That a government program is without public demand or is unsupported by sound economic reasoning doesn’t deter governments from torching taxpayers’ dollars. Business subsidies, also known as corporate welfare, are a prime example of government waste.
What’s really amazing is the ability of governments to spend money or enforce costly regulations to achieve contradictory outcomes. The government is so fat, it seems, and its arms so far apart, that the right hand doesn’t know what the left hand is doing.
While the right hand dispenses taxpayers’ money to achieve outcome X, the left hand is busy implementing other expensive programs in hopes of achieving the opposite of X.
For example, the Ontario government takes expensive spending and regulatory actions to reduce greenhouse gas emissions, but as the public accounts show, last fiscal year the Ministry of Economic Development gave away over $50 million in corporate welfare to the automobile industry.
Or think of all the government actions – health expenditures, burdensome red tape on restaurateurs, and so on – to fight obesity. Meanwhile, the government gave one of North America’s largest snacks companies – a producer of chocolate, candy and cookies – a $10.9-million taxpayer handout.
The accounts also show that millions of dollars more went to other producers of sugary foods and drinks, including candy companies, ice cream shops, bakeries and PepsiCo, which received $1.9 million from taxpayers.
So on the one hand, the Ministry of Health website informs that “childhood obesity is a serious health issue that is strongly linked to increased risks of hypertension, Type 2 diabetes, heart disease, gallbladder disease, stroke, and certain types of cancer, including breast and colon cancer.”
Meanwhile, the Ministry of Economic Development gave millions to subsidize the production of chocolate, candy, ice cream and Pepsi last year. Clearly the right hand does not know what the left hand is doing.
Or how about the Ontario government putting in place new spending to fight alcohol addiction but giving a $4.8-million taxpayer handout last year to the Wine Marketing Association of Ontario and handouts of over $100,000 each to several breweries and wine companies.
Indeed, there appears to be nothing the Ontario government won’t subsidize. Last year, the Ministry of Economic Development distributed hundreds of millions of dollars in corporate welfare, with subsidies for everything from video game and computer software companies, to gold and diamond mining companies.
Pharmaceutical companies, forestry companies, saw mills, windmills, oil and gas companies, and luxury resorts and spas were also given taxpayer handouts from the Ministry of Economic Development. So were manufacturers of plastic, concrete, steel products, equipment, auto parts, aircraft, pet products and so on.
This is nothing new – corporate welfare and other wasteful government spending have been afflicting taxpayers for decades, and everywhere in the country.
Recipients of corporate welfare aren’t to blame. Few people would turn down millions of dollars in government handouts if it was on offer. The fault lies with the politicians distributing these handouts – and the voters who let them get away with it.
Matthew Lau is a research associate with the Frontier Centre for Public Policy.
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