As Ottawa weighs Bombardier Inc bailout, questions about previous aerospace funding linger

Nearly 4 years after the auditor general found serious too little the way the federal government supports the aerospace sector, important questions remain unanswered as Ottawa weighs Bombardier’s request another US$1 billion in support.

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Bombardier has asked the us government to match the investment it has already caused by Quebec, arguing it requires the aid to enhance customer confidence and support the beleaguered CSeries jet program until it starts to generate positive cash flow in 2020.

The Liberals say they’re still evaluating the request, and keep that Bombardier will have to make a “strong business case” before it receives any assistance.

This is a refreshing stance, even though the government will undoubtedly support Bombardier in the end, said Peter Hadekel, author of Silent Partners: Taxpayers and the Bankrolling of Bombardier, an in-depth look at decades of government largesse.

“We haven’t heard that sort of language all that much previously,” said Hadekel, a columnist for that Montreal Gazette. “The business case has never really mattered much.”

This can be seen within the shortcomings discovered by Auditor General Michael Ferguson in his fall 2012 report. Based on Ferguson, the government didn’t adequately track the performance of their aerospace funding programs, including one dedicated specifically to supporting the CSeries. Even though several improvements have been made since 2012, the federal government still has not evaluated the potency of vast amounts of dollars in aerospace aid.

The Canadian aerospace industry continues to be receiving government assistance in a single form or any other since at least 1959, once the Cold War-era Defence Industry Productivity Program (DIPP) was created to encourage defence-related industries that may compete internationally.

DIPP was cancelled in 1995, even though it arguably succeeded in supporting Canada’s defence and aerospace companies, it had been failing when it found repayment.

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From 1985 onwards, DIPP beneficiaries received $2 billion in government funding, 55 per cent which was repayable. Of that, only $607 million or 30 percent of the total had been returned by mid-2012.

DIPP was replaced by Technology Partnerships Canada (TPC), which ran from 1996 to 2006. From the $3.1 billion disbursed under TPC, $767 million or 25 % have been repaid by mid-2012.

Although ten years has transpired since TPC was cancelled, the federal government still has not completed your final assessment of the program. As a result, its successor, the Strategic Defence and Aerospace Initiative (SADI), is passing up on information that could make it more effective, the auditor general said.

“We found that a final evaluation of TPC’s program effectiveness – including of the program’s longer-term technological, economic and societal outcomes – is not done,” despite the fact that Industry Canada said it would compete the evaluation by 2011, the report says.

“This means (Industry Canada) is not yet capable of integrate lessons learned from a final evaluation of TPC to potentially improve performance measurement for SADI.”

Industry Canada – renamed Innovation, Science and Economic Development Canada through the Liberals – is “progressing on and will be finalizing a lessons-learned report,” department spokeswoman St