Canada’s 2006 corporate welfare bill: $1300 per taxpayer
The latest Fraser Institute report on corporate welfare in Canada arrives at a very appropriate time. The allegedly “Conservative” federal government is about to throw away $4 billion on propping up failing car companies and their unionised workers. Newfoundland and Labrador should also take note: Danny Williams has embarked on an arguably illegal and potentially very expensive expropriation programme, no doubt to be followed by heavy public subsidies to keep unprofitable operations afloat.
Here are snippets from the press release accompanying the report, Corporate Welfare: Now a $182 billion Addiction.
While politicians in Ottawa argue over how much additional money the government should give business in the name of economic stimulation, a new report from independent research organization the Fraser Institute shows that Canadians already provided more than $182 billion in corporate welfare to businesses between 1994 and 2006.
That works out to $13,639 per tax payer over that twelve-year period or $1,291 per tax payer in 2006 alone.
I know I can think of far better uses for my $1291 than subsiding wealthy car-company executives and auto workers in southern Ontario.
With much attention recently focussing on the auto industry, [report author Mark] Milke points out that since 2004 alone, the federal and Ontario governments together promised $752 million to the automotive industry, including $200 million for Ford, $200 million for GM, and $125 million for Toyota. And now the automotive industry is asking for additional billions in corporate welfare payments.
Among the key problems with corporate welfare, noted in the full report, is that it distorts economic activity by encouraging companies to divert resources toward lobbying politicians for taxpayer-funded handouts at the expense of making useful goods and services and other productive economic activities.
Corporate Welfare: Now a $182 billion Addiction can be downloaded here (pdf).
I’m not keen on the auto bailout, but I think Danny Williams is on the right track. The company was given access to the land to run a lumber mill – they closed the mill, they don’t have access to the land anymore. Newfoundland has been jerked around for years and years with regards to her natural resources – it’s about time somebody had the guts to fight back.
If Danny Williams’ precipitate action is a response to being “jerked around”, it could turn out to be a very expensive self-indulgence. AbitibiBowater appears to have a credible claim to substantial monetary damages. That, combined with the anti-business signal this sends to other large companies, could put NL in an economic hole it would take decades to recover from. It’s ironic that could happen so soon after high oil prices made NL (temporarily) a “have” province.
To avoid being jerked around, negotiate better contracts with natural resource companies.
Well, considering that the current contract was negotiated in 1923… Seriously though, the news reports I heard said that AbitibiBowater didn’t in fact own the land – they were granted access to crown land in exchange for operating mills in NF. No mills, no access. Seems pretty fair to me.