Juno News - Should government spend billions on corporate handouts？

00:00:00.000 you're tuned in to the andrew lawton show

00:00:05.920 i want to move on to the idea of corporate welfare here and we talked a few weeks back

00:00:13.040 on this show about the slippery slope which you didn't even need to look that far down

00:00:17.020 the pipeline to see coming and the implications of the federal and provincial governments bending

00:00:22.940 over backwards to give billions and billions and billions in subsidies to volkswagen to build an

00:00:29.920 electric vehicle battery plant in st thomas ontario again i'm sticking with local news today but there's

00:00:35.220 a bigger picture aspect of it 13 billion was what we found out volkswagen was getting and now you look

00:00:41.860 just a couple hours down the 401 and stellantis an auto manufacturer building a plant in windsor ontario

00:00:49.020 has halted because it wants more money from the federal and provincial governments and now the

00:00:56.020 great story here uh philippe francois champagne the federal cabinet minister says ontario needs to

00:01:02.220 pay its fair share to the company to end the stalemate so all of a sudden it is companies

00:01:09.560 shaking down the government at all levels for money and this is just the way business is done

00:01:14.940 in canada aaron woodrick is the domestic policy director for the mcdonald laurie institute and

00:01:20.540 joins us now uh aaron it's always good to talk to you could we have seen this coming from a mile away

00:01:25.720 that now every company is just wanting more and more cash now that they've seen uh how much is

00:01:30.900 coming out of the government taps boy if only someone could have predicted this like you and me

00:01:36.060 and a lot of other people who said you know i i do have to confess though inder i didn't see the

00:01:40.420 chickens coming home to roost quite this quickly no i thought maybe like years not weeks yeah i mean it is

00:01:46.160 really something here and look put yourself in stalantis's shoes right i mean what they're doing

00:01:50.180 is perfectly logical perfectly rational they're saying they're saying hold on a second you just

00:01:54.680 gave vw 13 billion what are we doing here i mean we can clearly get more they're clearly prepared to

00:01:59.880 pay more so now they're they've they've stopped constructing their plant um and you know the thing

00:02:04.740 that really the real kicker here andrew is i'm absolutely certain that nobody in the ford

00:02:09.840 government or trudeau government when they were busy trying to you know get seduce vw with billions

00:02:14.820 of dollars none of them put any thought into what it would do to stalantis none of them put any thought

00:02:18.580 into what it would do to other companies watching and learning how to play the game so that's the

00:02:24.040 real uh tragedy here is this is a mess entirely of their own making now you've got ford telling the

00:02:29.720 feds to do it and you've got the feds telling ford government to do it and i'm saying guys before you

00:02:34.340 were you were climbing over each other for a chance to offer the subsidy now you're saying oh no no it's

00:02:39.560 not my problem i mean the irony is pretty rich here yeah and that's the problem i mean

00:02:44.660 they were just bragging about the 13 billion dollars when i would have seen that as a confession more

00:02:50.040 than a boast and and now you know they've decided volkswagen is the beneficiary everyone else should

00:02:55.020 just be satisfied with what they got but but again if you're a company like this and i mean basically

00:03:00.600 you're holding jobs over the government's head here i i get it from a business perspective it makes

00:03:05.940 sense because free money is better than no money and they know it's being dished out sure but that's

00:03:11.420 that's exactly why these things are dangerous precedents once you're a government that hangs

00:03:15.340 a sign in your window saying we will we will give free money away what do you think is going to

00:03:20.240 happen to every any company andrew that's thinking of coming to ontario um is going to stop at queen's

00:03:25.940 park first and say and hint and say hey we were thinking of building this plant here we might build

00:03:30.860 it somewhere else what have you got for me i mean this is the situation that they have created for

00:03:35.100 themselves and it's it's just not sustainable we're going to see how tough they are i mean

00:03:39.800 you'll recall on the day of the vw announcement andrew the prime minister uh very explicitly said

00:03:45.220 oh well you know other companies shouldn't expect this this is a one-off well it's only been a few

00:03:50.560 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

00:03:55.200 difficult to pull up a metaphorical crystal ball here and and see what's going to happen i mean if

00:04:00.180 you're stellantis and you've already invested in starting this plant and you already budgeted for it

00:04:05.800 it stands to reason that if the government were to call their bluff um i would assume they would

00:04:10.760 proceed rather than cut their losses but you never know and and i think the government may not want

00:04:16.380 this if the stellantis folks end up having better pr than the government does sure and you know you

00:04:21.900 might be right but uh we've seen in the past we've seen automakers that already have plants in ontario

00:04:27.440 that were up and running play this game and imply that you know what if we don't get more subsidies

00:04:32.380 we might have to leave so um it would be nice to see a government try and call their bluff on it for

00:04:37.200 once i mean of course a lot of governments are terrified that their bluff would be called and

00:04:41.140 they'd have to wear it but if you never call their bluff i mean for from a company standpoint what

00:04:45.560 have they got to lose by trying to do this all the time you had a great piece in the hub i think it

00:04:51.200 was i think it came out yesterday i read it this morning and when you talk about there being

00:04:54.440 smarter ways to strengthen canada than with corporate welfare but one of the angles that you

00:04:59.580 discussed here which i think is important is how certain jobs can be sentimentalized and i think

00:05:04.060 you know factory jobs are that because it really is to a lot of people this hallmark of a bygone era

