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Volkswagen will get up to $13 billion in corporate welfare in exchange for a $7-billion electric car battery plant

By Franco Terrazzano
and Jay Goldberg

More than $4 million per job. That’s how much Prime Minister Justin Trudeau has committed taxpayers to spending in his sweetheart deal with a German auto giant.

Flanked by Ontario Premier Doug Ford, Trudeau announced in St. Thomas, Ont. that taxpayers are set to give Volkswagen up to $13 billion in exchange for a $7-billion electric car battery plant.

The plant is costing taxpayers $13 billion and is set to employ 3,000 workers. Divide the total cost by the number of workers and you get $4.3 million per job.

Franco Terrazzano

Franco Terrazzano

Jay Goldberg

Jay Goldberg

Poverty Volkswagen corporate welfare
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Not to be left out, Ford also committed Ontario taxpayers to chipping in half a billion.

Step back for a moment and think about the larger implications of this agreement. What does it say about the competitiveness of the Canadian economy that the government felt it had to put this much money on the table just to attract a plant and 3,000 jobs?

Federal Industry Minister Francois-Philippe Champagne can talk about “seizing generational opportunities.” But there’s no downplaying the fact it took $13 billion to get Volkswagen to come here.

And what happens if Toyota is looking to build a new plant and wants its own multi-billion-dollar handout? What about Honda? Ferrari?

It’s quite possible that the government set a dangerous precedent that will result in every automaker demanding billions of dollars from taxpayers before agreeing to come to Canada.

Think of what else could have been done with $13 billion.

Canada could have built more than a dozen new hospitals, or hired 16,000 new nurses for a decade or paid off the entire debt of Prince Edward Island five times over.

Keep in mind that Volkswagen’s profits were over $33 billion last year. That’s a huge amount of money. Volkswagen’s profits are bigger than the individual provincial budgets of Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island or Newfoundland and Labrador.

Corporate welfare has real consequences. For every dollar politicians hand over to wealthy corporations, that’s one dollar less that can fund programs, lower tax bills, or reduce government debt.

A key consequence of corporate welfare is that it’s addictive. Remember good old Bombardier? A one-time corporate giveaway has turned into decades of government handouts. Corporate welfare is easy to start, but the dependency is difficult to end.

Even worse, the money the feds are handing over to Volkswagen is borrowed.

The Trudeau government is running a $40-billion deficit with no plan to ever balance the budget. It’s already spending nearly $44 billion on debt interest charges this year alone.

Then there’s the whole idea of trying to outbid the Americans. The feds are telling taxpayers that the government had to make the deal because the Biden administration’s subsidies effectively put a similar American offer on the table.

But the U.S. economy is 10 times the size of Canada’s, and the Americans have much more money to work with. Surely outbidding our neighbours to the south isn’t a sensible long-term strategy.

Instead of raising carbon taxes, payroll taxes and alcohol taxes and then giving a bag of cash to a hand-picked business, Trudeau should cut taxes across the board and cut out corporate welfare.

Finally, where is the political opposition? New Democratic Leader Jagmeet Singh loves to bash grocery store CEOs, so why hasn’t he grabbed the pitchfork after Volkswagen raided the public purse? If the Conservatives want to be the party of fiscal responsibility, why aren’t they up in arms over this corporate welfare?

Volkswagen’s sweetheart deal is bad news for taxpayers. Trudeau is taking money out of the pockets of struggling taxpayers and stashing it into the bank account of a profitable multinational corporation. Politicians of all stripes should oppose this kind of corporate giveaway.

Franco Terrazzano is the Federal Director and Jay Goldberg is the Ontario Director of the Canadian Taxpayers Federation.

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