out of favour with investors.
They help protect jobs at no real cost to taxpayers because the government gets its money back in three years through the income tax system, according to an analysis by the consulting firm SECOR Inc.
They are structured this way precisely because of the taxpayer support they receive. The 15-per-cent tax credit helps entice investors to a fund that is legally required, under its act of incorporation, to hold 60 per cent of its assets in unsecured venture capital.
Eliminate the tax credit and you’ll not only choke off an incentive for Quebecers to save money, you’ll also alter the fund’s entire investment approach.
“There has to be a balance,” says Gaétan Morin, vice-president of investment at the Fonds de solidarité. “You can’t expect the fund to fulfill its mandate without complementary support from taxpayers.”
And don’t compare the Fonds with other venture capital funds that get no tax credits. Those funds are bankrolled by cash-rich institutional investors, not by working men and women who plunk down their hard-earned dollars every year.
The decision will reduce the amount of unsecured venture capital offered to small and medium-size enterprises in Quebec, Morin said.
Sixty-seven per cent of the Fonds’ assets are invested in that category and 80 per cent of its partner companies are SMEs with fewer than 100 employees.
The Fonds invests an average of $750 million in Quebec companies every year.
Anyone with the slightest understanding about Quebec would know the Fonds de solidarité has become a huge part of the provincial eco-system. If it ain’t broke, why fix it?
“We go where other institutional investors don’t,” he said. “Look at the forest industry, it went through an economic desert over the past six or seven years but we continued to support it.
“In 2008-09, when credit was completely frozen during the financial crisis, we increased our investment to Quebec companies.
“We intervened in 2009 to help Bombardier, when they couldn’t renew one of their credit facilities. We put $100 million in.”
The storm is gathering in Quebec and there will be no shelter for the Conservatives.
Original Article
Source: canada.com
Author: Peter Hadekel
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