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When politicians gamble, taxpayers lose

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5 minute read

From the Canadian Taxpayers Federation

Author: Jay Goldberg

Trudeau and Ford bragged about how a $5 billion giveaway to Honda is going to generate 1,000 jobs. In case you’re thinking of doing the math, that’s $5 million per job.

Politicians are rolling the dice on the electric vehicle industry with your money.

If they bet wrong, and there’s a good chance they have, hardworking Canadians will be left holding the bag.

Prime Minister Justin Trudeau and Premier Doug Ford announced a $5-billion agreement with Honda, giving another Fortune 500 automaker a huge wad of taxpayer cash.

Then Trudeau released a video on social media bragging about “betting big” on the electric vehicle industry in Canada. The “betting” part of Trudeau’s statement tells you everything you need to know about why this is a big mistake.

Governments should never “bet” with taxpayer money. That’s the reality of corporate welfare: when governments give taxpayer money to corporations with few strings attached, everyday Canadians are left hoping and praying that politicians put the chips on the right numbers.

And these are huge bets.

When Trudeau and Ford announced this latest giveaway to Honda, the amount of taxpayer cash promised to the electric vehicle sector reached $57 billion. That’s more than the federal government plans to spend on health care this year.

Governments should never gamble with taxpayer money and there are at least three key reasons why this Honda deal is a mistake.

First, governments haven’t even proven themselves capable of tracking how many jobs are created through their corporate welfare schemes.

Trudeau and Ford bragged about how a $5 billion giveaway to Honda is going to generate 1,000 jobs. In case you’re thinking of doing the math, that’s $5 million per job.

Five million dollars per job is already outrageous. But some recent reporting from the Globe and Mail shows why corporate welfare in general is a terrible idea.

The feds don’t even have a proper mechanism for verifying if jobs are actually created after handing corporations buckets of taxpayer cash. So, while 1,000 jobs are promised through the Honda deal, the government isn’t capable of confirming whether those measly 1,000 jobs will materialize.

Second, betting on the electric vehicle industry comes with risk.

Trudeau and Ford gave the Ford Motor Company nearly $600 million to retool a plant in Oakville to build electric cars instead of gasoline powered ones back in 2020. But just weeks ago, Ford announced plans to delay the conversion for another three years, citing slumping electric vehicle sales.

Look into Ford’s quarterly reports and the danger of betting on electric vehicles becomes clear as day: Ford’s EV branch lost $1.3 billion in the first quarter of 2024. Reports also show Ford lost $130,000 on every electric vehicle sold.

The decline of electric vehicle demand isn’t limited to Ford. In the United States, electric vehicle sales fell by 7.3 per cent between the last quarter of 2023 and the first quarter of 2024.

Even Tesla’s sales were down 13 per cent in the first quarter of this year compared to the first quarter of 2023.

A Bloomberg headline from early April read “Tesla’s sales miss by the most ever in brutal blow for EVs.”

There’s certainly a risk in betting on electric vehicles right now.

Third, there’s the question of opportunity cost. Imagine what else our governments could be doing with $57 billion?

For about the same amount of money, the federal government could suspend the federal sales tax for an entire year. The feds could also use $57 billion to double health-care spending or build 57 new hospitals.

The solution for creating jobs isn’t to hand a select few companies buckets of cash just to lure them to Canada. Politicians should be focusing on creating the right environment for any company, large or small, to grow without a government handout.

To do that, Canada must be more competitive with lower business taxes, less red tape and more affordable energy. That’s a real recipe for success that doesn’t involve gambling with taxpayer cash.

It’s time for our politicians to kick their corporate welfare addiction. Until they do, Canadians will be left paying the price.

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Alberta

COWBOY UP! Pierre Poilievre Promises to Fight for Oil and Gas, a Stronger Military and the Interests of Western Canada

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Fr0m Energy Now

By Maureen McCall

As Calgarians take a break from the incessant news of tariff threat deadlines and global economic challenges to celebrate the annual Stampede, Conservative party leader Pierre Poilievre gave them even more to celebrate.

