New bridges. New railroads. An entirely new Canada on top of the existing Canada. Really anything other than 'give it to VW and Stellantis'
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Less than six weeks after it became public knowledge that the federal government would be paying $13 billion in subsidies to Volkswagen to build an EV battery factory in Ontario, early reports are showing that a similar subsidy package for a Stellantis-owned battery factory in Windsor could top $19 billion.
Even for a country that has never shied away from a good corporate welfare payout, these contracts are well beyond anything in the country’s history. Up until this year, the largest infusion of government cash into the private sector was the $13.7-billion bailout of GM and Chrysler in 2009. But that was paid out in exchange for an equity stake, the sale of which was done at a loss of just $3.5 billion.
The only thing remotely comparable to $32 billion in subsidies are the massive 18th and 19th century land grants made to the Hudson’s Bay Company or the builders of the Canadian Pacific Railroad: But those were cessions of undeveloped land, rather than cash transfers handed out without any equity share.
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Both subsidy packages are quantities of money that would be utterly transformational in other contexts, and if a sober panel of Canadian experts was asked the best way to grow the national economy using $32 billion, it’s unlikely that the answer would be “give it to two legacy carmakers.”
Here’s a quick guide to just how much money $32 billion is, and what a government really concerned about economic development could do with it.
You could build 14 bridges to Prince Edward Island
The 13-kilometre Confederation Bridge to Prince Edward Island has appeared on the cover of a few engineering textbooks, and is a pretty good example of how a well-placed financial outlay can boost local economic activity. After nearly 150 years of P.E.I. relying on marine traffic, it was suddenly a 10-minute drive from the mainland. Nobody’s done a comprehensive study of what the bridge has done to P.E.I. shipping costs and tourism, but the island is now so dependent on the link that according to one 2018 estimate, a 90-day closure would do $300 million in damage to the local economy.
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And the bridge came in at $1.3 billion in 1997. So, about $2.3 billion in 2023 dollars. Which means $32 billion could buy 14 of them. Or, 182 kilometres of bridge; enough to build a bridge from Montreal to Ottawa.
You could build a second Canada on top of the first one
Alternately called the Mid-Canada Plan or the Northern Corridor, this is a plan that’s been kicking around university libraries and government committees ever since the 1970s.
The basic idea is to lay down a massive network of highways, railroads and electrical infrastructure in Canada’s largely unoccupied boreal forest regions. With most Canadian settlements and economic activity huddled near the U.S. border, the idea of the “Northern Corridor” is basically to put down the seeds of an entirely new Canada on top of the first one. It’s a plan with some precedent: Some of Canada’s most consequential centres — from Ottawa to Calgary — do indeed exist simply because a railroad or canal planner willed them into existence.
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The last time the Northern Corridor was costed out, the rough estimate was that the whole thing would cost about $100 billion. So, for $32 billion, you could open up the boreal forest atop Ontario and part of Manitoba and see where it goes.
It’s more than half the contemporary value of all the gold pulled out of the Klondike
It’s generally agreed that 20 million ounces of gold have been pulled out of the Yukon territory since the 1898 Klondike Gold Rush. That includes all the gold shipped out in the rush itself, as well as the proceeds from more than a century of constant dredging and placer mining operations.
Most of that gold was sold during periods when the gold price was far lower than it is now. But if you could somehow gather up all 20 million ounces of Klondike gold and sell them off at the current sky-high world gold price of CDN$2,600 per ounce, you’d have $52 billion. So, a conservative estimate is that to get $32 billion, you’d only have to spend 60 to 75 years running all-out mining operations in one of the most famously rich gold-producing regions on Earth.
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It’s Newfoundland and Labrador’s entire economy for one year
While Newfoundland and Labrador is not particularly well-known for making money, its GDP is nothing to sniff at. If the province returned to being an independent country, it would have a national economy larger than Cambodia or even nearby Iceland.
The province provides 55 per cent of Canada’s annual iron ore, 24 per cent of its light oil (read: not oilsands) production and it’s still pulling 200,000 tonnes of seafood out of the ocean each year.
And yet, if you seized the salaries and revenues of absolutely every person and financial entity in Newfoundland and Labrador for an entire year, you’d just be able to scratch together the $32 billion to give Volkswagen and Stellantis. As recently as 2020, the combined GDP for the entire province was $32.24 billion.
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You could build about nine St. Lawrence Seaways
The St. Lawrence Seaway is the textbook example of a government willing economic growth into existence through the provision of new infrastructure. Completed in the 1950s, it’s a system of locks and canals that turned communities along the Great Lakes into ports with direct access to the Atlantic Ocean. Basically overnight, more than 100 ports and docks had an easy way to move product around the world, spurring an explosion of secondary development.
Canada’s contribution to the seaway was about $336 million in 1956, which works out to about $3.7 billion in 2023 dollars. So, for $32 billion you could build about eight-and-a-half of them.
Or at least six Gordie Howe International Bridges
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Another way to increase economic activity? Streamline the movement of goods along a chronically bottlenecked portion of the U.S.-Canadian border.
That’s the general idea of the Gordie Howe International Bridge, the under-construction Windsor-Detroit span intended to reduce reliance on the oft backed-up Ambassador Bridge.
Even after some massive cost increases, the bridge is expected to be completed for about $5.7 billion. Early estimates show that the bridge will create about 2,500 spinoff jobs, which just happens to be in the ballpark for the number of jobs created by the Stellantis and VW plants.
IN OTHER NEWS
So, everybody hates David Johnston. The House of Commons passed a 174-150 motion to fire Johnston as “special rapporteur” on foreign interference. And then a new Leger poll found that only 27 per cent of Canadians thought he was an impartial critic on foreign interference. Despite this, Prime Minister Justin Trudeau is refusing to fire him, and Johnston is refusing to leave. Broadcaster Don Martin has been around Ottawa almost as long as Johnston, and he’s proved particularly baffled by the 82-year-old’s refusal to leave. “It boggles the mind that one of Canadian history’s most distinguished Governor Generals won’t respect the will of Parliament and quit. He’s throwing himself under the bus,” tweeted Martin.
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The Bloc Québécois has consistently proved to be one of the more interesting observers of the Chinese interference scandal. None of the key points in the scandal affect them directly, so they’ve taken it up mostly as an example of the Trudeau government’s malfeasance. This week, Leader Yves-François Blanchet made sure to speak in English to reporters to explain why he thinks the whole fiasco deserves attention. “We have a government that is going very, very far, and paying a heavy political price to hide something. The question is, what the hell is he trying to hide so much?” he said.
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FIRST READING: How Ottawa could boost the economy with $32 billion (other than give it to foreign carmakers) - National Post
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