"If Stellantis is able to net the full C$15 billion from the federal and provincial governments over the next 10 to 15 years, which is based on meeting production targets, this would amount to C$6 million per worker, given that the Windsor plant is projected to employ 2,500 workers. Such a sum would more than cover its entire labor cost at the facility for three decades, meaning that the governments of Canada and Ontario are providing Stellantis with a free workforce into the second half of this century."
EV Battery Production has become a critical National Security issue for most countries.
We don't need yet another B2B SaaS that won't generate more than a couple hundred jobs in its lifetime, but we need EV battery manufacturers to continue to allow the Canadian automotive manufacturing hub in Southern Ontario to exist otherwise Thousands of jobs are lost as well as to allow for backup energy storage facilities to be built as nations begin migrating to renewable energy, which has production peaks
Ontario automotive manufacturing only exists because of corporate welfare, so in that sense I think draining our resources is not the path to being sovereign.
I didn't say fund B2B SaaS instead, I said just don't do corporate welfare. B2B SaaS gets R&D credits here which doesn't make sense either.
> Ontario automotive manufacturing only exists because of corporate welfare, so in that sense I think draining our resources is not the path to being sovereign.
That "corporate welfare" helps employ 136,000 Ontarians as well as maintaining an robust industrial base that can expand into newer critical technologies such as Battery Tech (as is clearly seen in the article above).
"Corporate welfare" is nonsense. As opposed to what? A theoretical total free market? Western governments have tried that for the past few decades, and that's done nothing but hollow out blue collar jobs and produce instability along with deaths of despair and wealth inequality.
The libertarian "free market" myth is effectively dead -- welcome to the age of industrial policy.
It's actually the opposite. In many cases corporate welfare is simply relaxing government taxes.
Governments understand that their taxes are barriers to the jobs and goods they want so they are willing to selectively get out of the way.
It's not a free market, but libertarian treatment for specific companies that they want to succeed.
In this case, nobody wants to build batteries in Canada if the government takes 25% of any profits, so the government has to reduce their take if they want battery factories
Well, for starters Ontario’s provincial government (the Progressive Conservatives led by Doug Ford) just handed an estimated $8b in “free” value to developers that owned previously-non-developable protected land on Ontario’s Greenbelt. Conveniently, those developers themselves had direct influence over which parcels would be unlocked. Additionally, some of those same developers made personal appearances at a cash fundraising event for the Premier’s daughter’s wedding.
> The political staffer took the instructions from two developers in envelopes handed to him at a September, 2022 dinner hosted by BILD, the principal lobby group for the residential building industry.
This is not conjecture, but rather the determination of a newly released report from the province’s auditor general.[1]
This is also the same province that leased a major highway, the 150km-long 407, to a private corporation for 99 years for just $3b in 1999 (in a deal facilitated again by the Progressive Conservatives). It is estimated this highway is worth over $30 billion dollars today.[2]
---
Now, the Stellaris and Volkswagen deals are a federal/provincial partnership, but my goal here was to highlight that Ontario has a history of self-owns.
Well for one thing, maybe if this international green tech "race to the bottom" goes fast enough, Canada's forests won't completely burn to the ground.
One way or another the company's obligations are down. Company revenue is ~$200B/yr so they will easily take advantage of the full tax exemption, which you could then think of as paying workers or any other business expense (pessimist note: I strongly suspect it will not go towards higher wages or better working conditions).
Volkswagen and Stellantis have 200B Canadian revenue? Where are you getting your numbers from?
That's 10% of Canada's entire GDP
The profits might not go to the workers, but whatever they will be getting paid to work at a battery Factory is more than zero for not working. If a battery Factory doesn't pay more than the next best job, they won't have any employees
In concept, that could work. People would be willing to take lower paid jobs if they were tax-free and therefore the cost of Labor at the battery Factory would be less.
However, the general Canadian public would flip their s** some people were given income tax deductions based on their job while they weren't.
The auto plants in ontario havent paid their employees in decades. This isn't new.
It goes back to 2003, the ontario liberals got into power and implemented manufacturing taxes against the autoplants. Ontario shed about 800,000 manufacturing jobs over this idiotic move.
But what ended up happening is 2 fold, they outsourced their assembly to live external plants. Avoiding these new taxes but also greatly reducing the number of employees needed for the main plant itself. So you are hiding the thousands of other workers.
The final major change is that the ontario government eventually had to come in and effectively give them all those taxes right back in subsidies. Why stay?
This is also why the Ontario Liberals basically dont exist anymore. They crushed Ontario pretty badly.
