The Slippery Slope of Government Subsidies

He was only trying to woo a hostile audience, but national NDP leader Thomas Mulcair raised the touchy subject of subsidies while speaking in Toronto last week. Mulcair’s speech was in the lion’s den – to the NDP-unfriendly Canadian Club, which is usually loaded with corporate bigwigs who wouldn’t be caught dead talking to a Dipper.

Thomas Mulcair, NDP | BCBusiness
Subsidies have ramped up Ontario’s film and television industry, but to the detriment of B.C.

He was only trying to woo a hostile audience, but national NDP leader Thomas Mulcair raised the touchy subject of subsidies while speaking in Toronto last week.

Mulcair’s speech was in the lion’s den – to the NDP-unfriendly Canadian Club, which is usually loaded with corporate bigwigs who wouldn’t be caught dead talking to a Dipper.

Soldiering through it however, Mulcair suggested that Ontario’s booming film and television industry was a good example of government intervention in an economy by “using the levers at our disposal to jump-start the economy.” Read: Subsidies.

Growth through theft

Subsidies have certainly kicked the Ontario film and television industry into high gear. It’s growing at some 25 per cent a year. But Mulcair left out an important part: Ontario essentially stole some of that industry from B.C. by out-subsidizing us.

It poured money into its own film and television industry and lured many of the Hollywood productions that used to come to us to Hogtown instead. There was no way we (meaning B.C.) could match them.

“Buying” business

Industry subsidies equate to buying business, presumably with the idea that at some point the industry will have grown to the size where it won’t have to subsidize any more.

That probably works with a factory or an industry that needs a specific location, but for modern knowledge-based businesses that can move in a minute, it’s usually “see ya buddy and good luck with that.”

B.C. learned about the downside of subsidizing

We naively thought it was our varied landscapes and fabulous crews that attracted the Hollywood companies. That played a part, but most of it was really great tax breaks or subsidies. We learned painfully about the slippery slope of subsidies.   

I’m sure Mulcair was trying to find something about the NDP platform that might please the financial big cheeses in Toronto. But maybe he should have studied the situation in B.C. before opening that door.