Last week, the Trudeau government announced a $372.5 million ‘repayable loan’ to Bombardier, who had been asking for $1.3 billion in support for its C-Series aircraft since November 2015. Here are ten reasons why this bailout is bad news for Canadians.
1. They don’t even need the money
Last year, the top C-Series executive publicly stated Bombardier had “secured all the funding required to ramp up” the C-Series program and that federal cash would be “really just an extra bonus that would be helpful but is very clearly not required.”
2. They don’t deserve the money
Bombardier has received more than $4 billion in subsidies since 1966, on more than 50 different occasions. The C-Series project itself ran two years late and $2 billion over budget. Money alone can’t help overcome that kind of managerial incompetence.
3. Their executives don’t deserve it either
Bombardier’s CEO Alain Bellemare earned a compensation package worth $6.4 million in 2015. Normally, how much private companies pay their executives is their own business. But in Bombardier’s case, taxpayers are subsidizing generous executive salaries.
4. Others companies will play the game
More corporate welfare teaches companies to devote time and energy to sucking up to governments for freebies, rather than focusing on their actual business. A healthy business culture should discourage dependence on government, not encourage it.
5. We can’t win a subsidy war
Defenders of Bombardier often point out that their competitors are all subsidized, and that’s certainly true. But that merely shows how pointless it is for us to do the same. Canada cannot win a subsidy war.
6. It might violate international trade rules
It took just 12 hours for Brazil to lodge a complaint with the World Trade Organization, claiming that Canada might be violating trade rules. If the WTO ultimately rules against Canada, it could give Brazil the right to retaliate – meaning pain for Canadian exporters in other industries.
7. It stokes regional tensions
When handouts are on offer, every region is sure to want its fair share. And in Quebec, the announcement is already being used by separatists as proof Quebec isn’t getting its rightful piece of the action.
8. It isn’t transparent
We don’t know the repayment terms of the loan, and Bombardier has a long history of going to court to prevent information about repayments from becoming public. So Canadian taxpayers aren’t even allowed to know if they’re getting paid back.
9. We have to borrow money we’re loaning them
The Trudeau government is already running a deficit of close to $30 billion, with no end in sight, meaning Canadians, rather than Bombardier, have to pay the interest.
10. We can’t use it on anything else
Every dollar government spends has an alternative use. It might be roads, hospitals or schools. Or even – perish the thought – paying down our public debt or giving Canadians a tax break.
Aaron Wudrick is the Federal Director of the Canadian Taxpayers Federation.
