House Call with Carol Hughes

Government handouts to rich corporations continue

What is it about profitable corporations that makes governments want to pave the way for them? Netflix doesn’t pay taxes in Canada? No problem, they were offered a sweetheart deal to produce a meager amount of content here which costs far less than their tax bill would have. Cities around North America fell over themselves offering tax breaks and other incentives when Amazon was searching for a location to build a new headquarters. In Canada, the city of Ottawa gave Amazon an $800,000 leg-up just to build a warehouse on the outskirts of town. The phenomenon repeats itself time and again showing the willingness of governments at every level to engage in corporate welfare.

With that in mind, it’s not too surprising to learn the government extended a $50 million freebie that helped MasterCard decide Vancouver is the best location to develop a new cyber-security centre. The government is quick to defend their actions, claiming the project fits into their Strategic Innovation Fund. Critics are reminded of the way a $12 million gift to Loblaws fit neatly inside the government’s climate plan despite that company’s clear ability to replace their inefficient freezers themselves. It also came on the heels of a lawsuit that showed Loblaws bilked Canadians on the price of bread for years.

The government also claims their investment is about job creation. They say MasterCard will create hundreds of jobs in BC and across the country because of it. These are vague arguments that are designed as talking points most of all. If those hundreds turn out to be an even 200 then these jobs will cost a quarter of a million dollars each! That’s a hugely expensive investment from the same government that can’t come up with a couple of million for passenger rail services to support a $50 million tourism economy in Algoma. The difference seems to be the scale of the ask and the stature of those asking. On the one hand, you have corporate lobbyists and insiders with no end of access to decision makers in Ottawa, while the latter is a First Nation working with tourism and advocacy groups.

The public is often asked to foot the bill for big projects. Think of how many cities end up building arenas for pro-sports teams. This continues despite studies that show those investments don’t create enough jobs to justify the use of resources which could be better used on projects that benefit more people. The civic pride argument is spurious since emotions don’t foot the bills for infrastructure and capacity building projects. On top of that, many arena investments are arrived at after what can only be described as blackmail on the part of team ownership. The city of Calgary has just gone through this with their hockey franchise.

When it comes to the federal government, the jobs argument can be turned on its head. Why do we need to invest in corporations that regularly turn billions in profits while our small and medium sized businesses are left to go it-alone, despite their earned reputations as true job creators? For its part, MasterCard turned $16 billion in profit last year alone. Loblaws is owned by the Weston family who are among the very wealthiest of all Canadians. These are not businesses that are struggling to turn a profit, yet they are receiving great sums of our hard-earned tax dollars.

The notion of socialism for the wealthy and rugged individualism for the poor (and pretty much everybody else) has been around since the early 1960s, but the practice has been picking up speed in Canada lately. MasterCard is just the latest example of companies that are given money to do what they were going to do anyway. There’s no doubt that company required investment in cyber security to safeguard their business. The genius is how they managed to get everyday Canadians to foot a big chunk of that bill.