End corprate welfare now

If there was ever any doubt that corporate welfare is a bad idea, this weekend's headlines confirmed it. “Atcon's state-of-the-art plywood plant closed,” protested Saturday’s Telegraph Journal. Yes folks, that would be the same Atcon Plywood Group Inc. whose 'supposed' state-of-the-art facilities (hold your ears children) released wasteful contaminants into the environment just over a year ago, resulting in two violations of the Clean Environment Act. Not only that, they are part of the same group whose sister company, just 5 months ago, wheedled a multi-million dollar subsidy out of the New Brunswick government to build steel beams for a bridge across the MacKenzie River in the Northwest Territories. A sweet corporate welfare deal which Atcon Group itself will now profit off of after becoming a shareholder in the project.

Let's face it folks, as demonstrated by bottomless subsidy pit Atcon Group inc. above, not only is corporate welfare bad for the environment (since it is sometimes given to declining industries that are often the most harmful to the environment), it does not encourage companies to compete based on market forces. Quite the opposite, it encourages them to become better at lobbying governments for forgivable loans and grants and, in turn, they end up growing fat and lazy on the public trough. Not only is this poor use of taxpayers money, the result is that many facilities are not prepared to deal with market downturns and technological changes as less effort is put into modernization and anticipating trends than into cozying up to politicians. A trend that has come to a head in NB with a plethora of plant closures.

In a free market economy, there is nothing wrong with corporations fighting it out for private capital. But when public money is footing the bill, it’s a different story. Through their taxes, corporations which do not receive government subsidies subsidize their competitors. Talk about setting up an unhealthy business environment that is based on redistribution of profits.

I just wish that politicians would wake up and finally put a stop to this unfair practice. In the best performing economy in the country, they already have. Alberta outlawed corporate welfare banning any loan, grant or subsidy over $ 1 million. Rather than favouring particular companies or industries, the province simply has the lowest corporate tax rate in the country – 10 per cent.

Yet in New Brunswick, Premier Shawn Graham’s government has taken the opposite approach, canceling corporate tax cuts implemented by the previous government and meddling in the economy as much as possible. To date, the government has earmarked millions for the textile industry, forestry sector and tourist industry. This, in a province that is $6.5 billion in debt and taxpayers are paying the highest personal income taxes in fourteen years.

It's time to end the costly practice of corporate welfare.