Corporate welfare is not the answer
AV Cell to receive $17.3M from Graham government
Let's just say, I can't even begin to articulate how disappointed I am with the decision above. Furthermore, in the wake of last week's Dalhousie mill closure, the premier mused about future corporate welfare deals/loans (usually forgiveable) "with Flakeboard in St. Stephen and Fraser papers" in Edmundston. *sigh* Plus, rumour has it that this deal to a PEI beef processing plant may go through after all.What kind of message does this send to New Brunswick entrepreneurs (both large and small) who are not on the government radar when it comes to corporate welfare? I'll tell you what message it sends. It tells them that their successes, credit and capital (earned on an open market) will be diverted to less successful, government connected firms/companies. In other words, companies that do not receive government assistance subsidize their government-supported competitors through their corporate taxes. And you wonder why businesses avoid this region like the plague.
Advice to the Graham government: start implementing policies [today] that will ensure that the playing field for all competitors is even. Maybe you can start with a solid 21st century business approach whereby you make the region more attractive by lowering taxes (n\both personal and business), cleaning up government and eliminating useless and inefficient bureaucracies. Moreover, I wouldn't wait around for the feds to wave the magic wand and make everything better if I were you premier as I suspect this will be the only substantive announcement that will come out of your talks with the prime minister on self-sufficiency in Moncton. Can you say "not on the PM's radar screen" Shawn.
I guess now you know how it feels to be a firm in NB who doesn't receive a provincial government loan (bailout) while their fledgling competitors are rolling in the dough. It's not a good feeling, is it?
Related posts -- a growing list of offenses
I can't drive 55 (Roger Duguay on grants & loans)
Corporate welfare on the march once again (Atcon Group Inc.)
Spinning Yarn of Corporate Welfare (Atlantic Yarns)
Atlantic Yarns: Bottomless subsidy pit ("")
Atlantic Yarns: bottomless-pit filing for bankruptcy? ("")
The business of gov't is not the government of business
A culture of dependency (Rogers Communications Inc.)
My New Business Plan (The Mactaquac marina)
Business Pork (Cape Jourimain Nature Centre Inc.)
Statist Guile (Premier's pledge to stop use of grants & loans)
Put An End to Wasteful Subsidies (Atlantic Beef Products Inc.)
6 Comments:
I couldn't agree more with this point of view on corporate welfare. Our family owned tourist business, which has been around for nearly 40 years, have never looked to the government for money and they paid hard earned taxes every year. They often found themselves competing with government subsidized (their taxes) competitors. Most of them aren't around anymore.
There is a culture within the business community itself, believing that this is necessary. There is a large industry in economic development in Northern New Brunswick which perpetuates this thinking. I am not sure how it will change. (My advice would be cold turkey!)
As an aside, I heard Frank McKenna said that the provincial government should increase the HST when the feds drop the GST. He also said a corresponding DECREASE to business and income taxes would be more productive. These Liberals are so skilled at talking out of both sides of their mouths.
Excellent commentary Paul. I agree with you that corporate welfare is a practice that is deeply rooted in the business community. It is an accepted ethos amongst those that are on the receiving end. Just look at Enterprise New Brunswick if you want an example of an organization that not only preaches corporate welfare and regional economic development (via government loans), they want to expand it even further. That kind of mentality is hard to fathom since all I see are failed attempts in NB like the ones you mentioned in the tourist industry. Intesting that your parents business survived all those years despite government doing its best to make the plating field difficult for those that aren't frindly or tied into the Liberal party some how.
Anyway, to make a long story short, I am in agreement, we must place a ban on corporate welfare in this province and disband regional development agencies like ACOA, BNB and Enterprise NB. However, I'm not sure lawmakers have jurisdiction to dismantle the latter. Although it and its subordinates would just die a quick death if the former two were eliminated.
nb taxpayer,
You are bang on with your post. The subsidizing of businesses in New Brunswick and elsewhere is fundamentally flawed. The fact we take money from successful businesses and give it to unproven at best, failing at worst, businesses is unbelievable.
I have no idea how people can think this is productive. We punish the success stories and reward the losers. It is incredible.
RS
RS,
Thx for your comments. And you are correct, it is hard to fathom how people can actually believe that this is productive for the economy in NB (other than the so-called economic developers that benefit directly from taking a cut for a project or study). Other than that, I don't see any longterm economic benefit from setting up political pork barrell agencies like ACOA, BNB or Enterprise NB.
However, bloggers are starting to slowly blow the whistle on the atrocity of corporate welfare and the damaging effect it has on the overall competitiveness of our economy. Let's hope we can take this message to more NBers in the next month and year so that people will be fully informed on what really is going on with their hard-earned money.
This kind of stuff bugs me too. I don't know if you caught it, but Rodney did the corporate welfare shakedown this week with our money.
Bowater deal
As you can see from the article, the premier is using these handouts as a way to increase his short-term political popualrity.
To be honest, regardless of the loans, I think MacDonald and Bowater won't last 'til 2009.
"I think the steps we have taken have made a difference in the decision-making of this company and of other companies," he told reporters. "But some of these steps, we realize and they realize, of course, that they're short-term."
Clearly Premier MacDonald isn't a fan of letting the market decide.
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