Canada's Corporate Welfare Bums

[August1991]

English is such a wonderfully flexible language, isn't it? In confirming it would be lending $350 million to Bombardier to help research and develop its new C-series passenger jet, the federal government said the money would be in the form of "repayable loans."

If I went to my bank and asked for a "repayable loan," I expect the loan officer would say, "We don't actually do 'repayable' loans. We do loans. We give you some money then you pay us back. In full, with interest, on a schedule we agree to in advance."

...

What do Quebec and Canadian taxpayers get for their $467 million? Bombardier says "we" get 1,000 well-paying jobs through 2013 and the possibility of up to 3,500 afterwards, if it can sell 3,150 airplanes.

Well-paying jobs are great, especially for the people who have them. But 1,000 jobs are just 0.03 per cent of all the jobs in Quebec. Are these jobs really so key to the Quebec and national economies that taxpayers should pay up to $467,000 per job to keep them?

William Watson

Bombardier is not really in the aerospace business. It's in the subsidy business. Oh sure, it makes passenger aircraft, which it sells around the world. But its business is collecting subsidies. The aircraft are effectively loss leaders, sweeteners thrown in to keep the supply of government funds coming: with every subsidy you get a free airplane.

....

Besides, as the ever pragmatic industry minister, Jim Prentice, pointed out, the federal government also provides support to other industries, like the $250-million fund recently announced for the auto sector. So even as the subsidy to Bombardier is luring investment away from cars and into aircraft manufacturing, the subsidy to Ford and General Motors is luring it back from aerospace and into making cars. What could be more balanced? Everybody wins!

Andrew Coyne

Or how about the original spectrum handed out free to the telecoms or the territories granted to the cable monopolies? How about the sliding scale royalties in Alberta? How many oil companies survive because they get a free lunch?

All of this is costly to the Canadian economy and means that Canadians are poorer than we otherwise should be.

We have a wonderfully rich country, endowed with every natural resource imaginable and hard working people who generally respect the institutions of a civilized society - and then our politicians let us down by wasting these benefits.

[blueblood]

Alberta had to have sliding scale royalties in the 90's so oil companies would invest there in the first place. Look at what happened because of it, Alberta is one of the richest areas in the world and Canada is in good shape to survive the worldwide economic slowdown.

Lumping Alberta oil companies in with Bombardier is like comparing apples to oranges.

Edited July 22, 2008 by Charles Anthony
re-copied Opening Post deleted

[August1991]

Alberta had to have sliding scale royalties in the 90's so oil companies would invest there in the first place. Look at what happened because of it, Alberta is one of the richest areas in the world and Canada is in good shape to survive the worldwide economic slowdown.

Lumping Alberta oil companies in with Bombardier is like comparing apples to oranges.

Let me take this idea from another angle.

Do you think that Albertan politicians are honest? Sophisticated? Wise?

What are the chances that a smart owner of a small oil supply business in Calgary got the ear/ego of a minister in Edmonton "to do what was right for ordinary people"?

[eyeball]

Alberta had to have sliding scale royalties in the 90's so oil companies would invest there in the first place. Look at what happened because of it, Alberta is one of the richest areas in the world and Canada is in good shape to survive the worldwide economic slowdown.

Lumping Alberta oil companies in with Bombardier is like comparing apples to oranges.

Alberta needed more than just a sliding royalty scale, it also had to look the other way. Look at what's happening because of it. Alberta is or soon will be, one of the most environmentally damaged not to mention damaging areas in the country. Surviving a worldwide economic slowdown will look like peanuts compared to surviving without an ecosystem.

Yep, Alberta's getting a free ride, right now as we speak. Fat lot of good that does anyone else.

I suppose we could have a seperate thread for Environmental Welfare Bums but the reality is, this side of the equation weaves in and out of just about any that deal with the economy especially the corporate sectors.

Edited July 22, 2008 by eyeball

[Visionseeker]

I’m opposed to “corporate welfare”, but do accept (and to some degree expect) government involvement in facilitating R&D, refitting or expansion that carries with it a return on investment in the combined form of repayments and creation of sustainable employment. This doesn’t mean that the repayment portion needs to be 100% plus interest (because one presumes that a company capable of satisfying those terms could simply raise the needed capital on the open market). Rather, the loans might be interest free until the plant opens, the product reaches the market or (in the case of PPPs) other investors have received a certain return threshold.