Canada has a pretend economy for the most part (outside of resources). It's just government money sloshing around, giving us the appearance of participating in various industries. Look at AI, video game subsidies, all R&D (SRED is basically a scam), and there are worse ones than that...
It is surprising how people don't understand this and perceive that actual productivity happens, when in practice it's so uncommon to be unusual. The amount of people who work in "startups" but actually work for government funded accelerators, investment funds that only invest in Shopify, government jobs relating to startup R&D, as opposed to actual startups, is shocking.
If your paycheck is predicted on you not understanding it, why rock the boat? What are the alternatives? Attempt to make a go of a startup yourself with the astoundingly high failure rate? Go work for someone else? Playing pretend can be lucrative and comfortable, and life is hard and unfair; I fault no one for doing so.
(if you don't know at all, that's entirely different; situational awareness is invaluable)
The amount of people who work in "startups" but actually work for government funded accelerators, investment funds that only invest in Shopify, government jobs relating to startup R&D, as opposed to actual startups, is shocking.
Yeah I don't think there's anyone left. It's tough to find certainly a Series A or later that isn't invested in by BDC, CDPQ, etc. They think they're helping but they're actually destroying the potential of the industry, everyone with a good idea just goes to the US.
Not true, I live there. The accelerators are mostly occupied by big companies hoping to convince their team they work for a startup. The number of high quality startups is low and they mostly either raise from the US (what we did) or just relocate there permanently. There's more Waterloo grads working on high quality startups in each of Miami, Austin, SF and New Year than there are here.
This seems to be the case across most countries in the world except the US and China. The lack of such funding means the lack of any serious startup scene.
> Canada has a pretend economy for the most part (outside of resources)
What do you mean by “pretend economy”? When I look at https://en.wikipedia.org/wiki/Economy_of_Canada and consider Canada’s ranking across a broad range of metrics, it looks pretty real to me.
> It's just government money sloshing around, giving us the appearance of participating in various industries
Canada is resource rich like Australia or Qatar. It’s certainly doing better, from an economic perspective than Australia due to its neighbor being the first economy in the world.
But it doesn’t seem to change the underpinnings. Resource led countries develop power structures around these resources and it doesn’t seem that Canada is immune to that. This affects the economy.
don't forget about household debt exceeding GDP, with the housing market just being a ponzi scheme held up by a combination of foreign investors, immigrants, and a lack of new construction.
(1) China is going to do it, so the United States is going to do it, so the EU is going to do it, ...
(2) Really the world should just enforce a carbon tax of $50-100 a ton and rebate it to make it revenue neutral. In that case market mechanisms would be harnessed to develop a post-fossil fuel economy. It's conceivable such a mechanism would be perceived as "fair" in one country but it would be so fraught when the global north and south would be involved. The global south would want to be paid reparations for colonization, whereas the north would see the money being stolen and pissed away by governments and well-positioned individuals in the south: the south doesn't have the institutions to be able to received such a windfall. It wouldn't get so far, however, with voters in the south, who would be opposed to such a thing on the basis of simple racism.
It is much more palatable therefore to promote decarbonization through random subsidization projects like the above despite all the problems they entail.
No one country can do it alone. It's a cop-out that it is simply a problem of the global north because if you add up emissions from developing countries it is a lot
If a zone like the US or the EU imposes a carbon tax but some other zone such as China, does not, it will perceive unfair competition. Already everybody in global trade thinks the situation is unfair (This situation https://en.wikipedia.org/wiki/Corn_Laws that dominated UK politics in 1850 still dominates world politics today and is the real reason why the WTO hasn't recovered from "The Battle of Seattle")
and the answer we seem to have chosen is ecological collapse and die-off. Whoever is left behind is going to turn their backs on everything our civilization stands for (look how Rome's literature was purposefully destroyed;) it would be hopeful that people would embrace some kind of governance to deal with global problems by then but which much fewer people those problems might not seem so salient and that rejection might be more fundamental than that.
> President Biden's Bipartisan Infrastructure Law invests $7.5 billion in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals, and materials
Not sure what is unusual about Canada investing in things we want to get done too.
Sorry to argue semantics, but how are these "investments"? This money doesn't generate a return or grant equity to the taxpayers.
This is simply free money given to companies owned by politically connected people. It's marketed as helping "clean energy" or so they more easily jam it down the taxpayers throats.
Umm, investing in Education should mean more money for schools.
This is a taxpayer funded blank check for politically connected people to spin up private companies and risklessly get rich. The solution is simple: Give the taxpayers equity in the companies.
