Choosing winners and losers in the economy

Money should not be transferred from hard-working taxpayers to rich corporations.

(This column originally appeared in the Toronto Sun)

By: Candice Malcolm

Former Alberta premier, the late Ralph Klein, used to famously say that it was not his job to pick winners and losers in the economy.

Rather than give money to a few big corporations, hoping the money would eventually find its way to the pockets of the average Albertan, Ralph Klein instead chose to reduce government red tape and cut taxes for everyone. He figured that if you reduce taxes — Klein cut personal income taxes, cut corporate taxes, reduced small business tax rates, broke up government monopolies and cut red tape — the economy would grow and everyone would benefit.

It turns out, he was right. Because of Ralph Klein’s policies, Alberta became the wealthiest jurisdiction in North America.

It seems our leaders in Ontario have failed to take cues from King Ralph on this front.

Both Kathleen Wynne and Stephen Harper spent last week picking one winner and a bunch of losers in the economy. Our political leaders chose to give $101 million of our money (the losers) to the Guelph-based auto parts manufacturer, the Linamar Corp (the winner.)

That’s a lot of cash to give to a for-profit, multi-national company with 45 plants and nearly 20,000 employees. It gets even worse when you consider that almost 70 per cent of Linamar’s employees are outside Ontario, or that Linamar is worth close to $4.5 billion.

No, this is not a bailout. Thankfully, the era of auto bailouts has come to an end. But unfortunately for taxpayers, the era of corporate welfare is still going strong.

Rather than cutting taxes for everyone, the Alberta model, Ontario has instead chosen to increase taxes on Ontario families in order to transfer money to a few very wealthy multi-national corporations. Last year, the Wynne government hiked income taxes for 220,000 workers in Ontario. Business tax rates remain 15 per cent higher than Alberta, hydro rates have doubled in the past decade and continue to spike, and there are a plethora of new taxes on the horizon. Ontario can look forward to both a new payroll tax and a carbon tax; each will have crippling economic affects, particularly in the manufacturing sector.

Part of the agreement is that Linamar will use the taxpayer cash to create 1,200 new jobs. For anyone wondering, that works out to a little more than $84,000 per job. The Wynne government also claims that Linamar pledged to keep at least 6,870 jobs in Ontario.

Excuse taxpayers for our scepticism, but we’ve heard that line before. In Ontario, both Kellogg and Novartis received corporate handouts from Dalton McGuinty’s government, which did nothing to stop them from shutting down factories and firing more than 800 Ontario workers last year. 

In British Columbia, the government offered a sweet deal to Pixar Animation Studios in 2010 to move a production office to Vancouver. The BC government waived taxes for much of Pixar’s labour costs, but when that deal ended, Pixar split; shutting down its Vancouver office and laying off 100 workers.

Our political leaders in both Ottawa and Queen’s Park are failing us. Money should not be transferred from hard-working taxpayers to rich corporations. Handouts and subsidies are not an economic development strategy. And, as Ralph Klein demonstrated, nothing works better for the economy than letting people keep more of their own money.