Automotive giant Honda will be getting $5 billion in subsidies from the federal and Ontario governments towards its $15 billion investment in four new electric vehicle plants.
Prime Minister Justin Trudeau and Ontario Premier Doug Ford announced Honda’s plans to build the EV plants Thursday but were scant on details about how much taxpayers were on the hook for.
The $5 billion figure, shared by the federal and provincial governments, has raised eyebrows from critics of corporate welfare.
Domestic policy analyst Aaron Wudrick of the Macdonald-Laurier Institute, noted on X that $5 billion in subsidies to create 1,000 jobs – the new jobs promised by Honda and the government – would cost Canadians $5 million dollars per job.
Honda would be spending $15 billion on four new electric vehicle plants in Ontario and the Canadian taxpayer will be footing one third of the bill.
Trudeau said the jobs would be secured for “decades and even generations.” Trudeau also mentioned he believes this move will create jobs across the country for auto parts suppliers.
Trudeau also defended the expenditure as supporting Canada’s social and climate goals by going all-in on electric vehicles.
“Honda has set a goal to make EVs represent 100% of vehicle sales by 2040. In Canada our target is that 100% of all light duty cars and passenger truck sales be zero emission by 2035,” Trudeau said. “Climate policy is economic policy and, with its impact on families and communities around here, It’s also social policy.”
In Thursday’s episode of True North’s The Andrew Lawton Show, Wudrick said the move is a waste of public resources in the pursuit of a social goal.
“I hope they’re really well paying jobs if we’re paying $5 million a pop just to create them,” he said. “The reality is we are paying these companies to create these jobs.”
When converted to Canadian dollars, Honda made over $12 billion in profits last year.
“This is not a company that is hard done by. This is clearly a company that’s got the resources to invest their own money,” Wudrick said. “We pay taxes for public services, instead they’re turning around and giving it to a very profitable, multinational corporation.”
Wudrick said 1,000 jobs is not as much of a cause for celebration when the price tag for them is so high.
“Everytime I hear politicians talk about good paying jobs and the importance of them, that’s always on the presumption that they’re being generated by the private sector. If you’re going in and essentially paying the salary of these people for the company, it’s not really a private sector job,” he said. “It’s essentially a government job masquerading as a private sector job.”
When government spends money this way, it’s not spending on public goods Canadians expect their tax dollars to support, Wudrick noted.
“These kinds of announcements are taking resources out,” he said. “We’re not spending on things like roads and hospitals and schools and the kinds of things you expect your tax money’s supposed to go towards.”
He said the government is attempting to centrally plan the economy with what is supposed to be a private actor.
The government also claimed in its announcement that the funding will retain 4,200 existing jobs at Honda’s Alliston, Ont. plant. This claim is also Dubious, Wudrick charged.
“That starts to sound to me a lot like a ransom fee, right?” he said. “When governments signal that they’re willing to play the game. (Corporations) get taught to do this, right. They get taught that ‘I should look for the handout, frankly, because what if my competitor doesn’t?’”