MyLibrary Dashboard

Back to Dashboard Print
book cover

Summary

In 1972, federal NDP leader David Lewis launched an attack on Canada's corporate welfare system, citing the millions of dollars in government subsidies to wealthy corporate giants permitted by government to escape paying their fair share of income taxes. Lewis provides the detailed facts and analysis supporting his charge that "government and big business are holding hands - in your pocket.



Louder Voices

The Corporate Welfare Bums

Lewis, David


Chapter One
The Corporate Welfare State

Capital-cost allowances are not the only concessions given to corporations, but they are the most significant in economic terms, Besides draining revenue from the government, they introduce a bias in the direction of our economic growth. As a result, the individual Canadian is hit two ways. In the first place, individual taxpayers have had to make up for revenue losses incurred by the higher allowances to corporations. In 1951, corporate direct taxes amounted to 28 per cent of all revenues collected by the federal government. Individuals contributed 26.7 per cent. By 1973, according to John Turner's budget, individual taxpayers will provide 49.9 per cent of government revenues, while corporations will make up only 12.2 per cent. end marker


Chapter Three
The Extractive Industries

We are lucky beyond belief in what we have been given in the way of natural resources. But we are also unfortunate beyond belief in the way in which those resources are squandered. In terms of the advantages we get from them, we are no better off than most banana republics. In fact, we're worse off than some.

The companies that extract our natural resources are largely owned or controlled by the foreign countries that consume them. The oil and gas industry is 74 per cent foreign controlled. The mining and smelting industry is 65 per cent foreign controlled-mainly in the United States.

The companies that extract our natural resources are largely owned or controlled by the foreign countries that consume them. The oil and gas industry is 74 per cent foreign controlled. The mining and smelting industry is 65 per cent foreign controlled-mainly in the United States.

Thus, we have two major problems rolled into one: the threat to Canadian independence, and the depletion of our resources without matching benefits. end marker

To tax the mining companies fairly, however, would likely involve a slowing-down for a temporary period of exploration and new mine openings in the industry. This would not necessarily be a bad thing at all. Far from being a disadvantage of fair taxation, it would be one of the positive benefits. For the hard fact is that we are being played for suckers by some very smart international corporations and home-grown stock-exchange operators.

Canada is one of the largest storehouses of mineral wealth in the world. That wealth is a fixed amount. It cannot increase. It can only diminish as our rapidly advancing industrial societies gulp more and more raw materials to make the things that our industry produces, to move our cars, to heat our homes, to do all the million and one things that we need metals, oil and gas for.

As the world's population rises, as the demand of the world's people for a fair share of the world's goods rises, the value of raw materials is going to rise. All the studies that have been done forecast increasingly severe raw-material shortages in the United States in the years to come. That country was once a major exporter of oil; it has been an importer for many decades, and will continue to be so despite the recent finds in Alaska. The shortage of natural gas in the United States has grown so substantially that industry sources now talk of tripling the price. Even our own Canadian gas authorities, doubting the industry's inflated estimates of potential reserves, have grown reluctant to authorize further exports to the United States on the grounds that we will need the gas ourselves. The prices of industrial metals have risen sharply over the past decade. There is every reason to expect them to keep on doing so over the long term. end marker

We also pay in other ways. The huge amounts of borrowing needed put stress on capital markets. That pushes up interest rates, including those on home mortgages. The high interest rates attract foreign capital flows, which push up our exchange rates. The rise in the exchange rate makes our manufactured exports more expensive on world markets, and thus holds down new job creation in the manufacturing industry. We suffer in indirect ways from the irrational preference that Mr. Turner and his Liberal and Conservative predecessors have had for the mining industry.

The hidden burdens are very real. Statistics Canada does not add them up, so we cannot tell how much extra the small increase in mining jobs has actually cost us over the last ten years.

An expanding population will, of course, require investment in municipal services even if no new mines are opened. But the expense of building new roads, railways, ports or air facilities is avoided when development occurs in or near the towns and cities where people already live. The cost to government to you and me of the services required for 1000 jobs in Prince Rupert, in Regina, in Winnipeg, in Thunder Bay or in Bathurst is much lower than when a new mine is opened fifty or one hundred miles from a road. end marker

What would a rational policy be?

A rational national policy towards the mining industry should be high on our list of priorities.