Now some would say that these are all examples of corporate welfare, but I disagree. To me, corporate welfare is any state intervention that is growth neutral or negative. Basically, any “loan” that is solely motivated to keep a plant open and protect the jobs it contains is bad business and pork politics. In other words, the government can loan GM, Ford or others money to convert SUV manufacturing facilities into hybrid or other types of fuel efficient vehicles, but it cannot loan them money to keep the operation in the business of manufacturing SUVs.

[Smallc]

Alberta needed more than just a sliding royalty scale, it also had to look the other way. Look at what's happening because of it. Alberta is or soon will be, one of the most environmentally damaged not to mention damaging areas in the country. Surviving a worldwide economic slowdown will look like peanuts compared to surviving without an ecosystem.

You are mistaken in many ways. The oil that is present in Alberta's Oil Sands is very bad for the environment no matter what. There are many areas that are actually in much better shape after its taken out of the ground.

[blueblood]

Let me take this idea from another angle.

Do you think that Albertan politicians are honest? Sophisticated? Wise?

What are the chances that a smart owner of a small oil supply business in Calgary got the ear/ego of a minister in Edmonton "to do what was right for ordinary people"?

I'd say so, Ralph Klien blew up the hospital and said it was for the good of the province. Turns out he was right.

That smart owner knew what was making the economy tick and cashed in on it. Look at the ordinary person in Alberta compared to the ordinary person in Quebec and you tell me who is better off.

Your question is very vague.

[blueblood]

Alberta needed more than just a sliding royalty scale, it also had to look the other way. Look at what's happening because of it. Alberta is or soon will be, one of the most environmentally damaged not to mention damaging areas in the country. Surviving a worldwide economic slowdown will look like peanuts compared to surviving without an ecosystem.

Yep, Alberta's getting a free ride, right now as we speak. Fat lot of good that does anyone else.

I suppose we could have a seperate thread for Environmental Welfare Bums but the reality is, this side of the equation weaves in and out of just about any that deal with the economy especially the corporate sectors.

The air in Alberta is still much cleaner than the air in Southern Ontario. Canadians do not want to live a crappier life just for the sake of the environment. What you propose is called getting caught with our pants down. It happened with the crow rate, it would be smart not to repeat that mistake.

Alberta's free ride is keeping the TSX over 13,000 points whereas the NYSE is just over 11,000. Alberta's free ride is also whats bankrolling all those social programs you hold so dear.

[August1991]

I'd say so, Ralph Klien blew up the hospital and said it was for the good of the province. Turns out he was right.

Blew up? WTF?

Look at the ordinary person in Alberta compared to the ordinary person in Quebec and you tell me who is better off.

That sounds like the start of a joke.

An Albertan wins $5.2 million in the 6/47 lottery and he turns to the Quebecer who won $50,000 at craps in Las Vegas and says: You're lazy.

[blueblood]

Blew up? WTF?

That sounds like the start of a joke.

An Albertan wins $5.2 million in the 6/47 lottery and he turns to the Quebecer who won $50,000 at craps in Las Vegas and says: You're lazy.

The lefties like to harass Klien about demolishing a hospital in the early 90's when the economy was in the tank.

Your comparison is askew;

Here's a better one, an Albertan and Quebecer are destined to win the lottery, as you said the Albertan wins 5.2 mil and the Quebecer won 50 large. If they are both predetermined to win, why doesn't the quebecer go to where the winnings are going to be larger?

On a different note, Albertan politicians have maximized the use of Alberta's resources which are oil and agriculture, Alberta is doing very well and it's citizens are living very comfortable lives. Quebec politicians have squandered their resources which are Hydro electricity, shipping, iron ore, and manufacturing. How can a province that is 400 years old, with such a large head start, and large resources which are high in demand themselves be second fiddle to a province that is 100 years old and only a select few resources???

[Visionseeker]

Blew up? WTF?

That sounds like the start of a joke.

