DIANE FRANCIS
`Rerun of stupid handouts'
Canadian governments have two aptitudes: raising taxes and giving away money.
Added to that problem are concerns that Prime Minister Justin Trudeau's Liberal government is going to launch a “Great Reset,” a term coined years ago by the Davos elite, aimed at somehow transforming Canada from Sweden-lite into a green-socialist utopia.
Our only saving grace may be that the Liberals have already spent the country poor: With an unsustainable deficit and some of the highest taxes in the world, the government has limited wiggle room financially.
Of far greater concern, to me, is that the Liberals will unleash more of the same — crony giveaways dressed up as “solutions” paid for by Canadian taxpayers.
The template already exists. The WE Charity scandal was a public relations campaign mounted by Trudeau's pals, who scored a sole-source contract worth hundreds of millions of dollars to dole out funds designed to address youth unemployment. That ended in a parliamentary investigation and a high-profile resignation.
But it was nothing new, merely a not-for-profit version of how the Liberals proposed to close Canada's “technology gap” and create a Silicon Valley north: The Liberals bankrolled a scheme, run by civil servants without technology or business expertise, and issued billions of dollars in grants — often without strings attached — to inappropriate and questionable people, mostly on the basis of slick slide decks sprinkled with buzz words like “tech ecosystem,” “accelerators,” “platforms,” “networks,” “clusters” and so on.
You get the picture. Years later, not a single world-class technology company has resulted from the program. This is hardly surprising. After all, the cash that the feds and Quebec have gifted Bombardier over the decades has failed to create a world-class airplane manufacturer. This is because grants and subsidies do not build economies and wealth. They only create dependency and mirage.
The granddaddy of this was the discredited Scientific and Tax Credit program, which was designed to create a pharmaceutical sector in Canada, but was abandoned in 1983 over allegations of fraud.
This is partially why Canada will have to beg to get vaccines from the United States and the United Kingdom, both of which have built world-class pharmaceutical companies.
Should the Liberals simply create new programs to hand large sums of money to people with slick PowerPoint presentations filled with faddish buzzwords, it will result in costly failure. Here's how it works: Just plug the buzzwords into your grant pitch, recruit a couple of well-connected Liberals to work government relations and watch the money roll in.
Think this is an exaggeration? Consider the profligacy of the Liberals' Industrial Research Assistance Program (IRAP). IRAP grants did not require recipients to have financial skin in the game and covered up to 80 per cent of staff costs and up to 50 per cent of contractor costs. They also didn't audit operations, but instead sent out questionnaires about job creation estimates, and did not prevent recipients from double- and triple-dipping into other government programs. IRAP made many recipients cash-flow positive before they had produced any real work.
We're already seeing this play out again. In October, Le Journal de Québec reported that the federal government signed a $237-million sole-source contract to make ventilators with a newly formed company.
This outfit, in turn, was going to farm out manufacturing to a company belonging to former Liberal MP Frank Baylis, a pal of the prime minister's. The newspaper claimed the government was going to seriously overpay for the ventilators.
The point of all this is that a “Great Reset” is not the problem. The “great rerun of stupid handouts” is.
The job of governments is to create a framework for wealth creation by lowering taxes and encouraging investors to get involved. This is not achieved by throwing cash at unproven businesses and well-connected individuals.