I hear this morning that Bombardier will most likely receive a government incentive package worth some $750 million to expand in the Montreal area (cash, tax breaks, etc.). What’s amazing about Bombardier is that it is starting to look a bit like the Cape Breton coal industry. Government incentives should be a one time investment to leverage significantly greater private sector investment.
A study a few years back found that Bombardier was by far the biggest recipient of government incentives of any company in Canada (somewhat ironic because they were accusing their main rival Embraer of unfair government incentives but that’s another story). If the government is paying hundreds of millions to Bombardier for very little net new economic benefits – I think they should rethink. As the Cape Breton example shows, subsidizing a bad business model only delays the inevitable closure of the firm. And spending hundreds of millions of taxpayer dollars to keep a company going for a few more years is definitely not good use of public funds.
Interesting to note that when you add up GM, Ford, Bell Helicopters and Bombardier, the federal government has put more money into these four firms than all of Atlantic Canadian firms combined – for the past year – for the past five years – maybe even the last ten.
Alberta keeps quiet because they don’t want to stir up any fury about the billions in subsidies to one of their largest industries – agriculture.
Atlantic Canada keeps quiet because they don’t want to stir up any fury about the billions in Equalization and EI.
Ebb and Flow. Ebb and Flow.