If you want to know how Canada really works, take a close look at the hundreds of millions of dollars governments poured into Ontario’s automobile industry last week.
Premier Dalton McGuinty — a man smaller than his office — announced $435 million in government assistance for General Motors on March 2. About half of it comes from the feds, and half from the province.
The noble purpose — to keep jobs in Oshawa — is scarcely debated in Canada. So you could hear a pin drop when the federal government bestowed this gift upon Canada’s most powerful province.
No one shoved a microphone into Alberta Premier Ralph Klein’s face to ask if this constituted an unfair subsidy to another region of the nation. That only happens when Atlantic Canada gets a scrap or two.
And no Toronto columnist — as far as I know — suggested this assistance program (for one of the world’s biggest automakers) threw a lifeline to a sinking industry that was already going down for the third time. That kind of criticism is more often leveled when Ottawa props up the Atlantic fishing business.
Instead, The Globe and Mail greeted the GM announcement (in one headline) as “history-making.”
Would it were so.
In truth, the auto industries in Ontario, and the aerospace business in Quebec, have long been the most-favoured manufacturing sectors of the federal government.
Over the years, they have received billions of dollars in government financial incentives. Indeed, you only have to go back to the fall to uncover the last government gift to an Ontario carmaker. (Ottawa and Ontario teamed up to pour $200 million into a $1-billion expansion of Ford Motor’s operations in good old Oshawa.)
Commentators don’t see this as bad business for Canada, or good business for Canada. It was just business as usual — that’s why no one paid much mind when it happened again this week. And as far as I can tell, no bully from the Bay Street media corps even paused between sips of bottled water to try to figure out what it all means.
And what’s that?
It means that Canada continues to prop up the comparative advantage Ontario has enjoyed for more than a century in this nation. Subsidies to the auto business are — to a militant Maritimer — an extension of the tariff walls erected in the 19th Century to protect Ontario industries from U.S. competition. Never mind that these tariffs undermined, at the same time, the north-south trade patterns that had once been a foundation of a shaky prosperity in what is now Eastern Canada.
Now, I’m not so dumb about the way the world works that I want to scrap all subsidies to Ontario industries. As the boys of Bay Street say, you either offer incentives to the carmakers or lose the business.
And, sure, I know, that those autoworkers pay taxes that help keep Canada’s equalization system afloat.
I even buy Ontario’s argument that it has to fight like heck to keep GM, Ford and all the rest of them from sampling the sweet subsidy pies that have attracted so many new car plants to the southern U.S.
In fact, I’m only a trifle bitter that similar arguments were ignored when they were made on behalf of Canada’s largely defunct shipbuilding industry — which was not, by the way, located within a 90-minute drive of the CN Tower.
Here’s what does gall me: Premier McGuinty’s lunatic ravings about the fair — and that’s all it was, fair — deal Nova Scotia and Newfoundland finally concluded with Ottawa over offshore resource revenues.
Yes, Nova Scotia gets a sweet $800 million or so under that arrangement. But put beside that my favourite Toronto Star clipping from last June’s election campaign, trumpeting a $1 billion incentive package for the Ontario economy.
A one-day wonder designed to buy votes?
Sure, but at least the federal Liberals know where the voters are accustomed to being bought.
As I’ve pointed out in the past, Ontario is one of the spoiled rich kids of Confederation. To begin with, Canada’s first national economic policy established trade walls behind which Ontario grew wealthy. (Did I say that already?) And that was the gift that went on giving.
Even today, Canada’s biggest province receives more industrial incentives from Ottawa — on a per capita basis — than the Atlantic region.
So Premier McGuinty should show a little shame, and stop whining. After all, history has already handed his province the best deal in the best country in the world.