Let’s end business subsidies

Published on May 11, 2016

Speech at Conservative Party of Quebec convention: Let’s end business subsidies

Maxime Bernier

Quebec City, November 14, 2015


Dear Quebec Conservative friends,

It gives me great pleasure to be with other Conservatives here in Quebec City, in the most Conservative region in all of Quebec!

As a Member of Parliament, I of course do not get involved in provincial politics. I also know that there are people who share our principles in other provincial parties.

But all those who want to get involved in a true Conservative party, a party that does not defend conservative principles only half of the time or a quarter of the time, but all of the time, are here today, with the Conservative Party of Quebec.

I know your leader very well. Adrien and I were both involved with the Montreal Economic Institute. Adrien is someone who truly understands conservative principles, someone who is not afraid to defend them openly.

After half a century during which the Quebec government experienced continual growth, half a century during which Quebec was the Canadian champion of economic intervention, the champion of debt accumulation, the champion of costly and overly bureaucratic programmes, the champion of high taxes, it is now more crucial than ever to have another voice. A consistent, confident, full-time conservative voice.

What do we mean exactly when we talk about conservative principles, the principles that differentiate us from our political opponents? We are speaking first and foremost of freedom. Freedom is the fundamental value that brings us together here today. Freedom is nothing less than the foundation of our civilization. It is our duty to explain to everyone how freedom is important, so that we can live in a society that is even freer and more prosperous. A society that is tolerant and open to the world.

For our political opponents, the solution to the challenges faced by society is always about increasing government intervention, and never about increasing individual freedom.

Former US president Ronald Reagan explained it best when he said that these people tend to see the government’s role in three steps: if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it!

For us conservatives, on the contrary, government should ideally set up and enforce the basic rules of life in society. And then, leave individuals free to cooperate among themselves to provide for their wants. Government should not intervene to solve each and every problem on the road to a utopian and unrealistic vision of society.

To paraphrase John F. Kennedy, from a conservative perspective, don’t ask what your government can do for you; ask your government to get out of the way, so that you can be free to take responsibility for yourself, for your family, and for everyone else that you care about.

Unfortunately, over the past hundred years, government has grown to gigantic proportions. And not only in Quebec, but everywhere in the Western world. It intervenes in almost every aspect of our lives. It makes us dependent and irresponsible by taking care of us from the cradle to the grave. And it tries to plan economic development.

To fund all these interventions and costly government programmes, we got to a situation where every child that is born is already burdened with tens of thousands of dollars in debt. And if you take all levels of government into account, about half the wages of working people in this country goes to fund all this.

How did this happen? Economists and political scientists of the so-called “School of Public Choice” have tried to explain this dynamic. Their research shows how particular groups have a strong interest in getting organized to put pressure on politicians. These special interest groups want subsidies, trade protection, more generous social programs, a fiscal or legal privilege, regulation that favours them and keeps out competition. Any favour they get from the government can potentially bring them huge benefits.

It’s very hard for politicians to say no to these lobbies because they have the means to hijack debates, quickly mobilize support and fuel controversies in the media. On the other hand, nobody hears what the silent majority have to say, even if it is the one paying the bill.

So, there is a fundamental imbalance in political debates. On one side, you have concentrated benefits to special interest groups who have a strong incentive to do their lobbying; on the other side, you have dispersed costs that fall on society at large.

That’s how government grows and grows. That’s how we become less and less free. And more and more dependent on government.

We, Conservatives, have to give voice to this silent majority, the one paying the bill, as we defend our principles and values.

We’ve had a good example of this kind of detrimental intervention these past few days when the government of Quebec provided a single business, Bombardier, with 1.3 billion dollars in aid. Talk about a concentrated benefit!

You can be proud of your leader, Adrien, who has defended our principles and values with passion and with conviction and who was not afraid to go against the current by categorically opposing this government handout.

Among the many arguments we have heard in favour of this type of intervention, there is the argument that Bombardier is too big to let it fail. Meanwhile, there are thousands of small and medium-sized enterprises that declare bankruptcy every year, causing far more significant job losses. But those don’t have a strong enough voice to get the government’s attention.

Those who claim that this intervention saves jobs do not understand that the government is destroying as many, if not more jobs, elsewhere in the economy by transferring resources from other sectors to Bombardier. Moreover, there is no guarantee that CSeries aircraft jobs will be maintained in the long term.

By subsidizing Bombardier over and over again for decades, governments have created a company that takes too many risks, that gets involved in more projects than it is able to handle. Why not instead let the market operate as it is supposed to, let other investors and other businesses take control of Bombardier and manage it more carefully by generating wealth, instead of wasting resources?

There is also the argument that our aircraft manufacturer must be subsidized because the Americans, the Brazilians and the Europeans are doing so. But if we have to squander billions of dollars in sectors that our competitors subsidize, it will never end. They have ten times more resources than we do. Why not instead reduce taxes and provide a more favourable business environment? All businesses would benefit, not just the biggest ones or those with the best connections in government circles. They would, as a result, become more competitive, generate more wealth and long-term jobs, and our standard of living would increase.

Quebec’s minister of Economic Development, Jacques Daoust, has invited the new federal government to offer aid like it did to Bombardier. As a Quebec taxpayer, I don’t like to see my government in Quebec City waste my tax money. But it would be even more pernicious for Ottawa to follow suit.

Mr. Daoust justifies his request by saying that the federal government intervened in order to save Ontario’s auto industry. It’s always the same argument from those who see the federal government as a cash cow, wherever they may be in the country: Ontario received this investment, Newfoundland benefited from this programme, Quebec received this amount, that industry was favoured over another. So I deserve it too!

Everyone wants a portion of the big pot of government money. Since governments have spent money carelessly for decades, it is impossible to refute this argument. To give each region the impression of fairness and to buy peace, Ottawa gives in to the pressure and continues to distribute funds that it simply does not have.

This never-ending cycle of subsidies distribution has contributed to the rapid growth of the federal government. Our Conservative government did this as well during the past nine years, even if I would have preferred a different policy.

We must put an end to this dynamic. There is another, simple way for the federal government to show fairness to all regions of the country, to industries, to businesses, as well as to taxpayers: It is to completely stop subsidizing businesses and to reduce their taxes. This is not only a fair solution, but one that is economically efficient. It is a solution that emphasizes the rigorous management of public finances, the accountability of business players and the discipline of the free market. It is the only coherent conservative solution that respects our values of freedom and responsibility.

It is this solution that I will defend in Ottawa. And I hope that the next Conservative government will adopt it once elected in Ottawa or… in Quebec City!

Best success with your convention! Thank you.