Andrew Scheer is right. It's time to end corporate welfare in Canada
Last week, before any Canadian was debating dubious prime ministerial dress-ups, Conservative Leader Andrew Scheer came out with a pledge to eliminate $1.5 billion in federal corporate welfare spending.
It’s only scratching the surface: by some estimates total annual federal subsidies to business are in the range of $14 billion. But it’s also nothing to sneeze at: $1.5 billion represents the tax bills of 100,000 average-income Canadian households.
But even as a tentative first step, Scheer’s proposal represents a clear break from the comfortable status quo consensus about corporate welfare in Canada. For starters, it’s hard to think of a major party leader openly using the term “corporate welfare” in recent years — even though it has been around since 1972, when during that year’s federal election former NDP leader David Lewis went after “corporate welfare bums” living off taxpayer subsidies.
Over the past few decades, governments of all stripes, both federally and provincially, have been happy to play the same old game of handing big taxpayer-funded cheques to select businesses under the guise of “making investments” and “creating jobs.”
It’s not hard to see the political benefits. The benevolent politician handing over the money gets to hold a press conference. The grateful recipients gush their thanks. The local media frame it as an important boost to the local community. It’s a script so tried and true it has been played out literally thousands of times.
Unfortunately, aside from the politics, it’s foolish all the way down.
Bombardier alone has sucked more than $4 billion from the public teat since 1966. How many hospitals, schools or roads could we have built with that money? Mom-and-pop retailers see $12 million of their own tax dollars go to help a giant competitor like Loblaws buy new refrigerators. And when bailouts go bad — as the 2009 rescue of General Motors and Chrysler did — taxpayers are left holding the $3.7-billion bag.
The Harper Conservatives were no exception, dispensing corporate welfare with the best of them, including handouts to such companies as Pratt & Whitney and Toyota. They even created a new regional development agency, Fed Dev Ontario, to dispense largesse in one of the few remaining parts of the country without its own pork-barrelling apparatus.
When the Trudeau Liberals came to power in 2015, they were only too happy to continue the spending spree. Navdeep Bains, Justin Trudeau’s innovation minister, even took the act to new heights with such creations as the “Strategic Innovation Fund,” which has managed to dole out a cool $2 billion to create 10,800 jobs — a whopping $185,000 per job.
In fact, the taxpayer-funded bonanza has become so absurd during the Trudeau era that Ottawa has seen an unprecedented spike in lobbying as industries line up to petition ministers for a piece of the handout action. As one unnamed lobbyist recently observed, “it’s getting to the point where nobody wants to invest in anything until they can get a subsidy for it.” Well done, governments!
Scheer’s break from mainstream subsidy orthodoxy may well be more than a conversion of convenience. When running for party leader, Scheer made a similar pledge (as did his once-and-again rival, Maxime Bernier). Best of all, now that Scheer has come out against corporate welfare, the pressure will be on his rivals to do the same.
It would be an obvious move for the NDP to revive David Lewis’s opposition to corporate welfare. Jagmeet Singh wants big tax hikes on the wealthy, so he presumably could support ending the gravy train for the wealthy owners of Bombardier and Loblaws.
That leaves the Liberals, who are unlikely to relish being framed as water carriers for monied interests, particularly given the lasting damage wrought by the SNC-Lavalin saga. If Justin Trudeau is looking for an effective channel-changer, he may wish to consider targeting business subsidies for the rich.
For too long, political inertia has trapped us all in an endless cycle of corporate welfare. Scheer’s move — in a highly fluid election — has the potential to change that. Here’s hoping his opponents join him in waging war on corporate welfare so that no matter who wins this election we can finally get on a path to ending this wasteful and destructive practice.
Aaron Wudrick is federal director of the Canadian Taxpayers Federation.