In March, the governments of Canada and Ontario jointly announced what could turn out to be the largest corporate welfare handout in the country’s history. Experts say the governments collectively gave some $10 billion to Volkswagen to build its new electric car battery plant in St. Thomas. Photo credit: AP/Michael Sohn
Here’s a sad reality: Ontario Premier Doug Ford, hand-in-hand with Prime Minister Justin Trudeau, have fallen in love with taxpayer-funded corporate giveaways.
Ford has been crisscrossing the province acting like Oprah. Magna International: you get a handout! Fortune 500 automakers Ford and Stellantis: you get handouts! Volkswagen: you get a secretive handout that could be worth up to $10 billion! Most of these handouts have been made in tandem with Ottawa.
When you hear one individual announcement on the news, you might shrug. But after a while the billion-dollar handouts start adding up to real money.
The Fraser Institute released a study on corporate welfare spending in Canada from 2007 to 2019. It’s an eye popper.
The authors note that Canadian governments, including the federal government and all 13 provincial and territorial governments, collectively gave away $352.1 billion of taxpayer dollars over the course of the study.
And Ontario was near the front of the pack: $73.4 billion of the corporate welfare cash was handed out by the Ontario government.
If you take the $73.4 billion and average it out over the 13 years of the study, Ontario spent an average of $5.7 billion a year on corporate welfare.
What else could Ontarians have gotten for the money? We could have built five new hospitals each and every year for 13 years. That’s 65 hospitals Ontario missed out on because of sweetheart corporate giveaways.
Alternatively, the government could have lowered the provincial portion of the HST from eight per cent to 6.5 per cent for the entire 13-year span of the study.
Every policy decision has consequences. Every time a politician decides to waste taxpayer dollars, money gets taken away from other priorities.
To be fair, Ford wasn’t premier throughout most of the study period. But his recent giveaways to major Fortune 500 automakers sure shows that he isn’t departing from the trend established by his Liberal predecessors.
We’ve heard politicians say countless times that these giveaways are worth it. We’re often told that if Ontario taxpayers don’t shell out billions of dollars, some other jurisdiction will. The odd time that might happen. But by saving an average of $5.7 billion a year, we’d have more money to use to lower taxes, which in turn would generate more economic activity that could benefit more people in more places.
Last month, the feds and the province announced what could turn out to be the largest corporate welfare handout in Canadian history. Volkswagen announced it was set to build a new electric car battery plant in St. Thomas, Ontario. Experts say the governments collectively handed out up to $10 billion for the project.
Vic Fedeli, Ontario’s economic development minister, claimed that the deal proved “we are an attractive investment destination with everything companies need to grow.”
If that truly were the case, Volkswagen would have opened the plant in St. Thomas because it made good business sense, without requiring a massive taxpayer handout.
These corporate handouts need to end. Yes, we want Ontario to be an attractive place to invest. But if we need $10 billion to convince Volkswagen to build a plant in Ontario, the province isn’t an attractive place to invest. Think of all the businesses that aren’t getting handouts that are deciding not to move to Ontario.
The answer is to make Ontario an attractive place to companies across the board. A 20 per cent corporate tax cut would cost less than what we’ve been spending in corporate welfare handouts and would attract businesses of all shapes and sizes. Not only would big companies like Volkswagen be attracted to invest in Ontario, but so too would small businesses like neighbourhood hardware stores and family restaurants.
The bottom line is that it’s time for the Ford government to stop the cherry picking. Let’s make Ontario an attractive place to invest while reallocating corporate welfare money to taxpayers, not corporate elites.
Jay Goldberg is the Ontario Director at the Canadian Taxpayers Federation. He previously served as a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.