Should government spend billions on corporate handouts？
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Summary
Andrew Lawton talks about the fallout from the government's 13 billion dollar corporate welfare giveaway to Volkswagen for a battery plant in St. Thomas, Ontario, Canada, and the company's decision to pull the plug on the project.
Transcript
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i want to move on to the idea of corporate welfare here and we talked a few weeks back
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on this show about the slippery slope which you didn't even need to look that far down
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the pipeline to see coming and the implications of the federal and provincial governments bending
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over backwards to give billions and billions and billions in subsidies to volkswagen to build an
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electric vehicle battery plant in st thomas ontario again i'm sticking with local news today but there's
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a bigger picture aspect of it 13 billion was what we found out volkswagen was getting and now you look
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just a couple hours down the 401 and stellantis an auto manufacturer building a plant in windsor ontario
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has halted because it wants more money from the federal and provincial governments and now the
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great story here uh philippe francois champagne the federal cabinet minister says ontario needs to
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pay its fair share to the company to end the stalemate so all of a sudden it is companies
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shaking down the government at all levels for money and this is just the way business is done
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in canada aaron woodrick is the domestic policy director for the mcdonald laurie institute and
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joins us now uh aaron it's always good to talk to you could we have seen this coming from a mile away
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that now every company is just wanting more and more cash now that they've seen uh how much is
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coming out of the government taps boy if only someone could have predicted this like you and me
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and a lot of other people who said you know i i do have to confess though inder i didn't see the
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chickens coming home to roost quite this quickly no i thought maybe like years not weeks yeah i mean it is
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really something here and look put yourself in stalantis's shoes right i mean what they're doing
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is perfectly logical perfectly rational they're saying they're saying hold on a second you just
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gave vw 13 billion what are we doing here i mean we can clearly get more they're clearly prepared to
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pay more so now they're they've they've stopped constructing their plant um and you know the thing
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that really the real kicker here andrew is i'm absolutely certain that nobody in the ford
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government or trudeau government when they were busy trying to you know get seduce vw with billions
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of dollars none of them put any thought into what it would do to stalantis none of them put any thought
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into what it would do to other companies watching and learning how to play the game so that's the
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real uh tragedy here is this is a mess entirely of their own making now you've got ford telling the
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feds to do it and you've got the feds telling ford government to do it and i'm saying guys before you
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were you were climbing over each other for a chance to offer the subsidy now you're saying oh no no it's
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not my problem i mean the irony is pretty rich here yeah and that's the problem i mean
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they were just bragging about the 13 billion dollars when i would have seen that as a confession more
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than a boast and and now you know they've decided volkswagen is the beneficiary everyone else should
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just be satisfied with what they got but but again if you're a company like this and i mean basically
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you're holding jobs over the government's head here i i get it from a business perspective it makes
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sense because free money is better than no money and they know it's being dished out sure but that's
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that's exactly why these things are dangerous precedents once you're a government that hangs
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a sign in your window saying we will we will give free money away what do you think is going to
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happen to every any company andrew that's thinking of coming to ontario um is going to stop at queen's
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park first and say and hint and say hey we were thinking of building this plant here we might build
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it somewhere else what have you got for me i mean this is the situation that they have created for
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themselves and it's it's just not sustainable we're going to see how tough they are i mean
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you'll recall on the day of the vw announcement andrew the prime minister uh very explicitly said
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oh well you know other companies shouldn't expect this this is a one-off well it's only been a few
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weeks and he's about to be tested if he's going to keep his word on that yeah and i i know it's
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difficult to pull up a metaphorical crystal ball here and and see what's going to happen i mean if
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you're stellantis and you've already invested in starting this plant and you already budgeted for it
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it stands to reason that if the government were to call their bluff um i would assume they would
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proceed rather than cut their losses but you never know and and i think the government may not want
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this if the stellantis folks end up having better pr than the government does sure and you know you
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might be right but uh we've seen in the past we've seen automakers that already have plants in ontario
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that were up and running play this game and imply that you know what if we don't get more subsidies
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we might have to leave so um it would be nice to see a government try and call their bluff on it for
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once i mean of course a lot of governments are terrified that their bluff would be called and
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they'd have to wear it but if you never call their bluff i mean for from a company standpoint what
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have they got to lose by trying to do this all the time you had a great piece in the hub i think it
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was i think it came out yesterday i read it this morning and when you talk about there being
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smarter ways to strengthen canada than with corporate welfare but one of the angles that you
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discussed here which i think is important is how certain jobs can be sentimentalized and i think
