Federal government spends close to $200 million of SIF funds to promote Canadian steel and aluminium sector

The federal government in Canada has spent close to $200 million to subsidize steel and aluminium companies under a fund scheme designed to spur cutting-edge innovation. Ottawa has invested US$194.9 million into a number of steel and aluminium producers and manufacturers through the Strategic Innovation Fund (SIF), created by PM Justin Trudeau in 2017.

Ottawa has promised to spend about $2 billion in support to steel and aluminium sector — US$250 million of which will come from the SIF — as a way to compensate damages incurred by companies as a result of retaliatory tariffs against the U.S. in July 2018, which have been dropped now.

Many policy experts however, have criticised the development calling it a misuse of funds. They But have argued that sound innovation spending should not typically flow into specific sectors just as they face acute crisis.

“There is no strategy or any innovation in what the current government is doing with the fund,” said Dan Breznitz, professor at the Munk School of Global Affairs and Public Policy.They are saying Canada is failing to introduce innovation policy that will allow tech companies to thrive in an increasingly competitive global marketplace. However, Industry Minister Navdeep Bains has been established a US$1.26-billion Strategic Innovation Fund for this purpose, which was later increased to US$2.06 billion.

But policy experts say the fund, similar to past programs, has fallen into a familiar pattern of industry subsidization.

The federal government has defended its fund spending. Bains’ spokesperson Dani Keenan said Ottawa is “helping bolster the competitiveness of Canadian manufacturers” through the steel and aluminium subsidies. According to its website, the government has spent a total $1.7 billion under the fund.

The critics say the fund’s focus has drifted from highly innovative areas toward mere government subsidies. Government had earlier announced subsidies for Aluminerie Alouette, an aluminium producing company owned by major conglomerates including Marubeni in Japan mining giant Rio Tinto Group.