00:05:09.560 where everyone in the town works at the same factory and around that factory there's a sense

00:05:13.740 of community and i i don't think that that sentimentalization for lack of a term is worth

00:05:18.900 the 13 billion dollars no and look there's nothing wrong with as i write in the piece of course you

00:05:24.500 should be focused on working class families and communities that have lost their employers but

00:05:29.220 what my argument is that you know corporate welfare is just creating the illusion of bringing back those

00:05:34.580 old times it's not real i mean these are not companies that have an attachment to the community

00:05:38.800 um they're only coming because they're getting a big subsidy it's a bit like saying i i've developed

00:05:43.360 this new friendship when really you just paid someone to be your friend i mean that's what's going on

00:05:48.200 here and i think i particularly for conservatives they need to be careful that they're not sort of

00:05:53.100 um uh you know they're not kidding themselves because this is this is not real these are not

00:05:57.440 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

00:06:05.140 that's uh most people would find that a bit bizarre is that's but that's exactly what's happening here

00:06:08.760 and so i think people need to remember um that there's a massive cost involved in something that

00:06:14.320 would otherwise just be celebrated as as a as a pure gain to the community yeah and i think there

00:06:19.660 are examples of that i mean chapman's the ice cream factory up in markdale is a really community

00:06:24.420 oriented factory i think the the savage arms uh plant which i toured a couple of years ago up in

00:06:29.300 in peterborough an american company but really ingrained in the community but but a lot of these

00:06:33.340 automotive uh manufacturers it's not to say that they don't have roots in the community in some

00:06:37.740 ways but i i don't believe for a second that if ew could uh do things for more cheaply in

00:06:43.680 soul that they wouldn't in a second just shut down overnight and move everything over there

00:06:48.060 because we've seen these big international conglomerates do that so they aren't really

00:06:52.300 invested unless the subsidies keep coming sure and the other thing when we romanticize the sort of

00:06:58.700 one company town we have to remember how those stories ended most of the time they ended very badly

00:07:03.460 precisely because companies were at the at the mercy of a single company i think if you want to build

00:07:08.120 communities that are resilient that are diversified you can't have one employer the goal shouldn't be one

00:07:13.020 big employer it should be a you know a range of employers so that you don't sort of have all your

00:07:17.740 eggs in one basket and so if anything i mean we're trying to recreate a situation that made a lot of

00:07:22.560 these communities vulnerable and and that's not something we should aspire to we should be aspiring

00:07:26.620 to situations where when one company goes out of business it's not devastating to the whole

00:07:30.680 community and you do that by having um a lot of smaller employers instead of just one big one

00:07:35.700 i know your focus aaron is on the policy over the politics of this but but i was wondering if you had

00:07:40.760 any advice on how politicians could actually criticize this when it becomes very difficult

00:07:47.080 when they have to basically say no to an immediate promise of you know 2500 jobs in a particular town

00:07:54.040 i mean in the case of the the saint thomas plant it's in a conservative riding and i know there was

00:07:58.560 a bit of an awkward encounter there with the local conservative mp karen vecchio when she was standing

00:08:03.040 beside trudeau taking pot shots at pierre pollie for not supporting corporate welfare sure i mean well

00:08:09.400 there's a few things and you can see that the the federal conservatives have done this by referring

00:08:13.060 it to the parliamentary budget officer i think that's their way of sort of signaling we're concerned

00:08:16.980 but they don't want to sort of give the strongly worded letter approach sure but but they don't

00:08:21.940 want to give the liberals the clip of them saying that they are against these jobs or things like

00:08:26.440 that right but you know i think one thing that uh that uh you know people who want to criticize

00:08:31.560 this can just be honest about is saying yeah i'm sure it's going to be good for the people who get

00:08:35.540 those jobs uh but let's be honest about the cost i mean this is not an ideal situation we shouldn't

00:08:40.780 have to to get jobs this way um and and there's a real cost i mean there are a million other

00:08:45.780 priorities there's so many other things canadians expect their tax dollars to go to um and the 13

00:08:50.580 billion is is is not exactly chunk change so um there's an opportunity cost here and you're right

00:08:56.160 and nobody wants to sort of be the the debbie downer and point out the bad stuff but uh somebody

00:09:01.580 needs to do it thankfully i'm not an elected official so i have no hesitation in calling it

00:09:05.780 out yeah and i mean when you look at the mat we looked at the math last time you and i spoke about

00:09:10.240 this on on how much it costs per job but even if you just look at the tax burden 13 billion dollars

00:09:14.920 divided by 40 million people that's 325 bucks a person i mean that that's not an insignificant

00:09:19.960 amount of money that if you were to add you know ask like mike and canmore you know joe and wherever

00:09:25.420 about they'd say yeah my family could use that sure and and this is for one plant in one community i

00:09:31.040 mean if this is your if this is your sort of industrial policy generally how many times can

00:09:35.880 you afford to do this and how many communities and how many sectors right is it really going to

00:09:39.680 be the one-off uh you know color me skeptical that this is going to be the last time they do this

00:09:44.240 aaron woodrick domestic policy guru over at the mcdonald laurie institute always good to talk to you

00:09:49.540 aaron thanks for coming on today thanks a lot thanks for listening to the andrew lawton show

00:09:54.120 support the program by donating to true north at www.tnc.news

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Juno News - May 22, 2023

Should government spend billions on corporate handouts？

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