Wednesday, June 26, 2013

On Corporate Welfare

David Lewis, the one-time head of the federal NDP and father of Stephen Lewis, used the phrase corporate welfare bums in his 1972 federal election campaign to describe the various subsidies handed out to the corporate world. It was a withering jab at the world of business, so proud to trumpet the merits of unfettered capitalism while not too proud to take every bit of free money that government has to offer it.

Today, that concept has never been more relevant. Probably the most egregious example of corporate welfare will become apparent in the coming months as the rest of Canada ponies up to pay for the environmental devastation wrought in Alberta that is, in my mind, the direct result of climate change, change which the corporate world continues to deny, evident in its ongoing concerted effort to oppose any measures that might ameliorate its most devastating effects. Corporate Canada will be asked for nothing by the Harper regime, which will continue to lower its tax rates as soon as the deficit is eliminated.

The futility of corporate welfare is, I think, very nicely addressed in the lead letter appearing in this morning's Star as Morgan Duchesney of Ottawa points out the folly of lowering corporate tax rates and getting nothing in return:

Re: The Great Recession still lingers, June 22

Stephen Poloz, the newly minted governor of the Bank of Canada, is working hard to distance himself from former governor Mark Carney’s “dead money” warnings to corporate Canada. Does that mean that Poloz also approves lowering tax rates for non-investing Canadian corporations that happily ship jobs to low-wage destinations like China?

As former CEO of Export Development Canada, Poloz is an expert proponent of corporate welfare. As corporate Canada continues to avoid research and development investment while stridently demanding lower taxes, the regime of public subsidy for private profit continues unabated under the Harper government’s well-advertised Economic Action Plan. Such behaviour exemplifies the eternal mythology of the so-called free market.

Private sector investment could reasonably be left to corporate Canada if our industrial titans were not so addicted to public subsidy. Ongoing multi-billion-dollar tax breaks and outright grants to the energy sector are good examples of this public-risk- for-private-profit model. In spite of the cost to working people, stiff corporate resistance to investment remains strong, although this hesitation is categorized as “thrift” by the generous Poloz. There is every indication that the Harper government plans to reward Canadian corporations with further tax cuts in spite of their continued reluctance to invest their profits in necessary research and development.

Of course, our political leadership has little desire to take a hard line on the business elite, who are, after all, their funding source and future employers. The tired excuse about not wanting to punish “job creators and innovators” is a bit threadbare in light of abysmal levels of corporate investment in Canada.
If Canadian corporations are operating overseas while shifting profits to low-tax jurisdictions, exactly who is benefiting and just how “Canadian” are these companies if they employ foreigners and only benefit arms-length stockholders?


  1. Duchesney decries an absurd policy, Lorne, which amounts Canadians getting nothing for something.

    1. That rather aptly describes our current overlords as the proverbial snake oil salesmen that they are, Owen.

  2. Speaking of corporate welfare, I think it's next month that Harper FinMin and garden gnome, Jimbo Flaherty, hosts his annual retreat for top Canadian CEOs. It's sort of like a very informal ALEC session at which they hand Jim their wish list and he goes back to see what he can deliver.

    Your mention of David Lewis brought back memories, Lorne. In 1974, the "Zap, You're Frozen" election that saw Trudeau trounce Robert Stanfield and Lewis lose his own seat, I covered the NDP campaign aboard BumAir II, a beat up old Convair 220 leased from Great Lakes Airways of Sarnia. Henry Champ was the self-annointed Social Activities Director which meant that he tended to dispense pre-flight cocktails all around. I got to spend a bit of time with Lewis on that campaign and it tore down some prejudices I held in my youth. He was a fine man married to a wonderful woman, Sophie. No wonder Stephen turned out so well.

    1. I'm sure that you have many interesting stories that you could tell of that time, Mound, a time when politics was far less scripted and politicians much more open and approachable compared to today, when people like Harper make the coldest of icebergs look warmly inviting.

      Speaking of ALEC, I was interested to learn that shareholders are pushing ocrporations to cut their ties with the outfit: