Quote:
Originally Posted by Hackslack
Sorry, dumb question, but… does that mean that, the total cost to the public of these 2 battery plants will be in excess of $30 billion?
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The Government of Canada will subsidize a portion of the cost of the batteries produced over a fixed period of time. In theory, this subsidy could be total upwards of $30 billion if the production reaches its theoretical maximum capacity. Now if the factories don't exist or produce, the subsidy is never paid.
From a
free-market point-of-view, it's bollocks. Tell VW and Stellantis to pound sand, put their factories elsewhere; government can spend the money on other things, because the private sector shouldn't need government to help.
From a
strategic point of view? That gets messy. If one looks at the history of this country - indeed, one of its nascent projects that resulted in Canada as we know it - and one sees similar concepts. The Canadian Pacific Railway was a free-market failure as initially conceived. What daft idiot would build a railway to the Prairies and onward to BC through muskeg of Northern Ontario and over the Rockies? Free-market economics says 'Build northwards through the United States', but strategic analysis says: 'A railway you don't control exclusively in your own territory means you are subject to the whims of the person who does'. Free-market failure initially, however, strategic success in the long run.
You can see this concept through the large hydro and nuclear projects completed in the 20th century in this country. Free markets says: 'Build massive coal plants instead, 'cause they're cheap', but the value of large-scale nuclear/hydro development was a dividend not clearly visible at that juncture. Strategic long-term victory versus free-market short-term loss.
Does the battery subsidy make sense strategically? Not if our largest trade partner wasn't pursuing the same strategy, because the larger automaking ecosystem could probably support something itself. The US chose a strategic path for reasons not really related to Canada. Is it the right path for us? Don't know that yet, but given that the automaking assembly operations are one of our largest net contributors to our exports, it's a big risk to ignore it.
In 2009, the free-market analysis says 'Let GM and Chrysler fail', but the when the 'free-market' defender (er, free market under
their rules) steps up and bails out their companies, we're sure in a pickle. Do we play free-market or not? Risky game. Maybe the point would be moot today if Canada was on the glide path to Australia-level car industry, as those companies probably would just ignore Canada for production.
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