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Time for Alberta to pull out of transfer payments

The McInnis Cement plant in the Gaspe region of Quebec should serve as a great example of why transfer payments, in Canada, do not work.
McLeod Brian-mug
Columnist Brian McLeod

The McInnis Cement plant in the Gaspe region of Quebec should serve as a great example of why transfer payments, in Canada, do not work. To begin, let’s look at the numbers: Alberta will send to Ottawa this year a total of approximately $49 billion dollars. Alberta will receive back a total of only $27.2 billion dollars, creating a net outflow of $21.8 billion, money that Alberta desperately needs. Of all provinces receiving transfer payments, Quebec is the biggest destination for the money (aren’t you surprised?). Last year, they hauled in $11.7 billion dollars in extra cash, although I don’t remember anyone in Quebec saying thank you.  

However, Quebecers didn’t sit idly around counting the money. Instead, they invested in the McInnis Cement plant. Proposed almost 10 years ago, this was the first cement plant to be built in Canada in 50 years, largely due to the fact that there is an excess of cement production in Canada already, and environmental approvals for a new plant are insanely lengthy and expensive. However, McInnis was no dummy. It teamed up with Beaudier Group – which just happens to be the investment vehicle for the family that owns Bombardier. Bombardier, as you likely know, is the world’s recognized leader in extracting free money from governments – federal, provincial and municipal, they take it all, over and over and over again. With all these government connections, McInnis solved its first big problem: environmental permits. The plant was approved without the required environmental studies being done. While activists pointed out that the plant’s use of burning coke for energy generation would make the plant the largest contributor to greenhouse gas emissions in Quebec, the rubber stamps were still busy approving the permits.

Originally, the plant was supposed to cost a total of $1.1 billion Canadian dollars, but as these things go, costs kept going up and up and up. Caisse, the big pension fund agency in Quebec, got roped into financing this hungry animal, and then more financing and more financing and still more. Fortunately, as the government of Quebec can rely on annual transfers of up to $12 billion, overruns really aren’t a problem. Costs soon reached $1.5 billion, then $1.7 billion, and the latest rounds of pouring in money has – by my estimate – taken the total to over $2 billion dollars.   

A visit to the McInnis Cement plant website is a comedy routine that would make Robin Williams proud. The site goes to great lengths to congratulate themselves on their wonderful environmental record and the hundreds of jobs created in what is a depressed region. They fail to mention that the plant was promoted on the basis of creating a minimum of 400 new jobs, yet to date has only created about 200. When you look at the employment section of the website, they are currently offering only three positions they need to fill. While Caisse has spent a lot of time and money trying to sell the plant, it’s usually very hard to find an investor who is both incredibly stupid and ridiculously rich at the same time!

Let’s relieve Quebec of the constant, annual problem of what to do with all the transfer dollars they receive. Mr. Premier, it’s time for Alberta to pull out of these transfer “extortions”.

Brian McLeod is a St. Albert resident.

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