The essence of that policy should be fair treatment of the operators of our mines, gas and oil wells. Profits from these operations - despite their extractive nature -should be treated and taxed on the same basis as the profits of our other corporations. There is no reason to go on subsidizing the running down of our resources by maintaining mining corporations as the favoured darlings of the tax rip-off system. That must end.

We must, though, not merely insist that they pay their taxes. We must require them to set aside, during the fat years, the funds to ease the exceptional human and economic problems they will inevitably leave behind when they have run out of ore. There is no reason why their workers and the taxpayers should be the ones to suffer. What we need is a fair tax arrangement sufficient to build up a fund to pay for early retirement benefits, retraining and mobility grants, the losses workers must take on their homes and the losses the towns must take on their bonds.

If the combination of these two things were to slow down the opening of new mines for a while, that would be entirely a good thing. Our investment priorities have been distorted by the tax system. They desperately need a new direction.

If we present the bill to the corporations they will pay. They certainly have the money. But we cannot even present the bill if we have governments that must rely - as Mr. Trudeau and Mr. Stanfield do - on the campaign contributions of the firms themselves.

It is as simple as that. Welfare is for the needy, not big and wealthy multinational corporations. end marker


Chapter Four
The Land Envelopers

Most housing built in the next decade will probably be constructed on land already owned by one of a few large builder-developers who have come to control land markets in recent years. The recently released Dennis report, * which presents the findings and recommendations of a Central Mortgage and Housing Corporation study group commissioned to advise the government on policies for low-income families and individuals, shows the extent of monopolistic and oligopolistic land holdings in Canadian cities (see Louder Voices.doc).

Many ordinary Canadians will be surprised by the extent of market concentration. The figures in the above table are only an indication of the degree of monopoly and oligopoly control that exists. The holdings of a number of other large companies are not shown, since these companies are not among the largest six in a given community.

Land developers also have many ways of controlling local land stocks. Their land options do not appear in this table; nor does land held in trust for the developer or held in other corporate names, many of which are difficult to trace. What the table does show is that at most, six land developers control the land markets in many Canadian cities. If you move to a new home in the next decade, it will likely be built on their land, which they will sell at vastly inflated prices. end marker

The taxation system also discriminates against the average Canadian who needs shelter for his family. The system works against comprehensive planning, confuses priorities, misallocates funds, discriminates against maintenance and operation of existing housing stock, induces wide-spread destruction of such stock for high-density rental dwellings and effectively puts a large portion of the Canadian population at the mercy of the whims and vagaries of the corporate developer landlords. Government has recreated the feudal lords. These modem barons control most of the land available for housing around our major cities, while the inner cities have become the personal fiefdom of the corporate landlords. end marker


Chapter Six
Alphabet Soup


MACH

Corporations, however, have been treated differently since 1968. Under the Machinery Remission Program (MACH), their machinery, accessories, attachments, control equipment, tools and components purchased abroad now receive a special con¬sideration in that the government remits to the user all customs duty paid on such items. end marker


Chapter Eight
Beyond the Corporate Welfare State

I say it is the government's responsibility to do the job. Governments are elected by people; corporations are not. Governments must answer to the people; corporations must answer only to their boards.

For this reason I reject the solutions of the past. I oppose unbridled give-aways to corporations, programs without strategy, evaluation or fair returns to the people of Canada.

I believe that every Canadian has the right to share fairly in the wealth of our country, regardless of where he lives. But I emphatically do not believe that private enterprise alone can be relied upon to make these rights a reality. If it could, poverty and regional disparity would not have arisen in the first place.

Free enterprise has a role in our society. But its role must be in accord with the objectives of our people. Only where this role contributes to our well-being should we give encouragement through the use of public funds.

In the last eight years, the federal government gave away $3.5 billion to industry in the form of grants and other subsidies, and approximately twice as much in income-tax concessions - a total of $10 billion to the corporations, most of them large and wealthy. Despite all this corporate welfare, hundreds of thousands of Canadians are jobless, and millions are living in poverty. Messrs. Trudeau and Stanfield talk about the importance of "business confidence." With profits rising every year, I don't believe we have to cater any longer to this bromide. It is the confidence of ordinary Canadians, especially those people who have no jobs and no future, that concerns me. No matter what statistical trickery the government may choose to use, half a million people, and often more, are being sacrificed to the powerful gods of the free-enterprise myth. And millions more are squeezed by high taxes, high interest rates and the rising cost of food and shelter.

