corporate welfare

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Canada is a superb creation and initial credit for that must, obviously, go to Canada's fathers of Confederation. How we came about is a fascinating tale of seemingly intractable regional disputes resolved, at least for a time, by new institutions and a new country.


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Canadians who don’t regularly track how governments spend money might be surprised to find how myths crop up about government expenditures. Exhibit A is a new report that claims Canada needs even more “industrial policy,” academic lingo for subsidies to business, and this as if governments had not already long practised such policy, and at a considerable cost to taxpayers.


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Back in June 2009, the federal and Ontario governments decided to use massive amounts of taxpayer cash to rescue General Motors and Chrysler, two corporations deemed too big to fail. The cost to Canadians was US$13.7 billion: $10.8 billion to GM and $2.9 billion to Chrysler.

The taxpayer bailout was part of the court-supervised restructuring process for the two companies, egged on by the Obama administration. Behind the scenes, the White House made clear that any restructured versions of the companies might leave Canada if taxpayers in this country did not ante up.


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If business leaders ever wonder why a chunk of the public disdain business and call for higher corporate taxes or sector-specific increases (higher royalty rates for energy and mining, higher stumpage fees in forestry) or just increased business taxation in general, here’s a clue: too many companies are addicted to corporate welfare.

Crony capitalism is problematic all on its own. Addiction to it only reinforces the perception that businesses can’t be bothered to compete on merit, in an open market, but prefer to plead for political favours and protection at taxpayers’ expense.


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There is apparently no shortage of politicians with a not-so-secret Hollywood love affair: they love to throw tax sweeteners and direct subsidies at the film industry, this in an effort to lure film production to their province or state.

The latest starry-eyed politician is the British Columbia opposition leader, Adrian Dix. In his run-up to that province’s May election, the B.C. NDP leader has promised to up the film tax credit for labour costs to 40 per cent, up from 35 per cent.


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If there was a theme in the recent federal budget, it was how chock full it was with new corporate welfare. The underlying refrain was how big government will help big business with your tax dollars.

For example, early on in Budget 2013, it is clear that crony capitalism is scattered throughout the budget. On page six, Ottawa promises $1-billion to the aerospace sector over five years through the Strategic Aerospace and Defence Initiative; that’s the main government program for disbursing taxpayer cash to the aerospace sector.


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You might think the federal Conservatives, who added $125-billion to the federal debt since 2008 and will add another $21-billion by the end of March, might be shy about unnecessary expenditures. Alas, that’s not the case, as it appears Prime Minister Stephen Harper and his colleagues would rather hand out cash to corporate Canada instead.

In just the first two weeks of January, the prime minister announced another $250-million for the Automotive Innovation Fund—a federal subsidy program that provides the auto sector with taxpayer cash for research and development.


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Most people wait until December 25th for Christmas presents. Apparently, the exception is Canada’s aerospace sector, recently the recipient of an early-season gift from former federal cabinet minister David Emerson. Emerson chaired a federally-commissioned review of the aerospace sector. The resulting report ostensibly challenges “companies, academic and research institutions, unions and governments” to “understand and adapt to changing realities.”


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For those who might have missed what’s happening in the city where Wayne Gretzky first made his mark in professional hockey, another round of taxpayer subsidies might soon be delivered to for-profit professional hockey in Edmonton.

The background: In 2011, Edmonton Oilers’ owner Daryl Katz convinced city council to deliver up taxpayer cash for a new $450 million arena.

More recently, Katz demanded more tax dollars and then visited Seattle to drop hints that he may move the Oilers to that west coast city if Edmonton City Council doesn’t agree to his latest “request.”