Ottawa is spending $1.7M for 10 new jobs at a pasta plant. Are these corporate subsidies worth it?
Ottawa is spending $1.7M for 10 new jobs at a pasta plant. Are these corporate subsidies worth it?
I'm always confused by these criticisms, do I misunderstand how they work?
Reading this article, this 1.7million is an interest free loan, so taxpayers are only covering the lost potential of that money being used elsewhere, unless something happens whichs exempts them paying back.
For the various EV related plants, the majority of the subsidies are tax rebates. Which means the company needs to setup and actively operating in Canada such that they are making enough revenue in Canada that their paying enough taxes to be able to untalize any rebate. As Canadian taxpayers the tax revenue were missing is purely net-new revenue that wouldn't exist if the company didn't setup here. It's not like we're writing a blank check, we're just saying that if they setup here and start making money, they can pay us less money for the first while.
Neither of those feel like obvious bad deals for Canadians. Am I missing something?
this 1.7million is an interest free loan, so taxpayers are only covering the lost potential of that money being used elsewhere, unless something happens whichs exempts them paying back.
If it's a 0% loan, then taxpayers lose the value of inflation - over the past few years that has been relatively high. And there's whatever administrative overhead is involved in selecting and administering the loan. And the cost of the photo op. Relative to the value of the loan, the overhead seems high.
The article makes the argument that this is where investors should step in. For an established factory, that seems reasonable.
IMO the EV plants are a different story, since the plant isn't established, and the PBO expects (some of them) to break even within 13 years.
The problem with these handouts is the end product isn’t a crown corporation
EV batteries? Sure you can give us your tech and we’ll make it for you
Pasta? Sure we’ll make it for you to resell
This isn’t the first time apparently, though it wasn’t a loan last time: https://investbrampton.ca/italpasta-limited-invests-in-pasta-packaging-and-production-equipment-in-brampton/
I wonder what happened to those 8 jobs.
I also wonder how hard they threatened to shut down their factory if they didn’t receive the money?
One economics professor tweeted he was "legit astonished" by the investment in Italpasta.
Fellow Millenials are now professors feel old yet
The headline buried the lede, which is the $5M spent per job created in the Honda EV factories. Tell me again how privatization is more efficient though?
Better than the 2.3M the government spent to finance the infrastructure required for the two jobs created by my girlfriend's employer... That will result in zero economic gains in the end because the whole project was managed like crap and it will probably be abandoned before achieving any results...
This is the best summary I could come up with:
When the federal government said earlier this week its investment of $1.7 million in a Brampton, Ont., pasta plant would create 10 jobs, some questioned whether that taxpayer money was being put to good use.
The $1.7 million subsidy for Italpasta Ltd., billed as the largest pasta manufacturer in Canada will help it "increase production to keep up with growing demand," according to Filomena Tassi, the minister responsible for the Federal Economic Development Agency for Southern Ontario.
Meanwhile, the benefits of such government corporate subsidies on a much larger scale were trumpeted by both Prime Minister Justin Trudeau and Ontario Premier Doug Ford last month.
"It is fairly irresponsible … to be using this money and defending this on a job creation argument," said Kent Fellows, assistant professor of economics at the School of Public Policy at the University of Calgary.
But Fellows says, under the free trade agreement, a lot of auto parts will pass back and forth across the border multiple times before they end up in a finished product.
"You could go out and ask a bunch of economists and you'd probably find hundreds of programs that would do a lot more for economic growth than giving a couple of tens of billions of dollars to the auto companies."
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