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you know factory jobs are that because it really is to a lot of people this hallmark of a bygone era
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where everyone in the town works at the same factory and around that factory there's a sense
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of community and i i don't think that that sentimentalization for lack of a term is worth
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the 13 billion dollars no and look there's nothing wrong with as i write in the piece of course you
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should be focused on working class families and communities that have lost their employers but
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what my argument is that you know corporate welfare is just creating the illusion of bringing back those
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old times it's not real i mean these are not companies that have an attachment to the community
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um they're only coming because they're getting a big subsidy it's a bit like saying i i've developed
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this new friendship when really you just paid someone to be your friend i mean that's what's going on
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here and i think i particularly for conservatives they need to be careful that they're not sort of
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um uh you know they're not kidding themselves because this is this is not real these are not
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real jobs i mean if you pay someone um to to to hire you um or is that is that is that a real job i mean
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that's uh most people would find that a bit bizarre is that's but that's exactly what's happening here
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and so i think people need to remember um that there's a massive cost involved in something that
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would otherwise just be celebrated as as a as a pure gain to the community yeah and i think there
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are examples of that i mean chapman's the ice cream factory up in markdale is a really community
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oriented factory i think the the savage arms uh plant which i toured a couple of years ago up in
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in peterborough an american company but really ingrained in the community but but a lot of these
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automotive uh manufacturers it's not to say that they don't have roots in the community in some
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ways but i i don't believe for a second that if ew could uh do things for more cheaply in
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soul that they wouldn't in a second just shut down overnight and move everything over there
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because we've seen these big international conglomerates do that so they aren't really
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invested unless the subsidies keep coming sure and the other thing when we romanticize the sort of
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one company town we have to remember how those stories ended most of the time they ended very badly
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precisely because companies were at the at the mercy of a single company i think if you want to build
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communities that are resilient that are diversified you can't have one employer the goal shouldn't be one
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big employer it should be a you know a range of employers so that you don't sort of have all your
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eggs in one basket and so if anything i mean we're trying to recreate a situation that made a lot of
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these communities vulnerable and and that's not something we should aspire to we should be aspiring
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to situations where when one company goes out of business it's not devastating to the whole
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community and you do that by having um a lot of smaller employers instead of just one big one
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i know your focus aaron is on the policy over the politics of this but but i was wondering if you had
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any advice on how politicians could actually criticize this when it becomes very difficult
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when they have to basically say no to an immediate promise of you know 2500 jobs in a particular town
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i mean in the case of the the saint thomas plant it's in a conservative riding and i know there was
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a bit of an awkward encounter there with the local conservative mp karen vecchio when she was standing
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beside trudeau taking pot shots at pierre pollie for not supporting corporate welfare sure i mean well
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there's a few things and you can see that the the federal conservatives have done this by referring
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it to the parliamentary budget officer i think that's their way of sort of signaling we're concerned
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but they don't want to sort of give the strongly worded letter approach sure but but they don't
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want to give the liberals the clip of them saying that they are against these jobs or things like
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that right but you know i think one thing that uh that uh you know people who want to criticize
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this can just be honest about is saying yeah i'm sure it's going to be good for the people who get
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those jobs uh but let's be honest about the cost i mean this is not an ideal situation we shouldn't
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have to to get jobs this way um and and there's a real cost i mean there are a million other
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priorities there's so many other things canadians expect their tax dollars to go to um and the 13
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billion is is is not exactly chunk change so um there's an opportunity cost here and you're right
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and nobody wants to sort of be the the debbie downer and point out the bad stuff but uh somebody
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needs to do it thankfully i'm not an elected official so i have no hesitation in calling it
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out yeah and i mean when you look at the mat we looked at the math last time you and i spoke about
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this on on how much it costs per job but even if you just look at the tax burden 13 billion dollars
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divided by 40 million people that's 325 bucks a person i mean that that's not an insignificant
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amount of money that if you were to add you know ask like mike and canmore you know joe and wherever
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about they'd say yeah my family could use that sure and and this is for one plant in one community i
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mean if this is your if this is your sort of industrial policy generally how many times can
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you afford to do this and how many communities and how many sectors right is it really going to
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be the one-off uh you know color me skeptical that this is going to be the last time they do this
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aaron woodrick domestic policy guru over at the mcdonald laurie institute always good to talk to you
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aaron thanks for coming on today thanks a lot thanks for listening to the andrew lawton show
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