The Minister of the Economy, Pierre Fitzgibbon yesterday launched a program of “forgivable” loans which will have the effect of boosting subsidies to businesses.
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Under the brand new Support for Transformative Investment Projects (SPRINT), businesses can obtain interest-free loans from Quebec, part of which will not have to be repaid if a predetermined job creation objective is reached (” sorry “).
“I hope that it will be an unlimited amount because with each pardon that we will give a posteriori, it will have created wealth for Quebec,” said Mr. Fitzgibbon yesterday to the Journal.
“It’s the best of both worlds because if we forgive, Quebec wins,” he added. And if the company is not able to meet its commitment, the money will come back to us at a higher interest rate than the cost of funds. “
Risks
The minister agreed, however, that companies unable to create the jobs promised risk being in a precarious situation and having difficulty repaying the government.
“We could make mistakes by lending to companies that have no sustainability,” he admitted.
Better protected taxpayers
Despite everything, a “forgivable” loan protects taxpayers better than a conventional subsidy, he says. He gives the example of Mattel, which has still not repaid its $ 18 million grant, a year after the closure of its Montreal plant.
That said, Pierre Fitzgibbon does not hide it: the “forgivable” portion of the loan is a subsidy.
“There are a lot of people who are surprised, but every government gives grants,” he said. Those who think that projects happen like that, because we are beautiful, fine and intelligent … This is not real life. “
For Nathan Jensen, a University of Texas at Austin professor who studies business assistance programs, the challenge for the state is to reject opportunistic demands.
“It’s particularly bad for taxpayers because you are subsidizing a project that would have seen the light of day anyway,” he notes.
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