The slap always hurts more when it comes from our own side.
That the opposition criticizes the billions in subsidies for the battery sector is in the order of things for the CAQ. But for the big boss of the National Bank to express his skepticism, an extremely rare occurrence on the part of a financier, it pinches more.
Especially since the economic leaders of the Coalition Avenir Québec (CAQ), Pierre Fitzgibbon and Eric Girard, worked at the National Bank.
For a government that is led by business people, normally not keen on state interventionism, it is surprising to see the extent to which the CAQ has its checkbook wide open to help businesses.
Quebec asks civil servants and municipalities to be reasonable. All right. But at the same time, it is the Canadian champion of business subsidies, surpassed only by Saskatchewan1.
On this account, we would not say that the CAQ is the result of a merger with the former Democratic Action of Quebec (ADQ) which promised to cut off the tentacles of the government, considered too intrusive.
The times are changing.
This week, the young Swedish company Northvolt announced the largest private investment in the history of Quebec.
The $7 billion project to build a cell factory – a component of electric vehicle batteries – will be financed 40% by governments, which are injecting 2.7 billion.
Subsequently, governments will pay subsidies of up to 4.6 billion to support production (one third Quebec, two thirds Ottawa), a copy and paste of the aid offered to the United States.
Total for governments: 7.3 billion.
But this is only the beginning. The battery sector, which has invested 15 billion in Quebec so far, could reach 30 billion… or even 50 billion, Quebec suggests. Hello grants!
Of course, we are delighted that the CAQ is on the right side of the energy transition, by developing a cutting-edge industry that will rely on our mineral resources and our hydroelectricity.
But when you “translate ambition into figures, it can make you dizzy”, as the co-founder of Northvolt so eloquently said, in front of an audience of euphoric politicians.
Let’s face it, it’s a big gamble with taxpayers’ money, who have seen some flops in the past.
Think about Magnola, 20 years ago. The company was to produce the cheapest magnesium in the world using our resources and cheap electricity. But the government lost face when the company announced it was closing, unable to compete with China.
Today, taxpayers must cross their fingers that nothing disrupts the plans for the battery sector, in which Quebec has enormous hopes. They must hope that the technology will not be outdated before governments recoup their money, through the economic fallout.
How long will this take? Thirteen years, Quebec estimates for Northvolt.
But to be clear, we would greatly need a Parliamentary Budget Officer, like in Ottawa, who would be able to provide solid and independent advice in order to inform the public debate on crucial issues.2.
The debate concerning the battery sector must notably focus on energy and labor.
We will need a lot more energy. Is a new dam needed? Nuclear? Running our dishwashers at night? Instead of launching piecemeal solutions, the CAQ must lead a national reflection on energy.
Labor will also be needed. Here again, we are ripe for a big discussion. In construction, for example, what are our priorities? Schools and hospitals? Housing ? The development of the battery sector?
The Northvolt factory will need 3,000 workers. Where will we find them? Among other companies whose business model holds up without subsidies?
We are no longer at the time when it made sense to subsidize job creation to combat high unemployment.
It is in this context that the tax credit for the production of multimedia titles was born, 25 years ago. The initiative made it possible to build the Multimedia City. Quebec has become a hub for video games which today employs 13,500 people. A major impact.
But in recent years, many Quebec companies have deplored the fact that foreign companies – major beneficiaries of this credit which costs 340 million per year – are giving them unfair competition by hiring the labor they lack.
Remove credit? Not so simple: multinationals can leave Quebec for a more generous province or country.
This is the same kind of subsidy escalation that is being put in place to stimulate green industry and achieve our GHG reduction targets. The objective is noble. But all this thwarts the OECD, which is bending over backwards to curb global tax competition by establishing a minimum tax for multinationals.
Never mind. The United States has released nearly US$400 billion for green industry. Canada responded with an $82.7 billion plan from which Ontario has already greatly benefited.
Not wanting to deprive itself of the windfall, Quebec therefore enters the waltz of subsidies by saying to itself: everyone is doing it, so do it.
The position of The Press
The development of the battery industry is a noble cause. But the risk is high for taxpayers. In a time of scarcity, we need a national conversation to determine whether this is the most optimal way to use our money, our energy and our workers.