The grand bargain starts to fray at the edges

I just heard that Jim Flaherty says there is $250 million in federal funds for GM to open a new plant in southern Ontario. Throw in a match from the province and you are looking at serious coin in terms of incentives. I suspect that Fiat has been offered a similar deal. After all, after Toyota, Chrysler, GM and Ford get these types of deals, it’s only fair.

Guess how many companies in New Brunswick have received $100 million or more from provincial and federal governments (direct incentives)? Zip.

Guess how many Ontario companies have received $100 million or more from provincial and federal governments (direct incentives)? I’ll take your fingers, and toes and much of the hair on the top of your head.

But that’s been what I call the grand bargain, hasn’t it? Ontario gets 75% of all new companies that move into Canada (in many cases with huge government incentives) and places like New Brunswick get some of the largess skimmed off in the form of Equalization. The grand economic development bargain.

Now, Daulton McGuinty wants to scrap Equalization and also wants $250 million from the feds everytime a new auto plant comes along. The problem is that his rationale for all this dough has been that “Ontario is the economic engine for the rest of Canada”.

The wheels on the bus go round and round, round and round, round and round – unless that bus is made in Oshawa, I guess.

Don’t get me wrong. Auto plants are big economic generators. Dropping 2,600 $36/hour jobs in Ontario does have ripple effects felt all the way down to Bouctouche.

Canada needs a strong Ontario the same way New Brunswick needs a strong Saint John (remember all the growth in Moncton and Freddy in the 1990s) were not enough to bring the overall province into positive population growth).

But now good for the goose, good for the gander comes into play. Maybe those $250 million packages should be available for large projects in New Brunswick, as well?

NBT won’t be too thrilled that the Tories are throwing around this kind of dough but it’s realpolitik – economic development style. $1 billion for biofuels plants in the strongest part of Canada, billions for auto plants in Ontario, almost a billion for sustainable technologies development -95% in southern Ontario — and a few more bucks for tourism in New Brunswick.