The bigger the business, the larger the hand(out)
The old saying is that it takes money to make money.
The suggestion, of course, is that you need capital in order to take advantage of the opportunities you see.
But I wonder if the saying shouldn’t be updated to “It takes money to get government money.”
Because, more and more, it seems like money from some level of government is a prerequisite for wealthy investors to take anything like risks.
It’s so prevalent that I think it’s now part of the ground-level discussion of any new venture: the talk is not just “Can this work?” but “What government assistance can we get?”
It would not surprise me if senior businesspeople actually spent their leisure time discussing which government programs offered the most money for the least effort.
Recent examples?
A wealthy businessman buys the Marystown shipyard in Newfoundland for $1 million, with the mayor of the town saying the yard was worth much more. The provincial government chips in $1.7 million to cover the environmental liabilities of the last owner. The shipyard is being converted to an aquaculture support centre. While the centre will require significant additional private investment, the government funding comes even though the project was already necessary for a giant aquaculture venture that the same provincial government is also supporting with millions more.
Businesspeople pitch the idea of a CFL franchise for Halifax; the idea is predicated on the construction of a $94-million stadium, with Halifax paying $2 million a year to finance the construction, and the province paying between $3 million and $4 million. The group organizing the team would pay $1 million a year.
A wealthy businessman with a love of professional hockey wants to keep the sport in St. John’s, but at a price to government. A wealthy businessman with a love of basketball wants a similar thing.
The city of St. John’s, already having to prop up its Mile One Centre – built at taxpayers’ expense – with $1.96 million a year, agrees to pump in another $229,000 a year over the next decade so that hockey and basketball teams will continue to play out of the building.
(Imagine telling your shareholders: “The good news is that we’ve managed to sign a contract with the same tenants we had last year to use our facility for the same number of nights. The bad news is that we’re going to lose even more money renting it than we did last year. The worse news is that we signed a deal to keep losing those large amounts of money for the next decade. How about a bonus?”)
A host of different businesspeople get into the legal cannabis business; it is arguably a great investment to make, if you have the capital. But even if you have the capital, there’s still government money to be had.
The business has a dedicated customer base and guaranteed sales through provincial Crown corporations, yet one company manages to wangle $40 million in tax breaks, just for agreeing to set up in St. John’s.
Look, I don’t blame businesspeople for taking money that’s offered up to them: as one prominent Newfoundland businessman once said to me, “If the government gives you a cookie, you take it.”
But often, it looks like the people who get the biggest plates of cookies are the people who need them the least – I suppose they’re used to the diet, and expect it now.
Why do the most successful of business people seem to get the most help?
Small and medium-sized businesses hire the largest number of people in the workforce – they are the backbone of the economy.
But municipalities aren’t stepping in to subsidize the rental of their premises.
Corner stores employ people, but governments don’t announce they’re paying a chunk of the cost of new coolers.
At the same time, governments will do exactly that for large and profitable grocery chains.
Yes, it takes money to get government money.
It’s funny, though, how often titans of industry are lauded for their acumen and initiative, and how rarely the regularly used stepping stone of government money seems to get mentioned in the encomiums published about them.