Gov­ern­ment fund­ing should have strings at­tached

The Compass - - Editorial - Rus­sell Wanger­sky East­ern Pas­sages Rus­sell Wanger­sky is TC Me­dia’s At­lantic re­gional colum­nist. He can be reached at rus­sell.wanger­sky@tc.tc — Twit­ter: @ Wanger­sky.

You can, from the right side of the board­room ta­ble, make the ar­gu­ment that Bom­bardier ex­ec­u­tives wholly de­served their 50 per cent salary in­crease.

Af­ter all, un­der their able stew­ard­ship, they’d man­aged to wrest some­thing like a bil­lion dol­lars from two lev­els of gov­ern­ment for a com­pany in se­ri­ous fi­nan­cial trou­ble, while also han­dling 7,500 or so lay­offs world­wide.

In­stead of los­ing $5.34 bil­lion in 2015, why, they only lost $981 mil­lion in 2016.

Why shouldn’t the five top wage earn­ers in the com­pany split $32.6 mil­lion be­tween them­selves this year?

Well, per­haps be­cause it’s a move that out­raged new in­vestors. And those new in­vestors are the tax­pay­ers — more so in Que­bec than any­where else, but in the end, all of us.

The Bom­bardier ex­ec­u­tives have backed off on the pay in­crease for now, at least for a year or so, be­cause of the pub­lic out­cry. Peo­ple were rightly out­raged that a com­pany could ar­gue that it’s poor enough to need gov­ern­ment help, yet rich enough to pile new heaps of cash on the top brass.

It raises an in­ter­est­ing ques­tion about gov­ern­ments and com­pa­nies, and whether com­pa­nies can or should ex­pect gov­ern­ment fund­ing to be a one-way street.

Maybe it’s time part­ner­ships ac­tu­ally had to mean some­thing to both part­ners.

Gov­ern­ments love to call their spend­ing “in­vest­ments,” whether they are “in­vest­ing” in play­grounds or new fire equip­ment. Strangely, though, for all that “in­vest­ment,” gov­ern­ments of­ten come up short on re­turn — and maybe, we should be look­ing for some­thing in ex­change.

But the fact is, not ev­ery­body’s keen on the idea that, when the tax­payer has fi­nan­cial skin in the game, they also should get a voice at the board­room ta­ble.

Que­bec Pre­mier Philippe Couil­lard had this to say about the idea: “If the gov­ern­ment gives a sig­nal to the world that when you come to Que­bec with a com­pany, the gov­ern­ment will put its big paws in your busi­ness and run your com­pany for you, we won’t go far in Que­bec.”

But how about a dif­fer­ent in­ter­pre­ta­tion? How about, if you come to a prov­ince and fi­nance your op­er­a­tion, the gov­ern­ment won’t get in­volved — but if you go cap-in-hand look­ing for fed­eral or pro­vin­cial bailouts (mak­ing, in essence, the tax­payer into your part­ner) you might have to ex­pect some strings at­tached.

Think about it: if you bor­rowed a bil­lion dol­lars from an eq­uity firm, mak­ing them a sub­stan­tial owner in your firm, the first thing they’d want is a sig­nif­i­cant block of shares to vote, and, more likely, a seat or two on the board of di­rec­tors as well.

As a com­pany, you wouldn’t ar­gue that your new in­vestor was “putting its big paws in your busi­ness and (run­ning) your com­pany for you,” you’d sim­ply rec­og­nize that some­one mak­ing a ma­jor in­vest­ment would feel, le­git­i­mately, that they should have a voice at the ta­ble, es­pe­cially be­cause it’s set­ting the di­rec­tion for a sub­stan­tial chunk of its own money.

You can un­der­stand why big com­pa­nies would rather have tax­pay­ers’ money with no strings at­tached. Wouldn’t ev­ery­one? But that sys­tem is a fic­tion — it merely helps to en­rich those at the top of the busi­ness pyra­mid, while they bleat about the need for a free mar­ket we help to pay for. Se­ri­ously, how well does that sys­tem work for the peo­ple who ac­tu­ally cough up the in­vest­ment? Are pay in­equal­i­ties get­ting smaller? Is the one per cent feel­ing the same fis­cal pinch all the rest of us are?

Bom­bardier pres­i­dent Alain Belle­mare was to re­ceive $9.5 mil­lion this year, up from $6.4 mil­lion last year. But since I’m now a gov­ern­ment share­holder, I’d like to vote on whether he should get that raise.

You prob­a­bly guess where I stand. All in favour?

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