OTTAWA—One of the Liberal government’s paramount goals is to transition to a low-carbon economy. Its Sept. 23 throne speech said that it needs the energy sector’s capabilities and contribution in order to reach that goal. However, some experienced observers say the feds’ approach to doing so, by directing innovation, is counterproductive.
The throne speech said, “Canada cannot reach net zero without the know-how of the energy sector, and the innovative ideas of all Canadians.”
The government will “support manufacturing, natural resource, and energy sectors as they work to transform to meet a net zero future, creating good-paying and long-lasting jobs,” the speech added.
But the government’s recent attempts at steering innovation have their critics. To those observers, the throne speech is seen as more of the same—picking winners and subsidizing them to the detriment of the greater good.
“A good government creates an environment that everyone can rise—or fall—on their own,” Jocelyn Bamford, president and founder of the Coalition of Concerned Manufacturers and Businesses of Canada, told The Epoch Times.
Intellectual property expert and Macdonald-Laurier Institute (MLI) Munk senior fellow Richard Owens says backing certain innovators and not others hurts the overall culture of innovation. Worst still, it risks having taxpayer dollars channelled toward political cronies and opening the door to corruption.
“Innovation cannot be planned or directed by the government,” he said in an MLI op-ed.
Instead, Owens backs reducing taxes such as those on capital gains and allowing the rapid depreciation of certain business investments to further lower tax burdens on innovating and potentially cash-strapped companies.
Subsidies ‘Costly and Risky for Little Return’
The feds have their own ideas. They plan to launch a new fund to attract investments in zero-emissions products and will halve the corporate tax rate for these companies in hopes of creating jobs and making Canada a world leader in clean technology. This is in addition to the new $5 billion Clean Power Fund to support the electrification of industries, including the resource and manufacturing sectors, using renewable sources like hydro, wind, and solar.
The Montreal Economic Institute criticized giving subsidies to the “so-called green technology companies,” saying the feds should “come to the aid of the private sector without discriminating between different sectors of activity.”
MEI economist Miguel Ouellette says that subsidies for green technologies raise prices for consumers and generally don’t create as many jobs as expected. Ontario’s experience under the Kathleen Wynne Liberal government is often cited as an example of how not to handle the green agenda, showing “just how costly and risky these investments can be, for little return,” Ouellette says.
A 2017 MEI study found that subsidies for electric vehicles—one example of a green initiative—had little effect on greenhouse gas emissions and were a lot more costly than other incentive measures to achieve the same result.