European companies in this case... Stellantis is Fiat (Chrysler), and VW is German, obviously. The American companies' battery plants are spoken for in the U.S. :P
> If Stellantis is able to net the full C$15 billion from the federal and provincial governments over the next 10 to 15 years, which is based on meeting production targets, this would amount to C$6 million per worker, given that the Windsor plant is projected to employ 2,500 workers. Such a sum would more than cover its entire labor cost at the facility for three decades, meaning that the governments of Canada and Ontario are providing Stellantis with a free workforce into the second half of this century.
I don't think you can equate depreciating equipment against income on your tax return (which is considered to be an "oil company subsidy" by many) with straight up free money from taxpayers like this.
They can have similar impacts but they're not the same as cash.
If I decide not to take a dollar from your wallet, that's not the same as if I gave you a dollar.
I totally agree that tax exemptions are unequally applied. That's because you and I don't have something to government wants and can't take our ball and go home. We can be extorted because we have no leverage and we're not going to do anything about it
Canada:
- squash innovation and entrepreneurs with high taxes and regulations
- try to bring big players with subsidies and tax exemptions.
Innovation is bottom up, come from small player that grow (Tesla) If the conditions are not right for those kind of players don't expect the big players to save you (they are on their way out anyway)
Most of the automakers will not survive the transition to EV. They resisted as long as they could. Now they are trying to catch up but are loosing money on each vehicles and Tesla is still growing 50% YoY.
I expect EV from China/Korea to be the androids of ev and Tesla to continue to be the iphone. If I ever buy an EV other than a Tesla it will be because it’s massively cheaper. This mean almost impossible margin for other manufacturer.
55 comments
[ 2.9 ms ] story [ 103 ms ] threadMake it make sense!
We don't need yet another B2B SaaS that won't generate more than a couple hundred jobs in its lifetime, but we need EV battery manufacturers to continue to allow the Canadian automotive manufacturing hub in Southern Ontario to exist otherwise Thousands of jobs are lost as well as to allow for backup energy storage facilities to be built as nations begin migrating to renewable energy, which has production peaks
I didn't say fund B2B SaaS instead, I said just don't do corporate welfare. B2B SaaS gets R&D credits here which doesn't make sense either.
That "corporate welfare" helps employ 136,000 Ontarians as well as maintaining an robust industrial base that can expand into newer critical technologies such as Battery Tech (as is clearly seen in the article above).
The libertarian "free market" myth is effectively dead -- welcome to the age of industrial policy.
Governments understand that their taxes are barriers to the jobs and goods they want so they are willing to selectively get out of the way.
It's not a free market, but libertarian treatment for specific companies that they want to succeed.
In this case, nobody wants to build batteries in Canada if the government takes 25% of any profits, so the government has to reduce their take if they want battery factories
> The political staffer took the instructions from two developers in envelopes handed to him at a September, 2022 dinner hosted by BILD, the principal lobby group for the residential building industry.
This is not conjecture, but rather the determination of a newly released report from the province’s auditor general.[1]
This is also the same province that leased a major highway, the 150km-long 407, to a private corporation for 99 years for just $3b in 1999 (in a deal facilitated again by the Progressive Conservatives). It is estimated this highway is worth over $30 billion dollars today.[2]
---
Now, the Stellaris and Volkswagen deals are a federal/provincial partnership, but my goal here was to highlight that Ontario has a history of self-owns.
[1] https://ca.news.yahoo.com/ontario-auditor-general-unwraps-do...
[2] https://www.thespec.com/news/canada/birth-of-a-fiasco-how-th...
You can't pay workers for 10 years with a tax exemption alone. You still have to make money selling product.
Similarly, those workers won't have income tax exemptions
That's 10% of Canada's entire GDP
The profits might not go to the workers, but whatever they will be getting paid to work at a battery Factory is more than zero for not working. If a battery Factory doesn't pay more than the next best job, they won't have any employees
Seems unfair - why not give workers tax exemption instead, let the companies pay there way. You will attact the best talent, or so the theory goes!
However, the general Canadian public would flip their s** some people were given income tax deductions based on their job while they weren't.
It goes back to 2003, the ontario liberals got into power and implemented manufacturing taxes against the autoplants. Ontario shed about 800,000 manufacturing jobs over this idiotic move.
But what ended up happening is 2 fold, they outsourced their assembly to live external plants. Avoiding these new taxes but also greatly reducing the number of employees needed for the main plant itself. So you are hiding the thousands of other workers.
The final major change is that the ontario government eventually had to come in and effectively give them all those taxes right back in subsidies. Why stay?
This is also why the Ontario Liberals basically dont exist anymore. They crushed Ontario pretty badly.
(if you don't know at all, that's entirely different; situational awareness is invaluable)
That free college for enby First Nations students? The new Montreal REM? Don't ask how they're paid for.
