Federal government will break even in 20 years on its $28.2B EV plant subsidies: report-صحيفة الصوت

It will take 20 years for the federal government to break even on its pledge to give $28.2 billion in production subsidies to automotive plants in St. Thomas and Windsor in southwestern Ontario, according to a report released Tuesday by the Parliamentary Budget Officer (PBO).

The report says it will be 2043 before the Stellantis-LGES EV battery plant in Windsor and the Volkswagen plant in St. Thomas generate enough federal and provincial tax revenue to total the subsidies.

PBO Yves Giroux said this shows Ottawa likely drastically underestimated in the spring when it said it would earn back the VW subsidy in under five years. 

Such estimates, he said, assume widespread economic growth in Canada’s automotive sector as a result of the new plants. His report makes more conservative estimates.

“Our report is less wildly optimistic and more reasonable,” he told reporters Tuesday.

“If we end up being wrong, so much better for the country. But I don’t think we’ll be that far off.”

Ottawa committed in the spring to give Volkswagen up to $13 billion in subsidies over the next 10 years to secure the battery plant in St. Thomas. That plant will be the size of 391 football fields and bring auto jobs to the region. 

Stellantis-LG halted construction on a Windsor plant this summer, saying the provincial and federal governments would need to come through with more than the initial investment of $500 million. Construction resumed after the governments announced up to $15 billion in subsidies.

That plant is expected to open in 2024 and employ about 2,500 people. 

Ottawa will cover two-thirds of the subsidies, or $18.8 billion combined, for Stellantis-LGES and Volkswagen, and Ontario will provide $9.4 billion. 

Ontario hasn’t announced a break-even timeline for the plants, the PBO report says. But Giroux said it will likely be the same as Ottawa’s — about 20 years. 

Jay Goldberg, a spokesperson for the Canadian Taxpayers Federation, said Giroux was right to make conservative estimates about the boon these projects would bring to the Canadian auto industry.

He said the way to handle such cases is to improve the Ontario economic climate for investment, rather than offer massive subsidies.

“It’s important for governments to come out and say, ‘We’re done. No more corporate welfare. No more handouts.'”

Irek Kusmierczyk, Liberal MPP for Windsor-Tecumseh, said that by not incorporating the major economic spinoff the plants will create, the PBO isn’t looking at the whole picture.

That’s also why there was a difference between the government’s break-even estimate and the PBO report, he said.

“Where it falls short is it doesn’t capture those secondary investments.”

As for the investment, Kusmierczyk said, “I would make this decision a hundred times over, without blinking an eye.”