An Albertan wins $5.2 million in the 6/47 lottery and he turns to the Quebecer who won $50,000 at craps in Las Vegas and says: You're lazy.

LOL! Now that's funny.

And one needs only to look at housing prices in AB vrs almost everywhere else to see that comparatively, the "average" person is better off living anywhere but AB. When the price of oil collapses (and it will, trust me), a whole bunch of Albertans are gonna be pissed and this time they won't have the easy excuse of NEP to blame.

I don't begrudge Alberta's oil wealth, but it is wealth built on a single commodity. Any financial adviser worth his/her fee will tell you that diversification is paramount in sustaining a healthy portfolio.

[blueblood]

LOL! Now that's funny.

And one needs only to look at housing prices in AB vrs almost everywhere else to see that comparatively, the "average" person is better off living anywhere but AB. When the price of oil collapses (and it will, trust me), a whole bunch of Albertans are gonna be pissed and this time they won't have the easy excuse of NEP to blame.

I don't begrudge Alberta's oil wealth, but it is wealth built on a single commodity. Any financial adviser worth his/her fee will tell you that diversification is paramount in sustaining a healthy portfolio.

What they are competitive with SK, cheaper than BC, and cheaper than Toronto. Seems pretty good to me. Then there is the ridiculous pay they get. People are still flocking to Alberta.

Oil will hit the floor at 100 bucks in the wintertime, when the world economy fixes itself oil will rise again.

Alberta does diversify, they have a very profitable agriculture sector now. They also have around 60 yrs. of oil left. That is plenty of time to diversify.

[Alta4ever]

Alberta needed more than just a sliding royalty scale, it also had to look the other way. Look at what's happening because of it. Alberta is or soon will be, one of the most damaged not to mention damaging areas in the country. Surviving a worldwide economic slowdown will look like peanuts compared to surviving without an ecosystem.

Yep, Alberta's getting a free ride, right now as we speak. Fat lot of good that does anyone else.

I suppose we could have a seperate thread for Environmental Welfare Bums but the reality is, this side of the equation weaves in and out of just about any that deal with the economy especially the corporate sectors.

Environmentally Damaged? Have you been to Alberta? You have no idea what is happening here, just what you think you know from media snippits from journalists who don't reside here(and don't have a clue), to politicans who could care less about advancing the real truth instead of their agendas. Oh right to you a gas vital to life on this planet is considered pollution.

You have not a clue about this province you have no idea what enviornemntal damage is being done or where, all you know is the picture of stacks taken in the winter venting water vapour and being told its pollution. Maybe you should stop with the arrogance get off your high horse and come to Alberta for a couple of years to find out what is really happening here.

Alberta's getting no free ride, we are working hard and toiling, when we were almost cippled by the rest of Canada thorught the NEP, we got nothing in return, we had to tighten our belts, we had to work harder, we had to builkt our industries back up. We never would have profited from the boom had it not been for the work done to build the industry so we could extract the resources.The rest of Canada did not help us with wealth transfers like other provinces in confederation get. Even while we did all of this Ottawa still took from us to give to eastern provinces.

We have built up our industry, but yet we haven't problems with acid rain, or smog, or over harvesting of resources, such as other provinces in confederation. We have managed just fine, our province is good shape and despite having to carry the rest of Canada along. Even in a slumping manufacturing economy, and an American economic recession, Canada's economy has been able to roll along as strong as ever thanks to the economic engine Alberta has become in the last 6 years. We feed the world, heat homes and provide the oil/fuel so you can get to work. We have made sure not to do considerable damage to delicate eco systems unlike other provinces hydo dams which has destoryed habitat vital to certain species of fish. Provinces that have destoried great lakes through pollution, or polluted ground water with to high a concentration of livestock intesive farms.

I suggest you fix the problems in your back yard before you mess with mine.

[Alta4ever]

LOL! Now that's funny.

And one needs only to look at housing prices in AB vrs almost everywhere else to see that comparatively, the "average" person is better off living anywhere but AB. When the price of oil collapses (and it will, trust me), a whole bunch of Albertans are gonna be pissed and this time they won't have the easy excuse of NEP to blame.

