It is impossible to be helpful, truly helpful, without being honest. Real help requires an accurate assessment of the problem and an ability to address it. Pretending to help by applying a pseudo-solution to the wrong problem is not only dishonest, it’s thoroughly unhelpful.
Here’s some hard honesty: we cannot help Churchill by flooding OmniTrax with tax dollars.
This is not a pleasant point. The spectre of losing such a large employer in such a small community is hard. Hopefully there are other ways we can help the 90 people losing their jobs.
However, there are some simple realities at play. Both the federal and provincial government are running significant deficits and can’t afford to speculate on a failing business. But even if the governments Ottawa and Winnipeg were awash in cash, bailouts and subsidies haven’t helped in the past and they won’t help now.
OmniTrax took over the railway and port in Churchill in 1997. It shipped 525,200 metric tonnes of grain in 2014-15. The port’s peak volume came in 1977 with 735,000 metric tonnes. Context on this point is important. Canada’s total grain exports in 2014-15 were nearly 39.7 million metric tonnes. Ports on the St. Lawrence Seaway shipped 6.8 million metric tonnes. Vancouver handled 26.7 million metric tonnes.
The reality is that Churchill has never handled more than a tiny fraction of the huge crops produced by Canadian farmers.
Millions of tax dollars that have poured into the Churchill port over the years have not changed that reality.
Governments combined to spend $150 million on the Churchill port between 1977 and 1994.
The flow of taxpayers’ money didn’t stop when OmniTrax took over. The federal government announced $25 million to subsidize the port over five years starting in 2012. In 2015, the provincial government provided between $800,000 and $1 million in subsidies.
Consider the subsidies poured into Churchill just last year. It totals about $6 million. Divide that number by the 90 jobs and it comes to about $65,000 per job.
Even if those subsidies were doubled and redoubled, would those jobs be any more secure? Would there be any guarantee that customers would start choosing to ship grain through Churchill rather than Thunder Bay or Vancouver? The honest answer is almost certainly no.
The reality is that corporate welfare doesn’t work. Either it isn’t enough to paper over deeper problems, as is case for OmniTrax. Or the business doesn’t actually need the cash, as is the case with the $500,000 in taxpayer cash Maple Leaf used to buy bacon-making equipment (Maple Leaf would have gone through with its $34-million expansion even without the handout).
Even more importantly, those subsidies have to come from somewhere: taxpayers. Imagine what taxpayers could do with this money if their governments didn’t hand it out in corporate welfare. How many plumbers could have hired an apprentice and helped more customers? How many families could have made an extra mortgage payment?
Even worse, cutting this kind of corporate welfare wouldn’t immediately translate into tax relief for local businesses and families because it would get swallowed by gapping deficits. Manitoba is running a $911-million deficit this year. It is an objective fact that the Manitoba government cannot afford to indulge in corporate welfare that simply does not work.
We have to be honest. There should be no tax dollars for OmniTrax. To say anything else would be a lie to the people of Churchill.
Todd MacKay is the Prairie Director for the Canadian Taxpayers Federation.
