This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, June 22, 2023
Ginormous subsidies to clean-energy companies, whose owners will be enriched at the expense of other industries and taxpayers, are the latest example of misdirected — and misdirecting — industrial policy.
Goldman Sachs, rubbing its hands in glee at the big profits it will earn, estimates that Joe Biden’s Inflation Reduction Act will cost US$1.2 trillion over 10 years, with a third of that related to electric vehicles (EV). In Canada, the $16-billion federal and provincial subsidies paid to Volkswagen will cover three-quarters of the cost of the battery plant the company is building in St. Thomas, Ontario. Given today’s low unemployment rates, the $5.3 million VW will get per worker won’t actually create any jobs but will merely draw workers from elsewhere in the economy. Complaining about its need to stay competitive, Stellantis is now blackmailing the federal and Ontario governments to provide a matching subsidy for its battery plant.
Who pays for all this? Either today’s hard-working Canadians, through their taxes, or future taxpayers paying interest on debt. With these companies standing to reap profits from battery production anyway, subsidies are just the (buttery rich) icing on the cake.