Poilievre returned to Calgary, his hometown, to outline his plan to amplify the legitimate demands of Western Canada and not only fight for oil and gas, but also fight for the interests of farmers, for low taxes, for decentralization, a stronger military and a smaller federal government.

Speaking at the annual Conservative party BBQ at Heritage Park in Calgary (a place Poilievre often visited on school trips growing up), he was reminded of the challenges his family experienced during the years when Trudeau senior was Prime Minister and the disastrous effect of his economic policies.

“I was born in ’79,” Poilievre said. “and only a few years later, Pierre Elliott Trudeau would attack our province with the National Energy Program. There are still a few that remember it. At the same time, he hammered the entire country with money printing deficits that gave us the worst inflation and interest rates in our history. Our family actually lost our home, and we had to scrimp and save and get help from extended family in order to get our little place in Shaughnessy, which my mother still lives in.”

This very personal story resonated with many in the crowd who are now experiencing an affordability crisis that leaves families struggling and young adults unable to afford their first house or condo. Poilievre said that the experience was a powerful motivator for his entry into politics. He wasted no time in proposing a solution – build alliances with other provinces with mutual interests, and he emphasized the importance of advocating for provincial needs.

“Let’s build an alliance with British Columbians who want to ship liquefied natural gas out of the Pacific Coast to Asia, and with Saskatchewanians, Newfoundlanders and Labradorians who want to develop their oil and gas and aren’t interested in having anyone in Ottawa cap how much they can produce. Let’s build alliances with Manitobans who want to ship oil in the port of Churchill… with Quebec and other provinces that want to decentralize our country and get Ottawa out of our business so that provinces and people can make their own decisions.”

Poilievre heavily criticized the federal government’s spending and policies of the last decade, including the increase in government costs, and he highlighted the negative impact of those policies on economic stability and warned of the dangers of high inflation and debt. He advocated strongly for a free-market economy, advocating for less government intervention, where businesses compete to impress customers rather than impress politicians. He also addressed the decade-long practice of blocking and then subsidizing certain industries. Poilievre referred to a famous quote from Ronald Reagan as the modus operandi of the current federal regime.

“The Government’s view of the economy could be summed up in a few short phrases. If anything moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

The practice of blocking and then subsidizing is merely a ploy to grab power, according to Poilievre, making industry far too reliant on government control.

“By blocking you from doing something and then making you ask the government to help you do it, it makes you reliant. It puts them at the center of all power, and that is their mission…a full government takeover of our economy. There’s a core difference between an economy controlled by the government and one controlled by the free market. Businesses have to clamour to please politicians and bureaucrats. In a free market (which we favour), businesses clamour to impress customers. The idea is to put people in charge of their economic lives by letting them have free exchange of work for wages, product for payment and investment for interest.”

Poilievre also said he plans to oppose any ban on gas-powered vehicles, saying, “You should be in the driver’s seat and have the freedom to decide.” This is in reference to the Trudeau-era plan to ban the sale of gas-powered cars by 2035, which the Carney government has said they have no intention to change, even though automakers are indicating that the targets cannot be met. He also intends to oppose the Industrial Carbon tax, Bill C-69 the Impact Assessment Act, Bill C-48 the Oil tanker ban, the proposed emissions cap which will cap energy production, as well as the single-use plastics ban and Bill C-11, also known as the Online Streaming Act and the proposed “Online Harms Act,” also known as Bill C-63. Poilievre closed with rallying thoughts that had a distinctive Western flavour.

“Fighting for these values is never easy. Change, as we’ve seen, is not easy. Nothing worth doing is easy… Making Alberta was hard. Making Canada, the country we love, was even harder. But we don’t back down, and we don’t run away. When things get hard, we dust ourselves off, we get back in the saddle, and we gallop forward to the fight.”

Cowboy up, Mr. Poilievre.

Maureen McCall is an energy professional who writes on issues affecting the energy industry.

