Newspaper article The Canadian Press

Federal Government Gave Millions to Irving Subsidiary, Records Reveal

Newspaper article The Canadian Press

Federal Government Gave Millions to Irving Subsidiary, Records Reveal

Article excerpt

Ottawa gave millions to Irving subsidiary

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The federal government has quietly given a subsidiary of East Coast business giant J.D. Irving Ltd. more than $40 million in funding that an expert says could have trade implications for the New Brunswick firm.

Atlantic Wallboard LP received the so-called conditionally repayable contributions between 2006 and 2012 from the Atlantic Canada Opportunities Agency (ACOA) under a much-vaunted shipyard redevelopment fund.

However, records obtained by The Canadian Press through an access-to-information request show that the company, which makes gypsum wallboard products commonly called drywall, has not been required to repay at least $35 million.

In all, Atlantic Wallboard has repaid just over half a million dollars -- or 1.3 per cent of the total loans.

The funding represents a polarizing approach to economic development that critics dismiss as handouts for private companies, while proponents argue it spurs investments and creates jobs.

Both Irving and ACOA say the company has met all the financing conditions, exceeding its investment requirements and creating a sustainable, long-term business.

But an economics expert says the federal agency used "murky language" by calling the money conditionally repayable to describe what is effectively a subsidy.

Ian McAllister, who headed the regional development unit of the federal Finance Department in the early 1970s, questioned whether it was a manoeuvre to skirt trade rules.

"It's what I might call deliberate obscurity to try to not break the rules," said the retired Dalhousie University economics professor. "ACOA and the Irvings may not want clarity because it then puts them in a confrontational situation with the U.S. government."

McAllister added: "With NAFTA renegotiations at the moment, it's the last kind of thing they'd want to have out."

It's a suggestion that Irving spokeswoman Mary Keith dismissed, noting that imports of gypsum wallboard from Canada are estimated to account for less than one per cent of U.S. consumption.

The Saint John company, part of a conglomerate of forestry, shipbuilding and oil and gas companies founded in the late 1800s, is one of the newer branches of the Irving family enterprise.

The company produces several types of wallboard under license to CGC Inc., a subsidiary of USG Corp., distributed in Canada and the northeastern United States.

The roots of Atlantic Wallboard can be traced back to the early 2000s when Ottawa sought to reduce shipbuilding capacity in Atlantic Canada.

Overcapacity had been a recurring problem for Canada's shipyards, and between 1986 and 1993 the federal government provided nearly $200 million to spur an industry-led downsizing to curb capacity in Ontario, Quebec and British Columbia.

In 2003, the federal government ponied up cash for the East Coast, saying it would provide up to $55 million to help redevelop the Saint John shipyard site. …

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