Will gov­ern­ments ever learn their les­son on cor­po­rate wel­fare?


There’s an old say­ing about the def­i­ni­tion of in­san­ity: do­ing the same thing over and over while ex­pect­ing a dif­fer­ent re­sult.

Never has this been more true than gov­ern­ments in Canada when it comes wast­ing your money on cor­po­rate wel­fare.

This week, Gen­eral Mo­tors an­nounced out of the blue that it will be moth­balling its plant in Oshawa, Ont., and elim­i­nat­ing 2,800 jobs in one fell swoop. It’s a bit­ter pill to swal­low for thou­sands of GM work­ers and their fam­i­lies who had no clue what­so­ever that such dev­as­tat­ing news was com­ing. They’re fu­ri­ous and so are Cana­di­ans from coast to coast.

Af­ter all, this was the same com­pany which, to­gether with Chrysler, begged for a bailout in 2008 at a cost of more than $13 bil­lion taken from tax­pay­ers’ pock­ets. Then-in­dus­try minister Tony Cle­ment ar­gued such a mas­sive bailout was needed in or­der to “achieve a vi­able in­dus­try.”

And, like kids car­ry­ing away their trick-or-treat­ing loot and promis­ing not to eat it too fast, GM pock­eted the cash and solemnly com­mit­ted “to do what it takes to get the job done so we can pro­ceed with new in­vest­ments and new pro­duc­tion launches in Canada.”

Fast for­ward to to­day, and with all of the dust set­tled, Cana­dian tax­pay­ers lost $2.8 bil­lion on Gen­eral Mo­tors, even af­ter some of the loans were re­paid and shares sold.

It turns out the bil­lions that tax­pay­ers forked over to the cor­po­rate be­he­moth in the name of “sta­bil­ity” was re­ally just a dressed-up pro­tec­tion racket that ended with GM skip­ping town any­way.

Ah well, live and learn, right? Gov­ern­ments made a multi-bil­lion dol­lar blun­der by giv­ing GM a bailout only to see it shower its em­ploy­ees with pink slips a few years later. But, surely, no gov­ern­ment could be dumb enough to do some­thing like that again.

Just one day af­ter GM’s nasty bomb­shell, both the fed­eral and On­tario gov­ern­ments showed they haven’t learned a thing about the folly of tax­payer hand­outs to big busi­ness.

Maple Leaf Foods an­nounced a new $660 mil­lion chicken pro­cess­ing plant to be built in Lon­don.

At the same time, the com­pany an­nounced it would be closing three other plants else­where in On­tario which em­ploy even more peo­ple than the fu­ture Lon­don plant. The end re­sult: 300 fewer jobs.

Nor­mally, when a com­pany sheds 300 jobs, politi­cians are the first to protest. But in this case the On­tario and fed­eral gov­ern­ments ac­tu­ally re­warded the highly prof­itable com­pany, owned by one of Canada’s rich­est fam­i­lies, with a $62 mil­lion tax­payer hand­out.

Enough is enough.

When gov­ern­ments pick favourite com­pa­nies to get free hand­outs, they are pun­ish­ing the rest of us who are pay­ing the bill with ever-in­creas­ing taxes and ev­er­in­creas­ing deficits. And in a coun­try with a di­verse econ­omy such as Canada, giv­ing sub­si­dies to cer­tain in­dus­tries and com­pa­nies, but not oth­ers, in­evitably fu­els toxic re­gional re­sent­ments.

In­stead of lurch­ing from hand­out to hand­out, beg­ging and brib­ing com­pa­nies with sub­si­dies, our gov­ern­ments need to take a smarter and sus­tain­able ap­proach to job cre­ation.

They can start by do­ing away with hand­outs and use that money to cut tax rates across the board – so there’s no more play­ing favourites. And they can work harder to stream­line reg­u­la­tion so that busi­nesses don’t get bogged down in a tan­gle of red tape.

They should aim to cre­ate a busi­ness en­vi­ron­ment that’s so at­trac­tive that we’re not con­stantly held hostage by in­di­vid­ual com­pa­nies threat­en­ing to pick up and leave, be­cause they won’t want to – and be­cause we will ac­tu­ally have con­fi­dence that many other busi­nesses are in­ter­ested in set­ting up shop here too.

Cana­di­ans are be­com­ing in­creas­ingly fed up with see­ing their hard earned tax dol­lars fun­nelled into the pock­ets of well-con­nected cor­po­rate ex­ec­u­tives.

Our gov­ern­ments would be wise to put a stop to it pronto, or they may soon be feel­ing Cana­di­ans’ wrath at the bal­lot box.

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