The government must stop its haphazard give-away programs. It must start with concrete and detailed objectives to develop a strategy.

A fair distribution of income should be the first and paramount goal. In this wealthy nation there is no reasonable excuse for poverty to ravage whole regions and whole segments of the population.

The present maze of corporate welfare programs undoubtedly arose piecemeal. It was not part of a grand design; it just happened. It happened because there was a highly favourable disposition to corporations on the part of government. But it happened also because the government had neither the imagination nor the courage to look for new solutions. Moreover, existing grant systems, too often contradictory and ineffective, are allowed to continue only because the cabinet minister administrating the program is too powerful to be challenged. Old soldiers never die; old grant programs seldom fade away. end marker

Special concessions to the mining and petroleum industry must end. These are the least justifiable concessions of all in terms of job creation or long-range economic benefits to our country. They have served to divert capital from secondary industry, which does create considerable employment, and they have encouraged foreign-owned companies to gorge themselves on our precious, non-renewable natural resources. The amounts involved here are even larger than those in the preceding paragraph.

We propose to end the accelerated depreciation provisions that have been substituted for the three-year tax holiday. Depletion allowances of all types should no longer be permitted. Mining and petroleum companies should be made to pay for the right to exploit our minerals rather than deducting payments from their tax bill because the resource will run out. If our resources are depleted, it is we, the people, who suffer, not the companies. The companies pack up and move on. We are left with the ghost towns, the unemployed, the defaced landscape - the grim reality behind the word "depletion."

Thought should be given to a new category of deductible expenses for mining corporations. Certain sums should be set aside each year in anticipation of the closing of mines. These would provide for the cleaning-up of the mine site, early retirement benefits for workers who choose that option, and relocation expenses of those who do not. The extraction companies should be expected to provide for the wide range of possible disruptions that occur when a mine dies, and such provision would be a legitimate deduction because it would be part of the miners' security and that of their community. Mr. Turner's "ghost towns," after all, have not been created by the New Democratic Party. They have been created by the lack of government foresight that has given the extraction industries carte blanche to exhaust our resources without thought of the people's or community's future. end marker

Let us for a moment assume that the twenty-year construction of the corporate welfare state had not occurred. Let us also assume that we are a government attempting to decide between competing demands. On one side we have the proponents of the corporate welfare state, the "louder voices" that haunt our present government. You are by now familiar with them.

On the other side are the programs that have not been carried out over the past twenty years on the grounds that we could not afford them. And we are aware of some of the challenges of the future: the need for better housing, the need to control the cost of living, the need to create meaningful employment opportunities, the needs of our senior citizens, the need to ensure Canada's economic independence, and with it control of our economic future.

Which of these would you choose, a vast and costly system of corporate welfare such as we have now, or a fair tax system to ease your burden and improve your future?

For this is the choice. Canada has enormous resources to meet the legitimate needs of its people. But these resources are pocketed by a privileged few, though they are generated by the labours of many.

The vast majority of us fulfill our obligations to society, and we benefit in return from the many services that are provided collectively by our society. But a very few benefit out of all proportion to their contribution. And by permitting their contribution to be withheld indefinitely, we deprive Canada of the means to bring about long-overdue changes in our social priorities.

We are all victims to some extent of the corporate myth. It is difficult for some to realize that institutions were created to serve the needs of people; that they have no life or soul of their own; that they have only the amount of power that people accord them; that they can exert only the amount of influence that people are willing to tolerate.

Every day of our lives we arrive at a crossroad. Every day we make decisions that will affect the course of our lives to a greater or lesser degree. To choose the right road, we must first know where we want to go. We must identify our destination. Otherwise, we stand paralyzed at the crossroad, without progress in any direction. No decision of any moment is simple or without conflict. But no achievement of any merit was ever accomplished by shirking decision, by apathy, by timidity or by lack of commitment to desired goals. Canadians must confront themselves with the evidence. They must weigh it carefully, because justice is not blind. Justice comes only to those who work for it, demand it, shout for it and proclaim its worth above other considerations.

These are not distant ideals or empty dreams. In many countries of the world they would be. Canada has the resources and the people to make these goals a reality. But the people must make the choice. The future is in their hands.

Together, by the millions, they can make theirs the louder voices. end marker