One of Ottawa’s biggest selling points for its record subsidy to Volkswagen—which could top $13 billion—is the potential creation of tens of thousands of jobs. But leading public policy expert Jack Mintz is highly skeptical and also questions how the feds project to cover the cost of the new gigafactory in under five years.
The plant, in St. Thomas, Ontario, will generate about $200 billion in value and will be the largest manufacturing plant in Canada, according to the government’s April 21 news release.
At a news conference in the southwestern Ontario city, Prime Minister Justin Trudeau said, ”Yes, this investment is a big one,” adding that it was part of a strategic vision taken to invest in the battery and auto-making supply chain in Canada.
Mintz, president’s fellow at the University of Calgary’s School of Public Policy, said in an interview that there’s already more jobs available in Canada’s economy than there are workers to fill them, and when the government has to pay for these subsidies, that’ll mean higher taxes.
“So what is the net job creation? I suspect very little, to be frank, because you’re just drawing from other sectors of the economy. And to the extent that taxes have negative impacts on economic growth, this could actually lead to lower job creation—not higher job creation—as a result of carrying out this kind of subsidy,” he said.
Industry Minister François-Philippe Champagne, when asked by reporters on April 20, did not explain how the cost of the subsidy to the German car giant will pay for itself in less than five years.
Mintz says he thinks Ottawa’s projection comes from a narrow view of the situation, in that the government will get taxes from the gigafactory and maybe save on unemployment insurance.
“This is a very partial look at it paying for itself,” he said.
But he cautions that he’d have to see what the calculations actually are.
Industry Canada media relations was not able to provide answers by publication time to an inquiry from The Epoch Times on how the subsidies are to be recovered within five years, nor were they able to say how the potentially $13 billion is accounted for in the budget or possibly via the Canada Growth Fund.
Industry Canada officials told senators at the April 25 Senate national finance committee that taxpayers will only learn the terms of the VW deal once the money has been spent, according to Blacklock’s Reporter.
It’s not clear, based on Industry Canada’s responses to the committee, how the potentially $13 billion subsidy has been accounted for in the budget or whether it’s additional spending that will worsen the deficits.
