Ontario gets the shaft?

This week, the federal government announced a $350 million “repayable contribution” to Bombardier for its new line of regional jets. The CSeries jets are to be assembled in Montreal, with the government of Quebec chipping in with an additional $110 million. The project is expected to generate about 6000 new jobs.

This news has some people in Ontario crying foul. A local union head, representing workers at a Downsview plant who are missing out on the deal, lamented, “Here we go again, pouring money into Quebec.” He also blasted the federal government for allowing the subsystems to be developed in Northern Ireland (with a $420 million subsidy from the British government) instead of Ontario. A Toronto city councilor accused the government of trying to buy votes in Quebec. She expressed her disappointment with Ontario MPs that have remained silent on the issue. Finally, joining in the chorus was Premiere Dalton McGuinty, who accused Prime Minister Paul Martin of “sandbagging” Ontario.

So is Ontario getting the shaft? In a way, yes. Undoubtedly, there was some political motivation in locating the project in Montreal, especially considering the Liberal’s fading fortune in the province. Ontario most likely lost out on this deal because it was less expedient politically for the Liberals to locate the project here. The only conclusion that can be drawn is that, in the future, Ontario must lobby harder. How unfortunate.

Canada is purportedly a competitive market economy, and yet the Liberals continue to arm-wrestle with the invisible hand. If Ontario is losing out, it is only because of the counterproductive business environment created nationwide by the federal government’s corporate subsidy regime. Consider the dismal record of corporate subsidies to Bombardier. Of $736 million in federal “loans” to Bombardier made since 1982, less than five percent of the sum has been repaid. I’m not going to hold my breath for Bombardier to pay back this latest loan. I don’t think Paul Martin will either. If this latest CSeries Jet project was actually a wise investment, it could have easily been financed privately. Meanwhile, businesses around the country that are actually profitable are saddled with high taxes, restricting their growth prospects.

It is time for the government to stop meddling in the economy. They are not in a position to impartially decide where Canadian money should be invested and where it shouldn’t. The separation of church and state is already a well-enshrined value. The separation of enterprise and state should be also.