After years of trying to make a go of it in the commercial-aviation market, Bombardier is calling it quits — and, for its sins, it’s selling its rail division to France-based Alstom. That’s a pretty dismal result for the Quebec-based company, and the sale of its rail division, in particular, will have major impacts on Bombardier workers in Kingston and Thunder Bay.
It’s important to note, however, that Bombardier’s fall comes despite enormous levels of support from the provincial governments of Ontario and Quebec, as well as from the feds. Some companies simply can’t be saved, although that hasn’t stopped governments of all stripes from trying.
Last night’s episode of TVO’s Political Blind Date sets up Cambridge mayor (and former MPP) Kathryn McGarry with current Flamborough–Glanbrook Tory MPP Donna Skelly. The two disagree over the answer to a fundamental question: Should government be engaged in “corporate welfare,” giving out grants to specific firms in hopes that they’ll create jobs, or instead focus on creating a climate that’s generally more conducive to business?
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The problem with trying to come up with an answer is that there’s no clear definition of corporate welfare. In the actual world of Ontario politics, “corporate welfare” seems only ever to mean “something the government is handing out when we’re in opposition.” After an election shakes up the makeup of the legislature, grants to businesses suddenly become “wise investments to help create or retain jobs.” Once upon a time, it was sufficient to entice businesses to hire people; in the 21st-century world of corporate hostage-taking, we’ll pay companies simply not to fire them.
You’ll be shocked to learn that the Tories have not, in fact, been able to resist the siren song of “wise investments”: they’ve been spreading cash around to businesses across the province. Heck, they’ll tell you all about it if you care to read their news releases.
In January, for example, the government pledged $14 million to encourage automakers to hire Ontario college graduates and apprentices. Seems like a totally worthy initiative to me — it’s an expansion of a program that’s already spent $5 million — but the conservative critique ought to be obvious: Why should we have to bribe Ontario automakers to hire well-educated Ontario workers?
This doesn’t even begin to deal with the regional economic-development agencies, which funnel millions of tax dollars to small businesses around the province. Also in January, the government sent nearly $3 million to northeastern towns through the Northern Ontario Heritage Fund. As someone who’s written quite a bit about the diverging economic fortunes of Ontario’s regions, I don’t fundamentally think this is a problem — and $3 million, in the context of the provincial budget, really isn’t much. On the other hand, the government was extremely proud of having saved $8 million by cancelling unused or under-used landline phones, so maybe it should take $3 million seriously, too?
Even if it’s possible to poke the Tories a bit for their inconsistencies, none of this stuff approaches the nightmare levels of corporate-welfare-gone-wrong that we’ve seen elsewhere. In Michigan, the state government offered Foxconn billions of dollars to locate a major factory there — and got very little in return. And, as we learned recently, Amazon’s much-heralded search for a second headquarters was as much about Jeff Bezos’s envy of Elon Musk as it was a sincere effort to locate a new office complex.
Such nightmares are rare, but they’re exactly why it’s important for the government to keep a lid on its largesse. Governments lose perspective on this stuff, but a billion dollars is what laypeople call “a ton of money.” And it will do a lot more good building community infrastructure or funding services than padding the accounts of a global corporation.