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Business

Carney’s new agenda faces old Canadian problems

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From the Fraser Institute

By John Ibbitson

In his June speech announcing a major buildup of Canada’s military, Prime Minister Mark Carney repeated his belief that this country faces a “hinge moment” of the sort the allied countries confronted after the Second World War.

A better comparison might be with the beginning of the war itself.

Then, the Allies found themselves at war with an autocratic state bent on their defeat and possible destruction. Now, Carney faces an antagonistic American president bent on annexing Canada through economic warfare.

Then, Canada rose to the challenge, creating the world’s third-largest navy and landing an army at Normandy on D-Day. Now, Carney has announced the most aggressive reorienting of Canada’s economic, foreign and defence policies in generations.

Polls show strong support among Canadians for this new agenda. But the old Canada is still there. It will fight back. It may yet win.

The situation certainly would have been more encouraging had Carney not inherited Justin Trudeau’s legacy of severe economic and environmental restrictions—picking economic winners and losers rather than letting the market decide—and chronic deficits. The new prime minister would do well to dismantle as much of that legacy as he can.

Some advocate a return to the more laissez-faire approach of Stephen Harper’s government. But Harper didn’t confront a belligerent president hoping to annex Canada through the “economic force” of tariff walls.

The prime minister succeeded in getting Bill C-5, which is intended to weaken at least some of the restrictions on resource development and infrastructure, passed into law. He and the premiers pledge to finally dismantle generations of internal trade and labour mobility barriers. If we must trade less with the Americans, we can at least learn to trade with ourselves.

And the prime minister deserves high praise for reversing decades of military decline through increased spending and efforts to improve procurement. If Carney accomplishes nothing more than restoring Canada’s defences, especially in the Arctic, he will be well remembered.

That said, major challenges confront the Carney agenda.

There’s much talk about a new national energy corridor. But what does that mean? One KPMG executive defined it as a “dedicated, streamlined pathway for the energy, electricity, decarbonization, transportation and digital infrastructure.”

Yes, but what does that mean?

Whatever it means, some First Nations will oppose it tooth-and-nail. Not all of them, mind you. The First Nations Major Project Coalition is dedicated to assisting First Nations in working with government and the private sector for the benefit of all. But many First Nations people consider resource development further exploitation of their ancestral lands by a colonizing power. At the first major proposal to which they do not buy in, they will take the government to court.

What investor will be willing to commit to a project that could be blocked for years as First Nations and Ottawa fight it out all the way to the Supreme Court?

The prime minister, formerly a fervent advocate of combatting climate change, now talks about developing “conventional energy,” which means oil and gas pipelines. But environmental activists will fiercely oppose those pipelines.

There is so much that could go wrong. Sweep away those internal trade barriers? Some premiers will resist. Accelerate housing development? Some mayors will resist. Expand exports to Europe and Asia? Some businesses and entrepreneurs will say it’s not worth the risk.

As for the massive increase in defence spending, where will the money come from? What will be next year’s deficit? What will be the deficit’s impact on inflation, interest rates and sovereign creditworthiness? The obstacles are high enough to make anyone wonder how much, if any, of the government’s platform will be realized. But other factors are at work as well, factors that were also present in 1939.

To execute his mandate, Carney is surrounding himself with what, back in the Second World War, were called “dollar a year men”—executives who came to Ottawa from the private sector to mobilize the economy for wartime.

In Carney’s case he has brought in Marc-André Blanchard as chief of staff and Michael Sabia as clerk of the privy council. Both are highly experienced in government and the private sector. Both are taking very large pay cuts because, presumably, they understand the gravity of the times and believe in the prime minister’s plans.

Most important, Carney’s agenda has broad support from a public that fears for the country’s future and will have little patience toward any group seeking to block the prime minister’s agenda.

Millions of Canadians want this government’s reform efforts to succeed. Those who would put it at risk of failing will have to contend with public anger. That gives Carney a shot at making real change.

John Ibbitson

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