Economy

Globe editorial: Ottawa’s $13-billion (and counting) ribbon-cutting won’t reverse Canada’s economic decline

Published

1 year ago

April 21, 2023

It will surely go down as the most expensive ribbon in Canadian ribbon-cutting history. Ottawa has finally fessed up to how big a bribe – sorry, industry-building anchor investment – it will pay to Volkswagen to build an electric-vehicle battery plant in Southwestern Ontario.

The eye-popping price tag: up to $13-billion (contingent on production and future U.S. subsidies), plus another $700-million in capital grants and whatever extra inducements the Ontario government adds to the pot.

And that will not be the end. Already, the corporate partnership backing an earlier battery plant is asking for a bigger handout, with its $1-billion subsidy now looking anemic.

The federal Liberals are promoting the massive subsidy to Volkswagen as both a necessity and a virtue. It’s a necessity, they say, because the United States is intent on spending vast sums to accelerate its shift to a green economy, and a virtue, because of the many, many economic benefits it will bring.

Finance Minister Chrystia Freeland has, surprisingly, already effectively rebutted the we-gotta part of the argument. Ms. Freeland pointed out the perils of “a new mutually sabotaging competition to provide ever richer corporate subsidies” in a speech earlier this month in Washington.

Of course, Ms. Freeland was not breaking ranks on the Volkswagen deal, but rather cautioning others on taking subsidies too far. Still, her logic is impeccable: Writing a cheque for $13-billion (and counting), for instance, takes funds away from other priorities, or keeps taxes higher than they need to be, or adds to the national debt.

In any case, there’s a cost. And the notion that Canada can keep pace with the United States on subsidies, dollar for dollar, is clearly ludicrous. The real question is, why even start?

Industry Minister François-Philippe Champagne has his own answer, asking rhetorically what the cost of inaction would be, an oratorical brushback of those criticizing the costs of the Volkswagen subsidy.

We would frame the question more broadly: What’s the best use for that $13-billion (and counting)?

Mr. Champagne’s answer is for Ottawa to spend that largesse on industrial subsidies, which will create good-paying jobs and generate thousands more in economic spinoffs. Undoubtedly his math is impeccable. So is similar arithmetic from every special interest that ever sought a government handout: Give us a dollar and we’ll generate three, no four, no make that five dollars!

But there are a few caveats that pop the bubble on that argument. For one, the next best use of the $13-billion (and counting) would presumably not be to throw it all in a giant heap and set it alight.

The federal government could spend it in other, perhaps even more productive, ways. Spending more, and faster, to bolster the national electrical grid, or to relieve pressure points in supply chains, come to mind.

Even better, Ottawa might cut taxes by $13-billion (and counting). Or to put it another way, the Liberals could cease forcing individuals and the owners of small- and medium-sized businesses to pony up to pad Volkswagen’s bottom line. The government might, for a change, think of ways to get out of the way of private-sector job creation.

Unfortunately for those businesses, a job created here and there doesn’t deliver the thrill of a $13-billion (and counting) ribbon cutting.

Still, those are theoretical points and counterpoints. What about history?

We have had more than seven years of the Liberal economic program of higher taxes, increasing regulation and aggressive subsidies. And in those seven years of ever-growing government intervention, Canadian living standards have stagnated (a trend well under way before the pandemic). Gross domestic product, adjusted for inflation and population growth, has almost flatlined, growing by a scant 0.4 per cent a year on average. The immediate future is even worse, with real GDP per capita likely to stagnate or even decline.

One might think that such a record would give the Liberals pause. That would, however, require the government to recant its economic dogma.

Instead, the Trudeau government is intent on more spending, more debt, more regulation and more meddling in the economy. A cheque for $13-billion (and counting) will pay for a heck of a ribbon-cutting ceremony. What it won’t buy is a reversal of Canada’s economic decline.

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Business

A timeline of events in the bread price-fixing scandal

Published

5 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

5 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

19 hours ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

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