Thank you so much, Madam Chair.
Thank you to the committee for having me today. For those unfamiliar with the Canadian Taxpayers Federation, we are a national, non-partisan non-profit with over 235,000 supporters across Canada. We focus our advocacy on three general areas: lower taxation, less government waste, and accountable and transparent government.
I don't know if the committee members have noticed, but we are the only witness here today without a direct link to the aerospace industry. I assure you that it's not my goal to alienate everyone else on the panel today, but I warn you that I may end up achieving it anyway.
I want to start, really, by posing a very simple question that I think the committee needs to ask itself before answering any other question: What is it about aerospace as an industry that makes it different from other industries? I think that question is an important one. The normal starting point for most industries is that they don’t require study by a parliamentary committee in the first place. Every day in Canada we see businesses come and go. Some of them succeed. Some of them fail. In the vast majority of cases....
I want to be clear here that I would exclude the present circumstances of this pandemic. I understand that a lot of the comments today will be with regard to the specific circumstances of the pandemic. I would agree that this is different from business as usual and may require special consideration. Generally speaking, though, the idea of governments riding to the rescue of an industry or business does not normally occur. We need to ask ourselves what it is about aerospace that makes it different as an industry.
One argument we often hear is that it employs a lot of people. That's true, but it's also true of many other industries. Very few of those other industries receive the level of subsidy that aerospace has historically received in Canada. Another argument we often hear is that aerospace jobs pay well. That's also true, but if one has to count the cost of the subsidies, which we should be doing, because the net benefit to the economy, to Canada and indeed to government coffers needs to include costs as well, then that argument also loses quite a bit of its attraction.
Finally, it is often argued that aerospace is a strategic industry that's crucial to an innovation economy. If that's so, it's not really clear what the strategy is other than endless subsidies, since the industry has not ever become self-sustaining in the last half-century, nor has it ever been explained how innovation is best served in any industry—not just aerospace—by shielding and protecting businesses from the disciplining forces of market competition.
At this point, I'm sure we have some committee members, and certainly some folks on the panel, thinking, “That sounds very nice in theory, Mr. Wudrick, but it's terribly naive. The world is not an economics textbook. The global aerospace industry is not a real competitive market. The harsh reality is that foreign competitors to Canadian aerospace all receive support from their respective governments, so Canada must do the same in order to level the playing field.”
I take that as a very significant rebuttal, but it seems to me that it also concedes, right off the top, that taxpayer subsidies are not some sort of exciting opportunity but really just a grim necessity and something we must endure. If they are a necessity, then we need to ask ourselves how far Canada should be prepared to go to defend this industry. If a Canadian company is up against a foreign competitor that has access to exponentially larger subsidies from their own government, how many billions of dollars should Canadian taxpayers be prepared to spend? Should it be $1 billion? Should it be $10 billion or $50 billion? Is there any threshold where anyone within the industry would concede that the costs start to exceed the benefits? If so, what would that threshold be?
Another thing that's important for the committee to consider is what else you are prepared to forgo in order to subsidize this industry. Despite what some folks may insist, resources are not infinite. Every dollar of support that goes to this industry is a dollar that cannot go towards something else. If you were to ask your constituents what their highest priorities were for their own tax dollars, how many of them would tell you that subsidizing aerospace would make that list?
I would close by saying that I don’t begrudge anyone in aerospace coming before you to make the case for government support for their industry. That is their job. If the historical record is any indication, they’re incredibly good at doing it. I would only ask that the committee bear in mind that when everyone in front of them is urging them to spend money and they also stand to benefit directly from that money, they are not exactly getting a representative sample of views on the issue.
Millions of Canadians who will end up paying the freight for such subsidies will never appear before this committee. All I ask is that you consider those unrepresented voices as well when making decisions about how you will support the industry.
Thank you very much.