One of the problems with this debate is that while the beneficiaries of government handouts are highly visible, the payers of those costs are dispersed and therefore invisible. We have the visible benefit and invisible cost.
It reminds me of about four years ago when the Ontario government showed up to a manufacturer and gave a big fat grant. The company took the money and said afterward that the existence of the grant will create no additional jobs. They said that they would do the project in which they were investing with or without the grant, but given the opportunity for free money, they'd take it. There's a saying in economics that if somebody's throwing money out a window, stand next to the window. You can't really blame the business for doing the rational thing, although it's irrational for taxpayers to be paying the cost. That cost is real, and the only benefit was to the shareholders of that company and to the politicians in the provincial government who got to show up, present a cheque and pretend that they were responsible for a bunch of jobs that would have happened with or without them.
My question is for Mr. Cross. These economic development agencies and governmental bureaucracies will regularly generate one-sided reports to claim benefits from their subsidies. They will say that this subsidy created 10 new jobs. They won't prove that those 10 jobs would not have existed without the grant; in many cases, they would have. They will say, for example, that the subsidy has leveraged $5 of investment for every $1 in taxpayer contribution, but offer no proof that the $5 would not have otherwise been invested somewhere else, acting on the assumption that the investors would have taken their $5 and just put it under a mattress had there not been a subsidy in place.
They don't perform any calculation for the costs to a competitor. For example, in my riding, a guy developed a smart phone app, only to discover that a competitor who invented the same app a year and a half later got a subsidy to do it. Now his competitor has taken all of the business because he has an extra pile of free cash to pay for his marketing. They don't measure the cost to the original inventor of a subsidy being given to his competitor.
There are all these invisible costs, such as opportunity cost, the cost to taxpayers and the cost to competitors. All of these costs are real, but they're not calculated anywhere.
Dr. Cross, you are the former chief economic analyst of Statistics Canada, so you would know more than almost anyone about how to measure and calculate things. How could we create a model to properly calculate the cost of corporate welfare, so that we no longer have these one-sided analyses from government departments, lobbyists and other insiders that only show the purported benefits?