'I think those spends are more about politics than they are about economic development,' says professor
Experts are criticizing the federal government for investing a ton of money to create a limited number of jobs.
Last week, Ottawa announced it would invest over $1.7 million in Italpasta Limited – based in Brampton, Ont.– to enhance the production of its made-in-Canada pasta products.
The investment in the family-owned and operated will create 10 jobs.
The investment “underscores our commitment to supporting Canadian businesses and industries as they produce quality made-in-Canada products and grow our economy. These investments not only strengthen the competitiveness of Canadian companies, they also contribute to our long-term economic growth,” said Filomena Tassi, minister responsible for the Federal Economic Development Agency for Southern Ontario.
“Investments like these are making a difference in our economy & helping businesses grow,” she added via a post on X.
This did not sit well with Stephen Gordon, an economics professor at Laval University, according to a CBC report.
He tweeted: "Do they not understand just how insane this is? That spending north of $170k for *one job* is an embarrassment, not an achievement?”
Meanwhile, Ontario would need an additional 33,200 nurses and 50,853 personal support workers (PSWs) by 2032, according to a report from The Canadian Press citing data from the federal government.
$5 billion EV subsidies for 1,000 jobs
Late in April, the federal government announced that it, along with Honda, will be building a new electric vehicle battery plant in Ontario, next to the existing Alliston assembly plant.
The $15-billion project is expected to create 1,000 new jobs in addition to the 4,200 already existing at the plant, which will be retooled.
The federal government is expected to give Honda roughly $2.5 billion in tax credits for clean energy and electric vehicle supply chain investment. Meanwhile, Ontario will contribute up to $2.5 billion for capital costs and site services.
The $5 billion EV subsidies for 1,000 jobs means taxpayers are paying $5 million per job.
"There is really no underlying economic rationale," said Robert Gillezeau, assistant professor of economics at the University of Toronto's Rotman School of Management, in the same CBC report. "I think those spends are more about politics than they are about economic development."
"You're introducing an economic inefficiency to the market."
Gillezeau believes Canada’s economy will be better served if the government would spend the money elsewhere.
"If we think about things like the power grids or the rail network or roads… those things are going to yield much larger returns quickly,” he said.
"You could go out and ask a bunch of economists and you'd probably find hundreds of programs that would do a lot more for economic growth than giving a couple of tens of billions of dollars to the auto companies."
Nearly six in 10 (58%) of Canadian CEOs believe that Canada is either already in a recession or will be in one soon this year, according to a previous report.
