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Kamloops News

LETTER: Ten reasons the Bombardier bailout is bad news

Aaron Wudrick, Federal Director of the Canadian Taxpayers Association.
Image Credit: SUBMITTED/Aaron Wudrick
February 13, 2017 - 11:30 AM




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 it’s C-Series aircraft since November 2015. While Bombardier executives are all smiles at this announcement, 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.” Translation: we’ll take free money, but we don’t actually need it!

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 – after all, it’s the company’s money, not taxpayers’. 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 (Bombardier had over 100 lobbying meetings in the last year). That includes Ontario-based automakers who have already pressured them to switch to giving them grants instead of loans. 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 against the United States or the European Union, which subsidize Boeing and Airbus, respectively.

6.      It might violate international trade rules

It took just 12 hours for Brazil (home to Embraer, another of Bombardier’s main competitors) to lodge a complaint with the World Trade Organization, claiming that Canada might be violating trade rules that prohibit government subsidies.  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 get 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 not only get the privilege of giving money to Bombardier – they 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. That means the money Bombardier is getting has to be borrowed – 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.  Instead, the government has chosen a money-losing airplane company as the highest priority for scarce tax dollars.

-This column originally appeared in the Toronto Sun on January 11th, 2017

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