With its oil industry in the gutter, jobless rates on the rise and tax revenue in the tank, Alberta learned this week that it would receive more than just the federal government’s goodwill and a selfie with Justin.
Finance Minister Bill Morneau confirmed the province will receive $250 million from a federal government stabilization fund. It won’t do much to ease the province’s $6 billion deficit. That said, at the very least, it is a nice gesture.
Albertans will certainly cringe as they cash the cheque. Most would much rather the federal government get on with approving Energy East, signing the Trans-Pacific Partnership trade deal or even re-jigging Employment Insurance qualification standards.
The stabilization fund serves dual political purposes, comforting and aggrieving Albertans in equal measure. There is nothing more humbling than charity, and as much as the province may feel the money well-earned, it can’t help noting an obvious disparity: only a quarter of a billion dollars for a province of four million Canadians, while one Quebec company — Bombardier Inc. — awaits the granting of a $1 billion bail-out.
After Quebec announced its $1.3 billion “investment” in the company, it will be hard for Ottawa not to follow suit. So what if the company has no foreseeable path to profitability before 2020? Who cares that its latest aircraft project is billions over budget and two years behind schedule?
The logical response to Bombardier’s woes would be to let it fail. There’s no particular reason for Canada to involve itself in a global aerospace industry rigged by subsidies we can’t match.
But let’s not pretend this is about logic. Bombardier is a totem; a central Canadian icon upon which to hang all our insecurities as an advanced economy and high-tech powerhouse. No mere drawers of water and hewers of wood, we. The fact that it’s situated in a Liberal stronghold is mere happy coincidence.
Acknowledging this, let’s admit that the federal government is incapable of letting Bombardier fail.
As such, we are hostage to its fortune. We will continue to funnel billions of dollars to a private company whose management has been, to put it politely, less than stellar. There is only one tenable solution, then. Nationalize it.
We should not allow ourselves the delusion of pretending government management would make Bombardier profitable. It would almost certainly morph into a giant, expensive boondoggle. But if we’re unwilling to let the company fail, we’ll inevitably be on the hook for continued infusions and bailouts, anyway. Whether we lose gobs of taxpayer cash to subsidies or mismanaged investment strikes me as being six of one, and a half-dozen of the other.
As political solutions go, it’s perfect.
At least nationalization would ensure public funds aren’t used to prop up the private interests of the Bombardier and Beaudoin families. Indeed, Quebec has already “invested” more taxpayer cash into Bombardier than the entire company is worth, and even now has only a partial equity stake while the previous owners remain at the helm, merrily turning Canada’s national pride-turned-subsidy machine into a supplicant for government handouts.
A mere equity stake shouldn’t be enough for a federal bail out, especially as Quebec and Ottawa are unlikely to see any return on that investment for the foreseeable future. If Bombardier and the 65,000 direct and indirect jobs it creates is indeed too important to be allowed to flounder on the free market, then turn it into a crown corporation. Appoint new management and run it for the benefit of its true investors — Canadians.
Nationalization presents other opportunities as well.
In its marketing literature, Bombardier boasts 75 production and engineering sites in 28 countries. Of its 13 sites located in Canada, only one is located outside Quebec or Ontario. One maintenance and operations hub exists in Vancouver. On this, Bombardier rests its claim to be a “Pan-Canadian Champion.”
Under a proper nationalization scheme this could change. Under federal ownership, Bombardier could operate for the good of all Canadians by opening manufacturing plants in parts of the country where such potential has been underdeveloped due to economics, location and history. Places like Alberta, Saskatchewan, Manitoba and even the Atlantic provinces come to mind.
None of this would be efficient or profitable, of course. If it were, Bombardier might have already pursued it. But we’ve already established that profitability is not the point.
This would be a sentimental jobs program — the sort of thing that inspires nostalgia and pride, much as Ottawa continues to prop up Via Rail out of a vague sense of responsibility to the past. It would also be the sort of vigorous government stimulus the Liberals believe will spur a sunny new growth in this country.
Alberta is accustomed to this talk. For years we’ve heard of our desperate need for economic diversification, for government investment in uneconomic schemes for the sake of creating jobs.
(Unsurprisingly, this philosophy is most often espoused by parties aligned with labour interests.)
Economists in Alberta use the metaphor of a “bucket brigade” to deride the concept. One has to picture countless people lined end on end, paid to pour bitumen by hand from bucket to bucket.
This would actually be the best possible way to create the most jobs for oil wealth — provided creating jobs were the only priority.
All else being equal, there is no reason why a nationalized Bombardier couldn’t become our nation’s very own bucket brigade.
So we have the magic of stimulus spending, in which government “investment” helps “create” jobs and inspires national economic growth. Check. Diversification of resource-dominant economies. Check. Feel-good national unity schemes. Check. A total disregard for market realities and wilful obliviousness to the efficacy and efficiency of government spending. Check check.
As political solutions go, it’s perfect.
National Post