What do you mean by “pretend economy”? When I look at https://en.wikipedia.org/wiki/Economy_of_Canada and consider Canada’s ranking across a broad range of metrics, it looks pretty real to me.
> It's just government money sloshing around, giving us the appearance of participating in various industries
Whence does this money hail?
Not the parent, but a guess: natural resources extraction?
But it doesn’t seem to change the underpinnings. Resource led countries develop power structures around these resources and it doesn’t seem that Canada is immune to that. This affects the economy.
In addition to https://en.wikipedia.org/wiki/Economy_of_Canada (linked above), Investopedia further clarifies that Canada's top industries are [1]:
- Real Estate, Rental, Leasing
- Manufacturing
- Mining, Quarrying, and Oil and Gas Extraction (representing 15.1% of GDP, for the 12 months ending 2021)
[1] https://www.investopedia.com/articles/investing/042315/funda...
(1) China is going to do it, so the United States is going to do it, so the EU is going to do it, ...
(2) Really the world should just enforce a carbon tax of $50-100 a ton and rebate it to make it revenue neutral. In that case market mechanisms would be harnessed to develop a post-fossil fuel economy. It's conceivable such a mechanism would be perceived as "fair" in one country but it would be so fraught when the global north and south would be involved. The global south would want to be paid reparations for colonization, whereas the north would see the money being stolen and pissed away by governments and well-positioned individuals in the south: the south doesn't have the institutions to be able to received such a windfall. It wouldn't get so far, however, with voters in the south, who would be opposed to such a thing on the basis of simple racism.
It is much more palatable therefore to promote decarbonization through random subsidization projects like the above despite all the problems they entail.
How does that work, again?
No one country can do it alone. It's a cop-out that it is simply a problem of the global north because if you add up emissions from developing countries it is a lot
https://www.cgdev.org/media/developing-countries-are-respons...
If a zone like the US or the EU imposes a carbon tax but some other zone such as China, does not, it will perceive unfair competition. Already everybody in global trade thinks the situation is unfair (This situation https://en.wikipedia.org/wiki/Corn_Laws that dominated UK politics in 1850 still dominates world politics today and is the real reason why the WTO hasn't recovered from "The Battle of Seattle")
It is the mother of all
https://en.wikipedia.org/wiki/Collective_action_problem
and the answer we seem to have chosen is ecological collapse and die-off. Whoever is left behind is going to turn their backs on everything our civilization stands for (look how Rome's literature was purposefully destroyed;) it would be hopeful that people would embrace some kind of governance to deal with global problems by then but which much fewer people those problems might not seem so salient and that rejection might be more fundamental than that.
I've heard Canada described as three mining companies standing on each other wearing an overcoat.
Canada doesn't have states...
Not sure what is unusual about Canada investing in things we want to get done too.
Canada doesn't have domestic equivalents...
This is simply free money given to companies owned by politically connected people. It's marketed as helping "clean energy" or so they more easily jam it down the taxpayers throats.
In the same way that we invest in healthcare and invest in education...
Just because you cannot easily quantify a monetary return, that doesn't mean that it's not an investment...in my opinion
This is a taxpayer funded blank check for politically connected people to spin up private companies and risklessly get rich. The solution is simple: Give the taxpayers equity in the companies.
> If Stellantis is able to net the full C$15 billion from the federal and provincial governments over the next 10 to 15 years, which is based on meeting production targets, this would amount to C$6 million per worker, given that the Windsor plant is projected to employ 2,500 workers. Such a sum would more than cover its entire labor cost at the facility for three decades, meaning that the governments of Canada and Ontario are providing Stellantis with a free workforce into the second half of this century.
I don't think you can equate depreciating equipment against income on your tax return (which is considered to be an "oil company subsidy" by many) with straight up free money from taxpayers like this.
The issue is that you and me can't just start any company and take advantage of this.
You must be politically connected to receive these special taxpayer-funded gifts.
If I decide not to take a dollar from your wallet, that's not the same as if I gave you a dollar.
I totally agree that tax exemptions are unequally applied. That's because you and I don't have something to government wants and can't take our ball and go home. We can be extorted because we have no leverage and we're not going to do anything about it
Innovation is bottom up, come from small player that grow (Tesla) If the conditions are not right for those kind of players don't expect the big players to save you (they are on their way out anyway)
Most of the automakers will not survive the transition to EV. They resisted as long as they could. Now they are trying to catch up but are loosing money on each vehicles and Tesla is still growing 50% YoY.
I expect EV from China/Korea to be the androids of ev and Tesla to continue to be the iphone. If I ever buy an EV other than a Tesla it will be because it’s massively cheaper. This mean almost impossible margin for other manufacturer.