Sand in the Shorts: Premier Demonstrates Lack of Fiscal Understanding - or Lack of Honesty

By James Phieffer

In the September 21st, 2011 issue of the Belleville Intelligencer, a story appeared concerning the visit of Liberal Leader Dalton McGuinty to Belleville, where he held a campaign event at the Kellogg's plant located in this city. In it, he challenged the Progressive Conservative's labelling of government subsidies as "corporate welfare.

From the article:

[Dalton McGuinty] added the Ontario PC Party refers to such incentives as "corporate welfare" which means many jobs across the province, including those at Kellogg which is expanding by 48 jobs, would not be created. The expansion means Kellogg will add Bran Buds and Kashi Heart to Heart brands to its line of locally-produced products.
"That's just evidence of the partnership that we've been able to strike with all our communities right across the province," McGuinty said. "We have found ways through various programs to partner with our communities and our private sector in order to combine our strengths and create jobs and prosperity." ----- 

I responded in the comments section:

It is corporate welfare - and it flies in the face of provincial fiscal sanity. The alleged idea of corporate welfare is to draw new business' to the province, but in reality it is an attempt by the government of the day, Liberal, PC, or NDP, to "pick the winners" when it comes to business success. And if they pick wrong, billions of dollars go down the drain. It means the risks inherent in any entrepeneurial venture are placed on the shoulders of taxpayers, while the benefits accrue to those who hold an actual ownership stake in the company.
The more logical, and successful, path to building the Ontario economy is through business/corporate tax cuts. These benefit all business' in the province, and in the long term aid in the growth of a tax base that aids all Ontarians - not just those living in and around Toronto. Tax cuts are also cheaper, as there is no need to pay thousands of bureaucrats to implement and monitor corporate welfare programs. Lower taxes need only the same people who handle the current tax regime.
Finally, consider how much each job created through these corporate welfare schemes costs - and don't forget to add in the cost of an increased bureaucracy necessary for the plan's implementation and operation. Even when these schemes work as planned, which is rare, the costs can be well over $100,000/job or higher (see the US Green Energy boondoggle, where the rate is around $5,000,000/job)- and too often, when the subsidy is up, the jobs go away(see the motion picture and television industry credits in Ontario - any cuts will see cuts to investment).
For long term economic growth, lower corporate taxes are the tried and true recipe.

It is important that within the confines of an election a certain level of accuracy is attained in the use of terms.  Dalton McGuinty, in his statement, either demonstrated a poor grasp of fiscal economics, or lied.


Premier chides Tories for calling funding “corporate welfare” - Belleville Intelligencer - Ontario, CA: