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Businesses shouldn’t get corporate welfare, especially when they don’t need it

October 05, 2018
Businesses shouldn’t get corporate welfare, especially when they don’t need it

When Canadian Taxpayers Federation raised concerns about taxpayers’ money going into the True North Square project two years ago, reporters asked True North what impact the government money would have on the project.


“Does that [taxpayers’ money] effect the economics of the tower? Not one bit,” said Jim Ludlow, president of True North Sports and Entertainment, as reported by the CBC in 2016.


It’s an intuitively obvious point. True North has put together financing worth more than half-a-billion dollars. Would a deal that big fall apart without a handout from government? Ludlow’s unequivocal answer is: no.


But that answer flies in the face of comments from self-congratulating politicians.


“Grants such as these keep the momentum of downtown revitalization going by stimulating private investment,” said Municipal Relations Minister Jeff Wharton.


That’s not true. The private investment was going ahead with or without the taxpayers’ money. This grant didn’t stimulate anything.


City officials are equally undeterred by reality.


“It will pay significant tax dividends for taxpayers,” said Mayor Brian Bowman.


How so? Will the return be greater due to the donation from taxpayers? If the project was strong enough to go ahead without the government money, wouldn’t the dividends be there without it?


And yet, despite that emphatic lack of necessity, the two levels of government are combining to pour $45 million into the project. In fact, over time, the government largess has grown. The current commitment is $20 million more than governments were promising two years ago when True North said it didn’t need the money “one bit.”


It’s frustrating that True North would be fine without the corporate welfare, but it’s even more frustrating that Wharton and Bowman don’t seem to think taxpayers could use that extra cash themselves.


If Winnipeg homeowners and business got to keep more of their tax dollars, what would they do with it? Maybe they’d invest in a luxury downtown real estate developments or maybe they’d build a new garage. In either case, carpenters and electricians are put to work, but Winnipeggers could choose what to do with their own money instead of having politicians choosing for them.


Unfortunately, new garages don’t make good photo ops and there’s the unfairness of corporate welfare. Those at the top who can hand politicians giant scissors at ribbon cuttings get multi-million-dollar deals from governments whether they need them or not. And ordinary Winnipeggers pay for their own garages while watching their taxes rise.


But, especially in the case of Bowman, the hypocrisy hits a much higher level.


Remember this quote?


“Growth has to pay for growth.”


The mayor has repeated that mantra for years to justify his so-called impact fees. Rather than expanding the economy, Bowman claims new homes create a strain on infrastructure. So he imposed a new-home tax of $500 per 100 square feet.


That’s a stark juxtaposition. True North is getting $45 million in taxpayers’ money it doesn’t need to support the growth created by its luxury development. But a family hiring carpenters and electricians to build a 1,000-square-foot new home gets welcomed to the neighbourhood with a $5,000 tax bill from Bowman.


Nor is there any reason to believe governments are good at making sound investments. Politicians promised taxpayers would be just fine when they provided more than a hundred-million dollars in loans to build the Blue Bombers a new place to play. They said there was no reason to worry because taxes generated by new development on the old stadium site would cover the payments. But the new development didn’t come and taxpayers are stuck with the nine-digit loan.


It’s time for politicians to recognize that taxpayers can’t afford to pay for corporate welfare to go to good businesses that don’t need it “one bit.”



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