I don't begrudge Alberta's oil wealth, but it is wealth built on a single commodity. Any financial adviser worth his/her fee will tell you that diversification is paramount in sustaining a healthy portfolio.

Alberta is still cheaper that Vancouver, and the major cities in the east.

[guyser]

Environmentally Damaged? Have you been to Alberta? You have no idea what is happening here, just what you think you know from media snippits from journalists who don't reside here(and don't have a clue), to politicans who could care less about advancing the real truth instead of their agendas. Oh right to you a gas vital to life on this planet is considered pollution.

So what you are saying is everything is ducky in the oil patch. The trees are green and no one is polluting. Ok

Must all be a media lie then.

Alberta's getting no free ride, we are working hard and toiling, when we were almost cippled by the rest of Canada thorught the NEP, we got nothing in return, we had to tighten our belts, we had to work harder, we had to builkt our industries back up..

NEP didnt cripple Alberta. It was in place less than 4 years. It certainly didnt help, but to gloss over world economic conditions only goes to show the myths Albertans like to keep saying.

World oil prices dropped significantly, the recession was felt everywhere in the world, the US and Britain were taxing as much as and more than what Alberta was being asked to do.

[AngusThermopyle]

So what you are saying is everything is ducky in the oil patch. The trees are green and no one is polluting. Ok

The patch is actually a very small area of Alberta, not as the media would sugest at all. When going only by what the media reports one gets the impression that the patch is about half of Alberta, it just aint so. And...yes...the media do lie quite often, either by omission or slanting the facts in a certain way. surely you aren't so naive as to believe the media are the pinnacle of honesty?

I just got back from a trip to golden B.C. yesterday, it was about a five hour drive. All the way I was thanking my lucky stars that I decided to leave Ontario and come to Alberta. Ontario is without a doubt a beautifull province but it still doesn't come close to comparing with the beauty of Alberta. As was pointed out previously, Ontario has far greater environmental problems than Alberta. I can still remember the stink in the air and the haze obscuring the horizon as I would drive down the 400 towards Toronto the god forsaken. Nothing like that here, just rolling prairies rising to meet the foothills and in turn the mountains.

My suggestion to posters who want to criticize Alberta is that they actually come here and experience it for themselves. I honestly believe they would leave with a different opinion from the one they arrived with.

[bk59]

Here's a better one, an Albertan and Quebecer are destined to win the lottery, as you said the Albertan wins 5.2 mil and the Quebecer won 50 large. If they are both predetermined to win, why doesn't the quebecer go to where the winnings are going to be larger?

That is gibberish. If they are both predetermined to win then nothing either one of them could do would change the outcome. If your point is that the person from Quebec should go to Alberta, that also makes no sense. Unless you want the entire Canadian population to move to Alberta.

On a different note, Albertan politicians have maximized the use of Alberta's resources which are oil and agriculture, Alberta is doing very well and it's citizens are living very comfortable lives. Quebec politicians have squandered their resources which are Hydro electricity, shipping, iron ore, and manufacturing. How can a province that is 400 years old, with such a large head start, and large resources which are high in demand themselves be second fiddle to a province that is 100 years old and only a select few resources???

Again, this makes no sense. First, manufacturing is not a resource. Neither is shipping.

Comparing the current demand for oil to the current demand for iron ore is a bit ridiculous.

Also, the "age" of a province/society/etc. has almost nothing to do with its economy. It's like saying all older people must be more wealthy than all younger people (unless they screwed up along the way). It obviously does not make a lot of sense. Life just isn't like that.

[Argus]

William Watson

Andrew Coyne

Or how about the original spectrum handed out free to the telecoms or the territories granted to the cable monopolies? How about the sliding scale royalties in Alberta? How many oil companies survive because they get a free lunch?

All of this is costly to the Canadian economy and means that Canadians are poorer than we otherwise should be.

I'm generally against corporate welfare, but I'd have to do the numbers to see if this makes sense. How much is going to be repaid? The cite saying this would cost something like $467,000 per job is obviously not accurate unless zero get repaid.

Whether this was a worthwhile "investment" depends on the numbers we don't have, including how many spinoff jobs depend on this. Maybe it's only 1000 or so at bombardier, but there could be thousands more in the companies which work with and supply them.