Ontario’s handout economy

The way the Ontario Liberal government sees it, the route to a successful economy is via an ongoing supply of government handouts.

According to recently released figures, Ontario has awarded more than $900 million in grants since 2013, mainly to profitable technology firms and big automakers. Internet technology giant Cisco Systems got $220 million, Fiat Chrysler and Honda Canada both got over $85 million, while the Ford Motor Company got over $70 million.

The grants are on top of other subsidies, worth billions more, that are sprinkled throughout the economy. In February, Auditor General Bonnie Lysyk calculated that the Liberals had handed $2.36 billion to 374 private business projects in the decade ending in May 2015, with $1.87 billion in grants and $489 million in loans. They kicked in another $118 million between the time the report was prepared and the day it was released.

Another report, by an expert panel examining the government’s support programs, calculated that all the province’s direct and indirect grants, tax credits and programs designed to grow certain sectors of the economy add up to about $5 billion a year.

The CBC reported in May that one of the biggest corporate recipients was an ethanol firm that received $160 million in taxpayer support, while donating $480,000 to the Liberal party. The firm got between $1.3 million and $31 million a year for 10 years starting in 2006. Another report indicated the Liberals had subsidized five buyers of Porsche 918 Spyders — a luxury sports car that sells for about $1.1 million — under a program meant to encourage sales of electric vehicles.

The Liberals are so keen on subsidies that one subsidy program can occasionally bump into another. Electricity costs for consumers have doubled in seven years, even as usage has declined substantially, thanks to generous support programs the Liberals have offered to producers of alternative energy. Ontario pays 11 cents a kilowatt hour for electricity, then exports the same power for two cents. The province doesn’t need the power — it already has more than it can use — but it continues to expand the program nonetheless.

To offset consumer anger, former premier Dalton McGuinty introduced a subsidy plan to reduce the impact on household bills. McGuinty’s plan ended last year, but Premier Kathleen Wynne recently reintroduced it. Her motive was the same as McGuinty’s: to curb voter anger at the Liberals’ gross mishandling of power needs. Meanwhile, her government will continue to build subsidized power projects it doesn’t need, producing high-cost power to be sold at a loss, while subsidizing consumers so they won’t feel the full burden of the whole crazy-quilt, selfdefeating program.

Wynne has recently conceded people are upset at the damage Liberal policies are doing, but gives no hint the government is likely to change its ways. Indeed, Economic Development Minister Brad Duguid makes clear that the Liberals remain as convinced as ever at their ability to pick winners and losers. In reaching a surprisingly generous contract deal with its workers recently, General Motors noted it would “be working with government on potential support and will provide further details on the investment at the appropriate time,” a strong hint that more public funding will be flowing its way soon. Duguid made little effort to hide that likelihood, telling the Financial Post:

“This government is the biggest champion of the auto sector that the province has probably ever had, and we’ve made it very clear that these are the kind of projects that we would partner on as we have in the past and we expect to in the future.”

It seems pointless to note that, as a rule, one government subsidy only leads to another, that propping up struggling businesses is not a formula for long-term growth and that jobs “created” by subsidies usually end as soon as the handouts do. Or that a province that’s up against a $300 billion wall of debt can’t afford to keep up the freebies forever. It’s pointless because Ontario’s is a tired government that’s out of ideas. It spends money it doesn’t have, because that’s what it knows how to do. It will continue to buy its way out of pain until voters end its access to their money.