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ENB Pub Note: Hat tip to Tammy Nemeth with the Energy Realities podcast for the lead on the story. This is indicative on the collapse of the EV markets. Toyota and Ford will be the first to try to survive through hybrids. The losers are those who bought the Ford Lightning and the Union workers. The Biden administration hurt the entire industry through it’s “Legislation through Regulations” and not letting the markets support the transition.
With Canadian GDP per capita dropping like a stone, what would you expect our minister of finance, Chrystia Freeland, to say last week at the elite Davos confab? “Come to Canada! We have $135 billion to give you!” is what she did say. Given our poor investment performance, it seems the only way to attract capital is to offer billions of tax dollars to foreign multinationals.
But not just to any company that might want to invest in Canada. Freeland’s $15-billion Canada Growth Plan and $120 billion in tax credits constitute an industrial policy skewed toward clean energy, critical mining (e.g., lithium, nickel and copper) and retooling manufacturing, largely in voter-rich Central Canada. It is a huge number to spend, equivalent to a year and half of federal corporate tax collections.
If you are mining for iron ore and gold, however, you’re out of luck since these are not critical minerals. As for agriculture and forestry, they don’t count, either. Service sectors like construction, communications and transportation also take a back seat. And forget about greenfield oil and gas investments like liquified natural gas plants. Instead, tell Germany to fly a kite in Qatar rather than have reliable Canadian supply.Will these “new economy” subsidies work? Past experience says no.
Subsidies are often paid to companies that would do the investment anyway. If there really is a transition to e-cars, batteries will be built for a profit anyway.
Even if subsidies do stimulate more investment, money is wasted as countries bid to attract the same investment. Besides, it is better to import subsidized products and use the tax dollars where Canada can create a real comparative advantage. Australia learned that lesson three decades ago when it let its frequently bailed-out auto industry disappear. Australian productivity improved.
Do subsidies really create jobs? Companies that hire more workers may simply draw them from more profitable enterprises elsewhere in the economy, with no net gain in jobs. Plus: not all jobs are equal. Freeland’s green economy means replacing oil and gas extraction that produces close to $1000 in output per working hour with green investments that earn about a thirteenth of that.
Subsidies are paid to politically chosen companies that might well fail. The feds gave $173 million to a Quebec vaccine company, Medicago, that ended up being shut down despite such a generous “helping hand.” Bombardier, recipient of over $4 billion in subsidies since 1996, can barely turn a profit without them.
The post Jack Mintz: Canada’s EV strategy has cost $4 million a job appeared first on Energy News Beat.
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