May 2, 2014 – Global News
In the past eight years the Ontario government has spent, by its own reckoning, more than three-quarters of a billion dollars giving money to companies in the name of job creation.
The $765,065,495 went to 109 companies to create, in theory, 32,000 jobs since 2007.
To put that job figure in context, the province’s economy gained about 13,000 jobs in April, lost 39,000 positions in December 2013 and added 46,100 net new jobs in April, 2012.
“It’s really a drop in the bucket,” says Laval University economist Stephen Gordon. “This is part of the normal churn.”
Global News obtained, through a freedom of information request, the province’s records of cash doled out for jobs since 2007, in chunks ranging from $56 million to $25,000.
It’s a live election issue in Ontario after the province announced multi-million-dollar deals with OpenText last month and Cisco in December, and pledged another $2.5 billion over a decade in its latest budget. The opposition Progressive Conservatives have slammed the deals as “corporate welfare.”
The hundred-odd corporations who’ve gotten government cash for jobs range from auto companies to cloud computing techies, video gamers and packaged salad-makers.
Some have thrived. Others went bankrupt, shuttered factories, laid off hundreds of workers, held back pensions or left the country altogether. Some have since faced workplace safety fines or become embroiled in years-long labour disputes.
The most expensive jobs came from ArcelorMittal Dofasco, the Hamilton-based steel company that received $13 million to create 28 jobs at a price of almost half a million each (that was one of three Ontario investments in the company; another $18.3 million cash infusion bought 72 jobs).
And the biggest single investment went to semiconductor company Advanced Micro Devices, which got $56.5 million. Toyota was close behind at $50 million, one of several cash handouts the auto-maker received.
The Liberal riding of Mississauga-Brampton South got 10 investments, more than anywhere else and double runners-up Thornhill, Oakville and Kitchener-Waterloo. (Conservative-held Thornhill’s cash infusions were the priciest, however)
“Job creation,” that campaigning politician’s holy grail, is in truth a bit of a mug’s game: Support a booming industry, and you’re adding wealth to a sector that doesn’t need it, whose unemployment levels are already low and that would arguably have “created” those jobs anyway; prop up an ailing industry and you risk sending money down an economic drain.
But what some call optimizing the conditions for business investment, others call a race to the bottom for wages and benefits, calling into question the quality of jobs you end up creating.
Eric Hoskins, Ontario’s Employment and Economic Development Minister, says the province has to use cash to lure some companies here, or to ensure they stick around and grow.
“I think Cisco and OpenText are perfect examples,” he said. “They could have chosen to make this $3-billion investment in any one of those 33 countries [where they operate]. We wanted to make sure it took place here.
“I very aggressively pursued OpenText … also to indicate we were prepared to partner with them financially, provided there were certain guarantees and targets in terms of job creation, as well as the size of the investment.”
But Gordon says these kinds of government giveaways don’t do much, even when there are theoretical strings attached.
“Governments usually don’t give them blank cheques,” he said, but “sometimes those guarantees are meaningless.”
Kellogg, which received $9.7-million from the province to create 80 jobs, announced late last year it’s shuttering its London factory, firing 550 workers.
Atlas Block, which the province gave $4.8-million for 16 jobs, declared bankruptcy in December.
Even the term “job creation” is misleading, Gordon said. “Diversion” or “exchange” might be more precise.
“We don’t really know how many of those jobs would have been created without that money. … Clearly other firms manage to create jobs without them,” he said.
“Why not just take that $100,000 and give that to some random guy?”
That said, paying companies to create jobs can make sense to stave off the economic body blow of an industry giant teetering on collapse – think GM bailout, Gordon says – or to boost an industry that needs a leg up in order to compete.
“There are certain economies of scale you want to exploit. You want to sort of build the industry up or the firms up until they get to a certain size when they’re big enough to have economies of scale,” he said. “That’s a valid argument.
“Except these industries never seem to grow up. So I’m somewhat skeptical.”
If the provincial government really wants to address employment, Gordon says, it makes more sense to focus on the people for whom you want to find jobs – on providing adequate training and helping people transition post-layoff, for example.
“The thing you want to do is help the workers who are at risk rather than the companies,” he said. “The problem is making sure they’re actually in the right place at the time with the right skills, basically.”
With files from Alan Carter, Jesse Ward and James Armstrong
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