Community Editorial Board: The Perils of Government Investment

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Investment according to Market Business News “refers to the things people, companies and governments do to create more wealth, make money grow, increase output and improve people’s living standards”.

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The Oxford dictionary goes further, stating that investment means “to put money into financial schemes, shares, property or a commercial venture with the expectation of making a profit” or “to devote one’s time, effort or energy to a particular enterprise with waiting for a useful result.”

Investments by people and companies are clear in most people’s minds. A person buying a triplex as an investment hopes to make a profit after paying the mortgage, various taxes, maintenance costs, insurance costs, etc., by collecting rent from the tenants. Finally, the investor will also hope to make a profit when he sells the triplex.

A company must make a profit after all the different costs, or it will eventually go bankrupt or sell the business before going bankrupt.

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I have listened to the federal government over the years and it has used the word free investment as if it is always a good thing for the government. Investment by individuals or companies is generally a good thing because they provide housing, products, services and also employ people. There is also the need for private enterprise to be profitable and productive if it is to survive in a competitive environment.

Government doesn’t really need to be any of these things in many of its various investments. The biggest investments the government has made lately are the various billions of dollars invested in electric car manufacturing companies and related businesses. One of the main arguments is if Canada doesn’t invest, then companies would go elsewhere. There is also the argument that these government investments will create several thousand well-paying jobs.

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Both arguments may be true, but we do not know whether these various operations will succeed. If these facilities are really successful, then the companies could raise enough money on their own and would not need government funding.

The entire anticipated success of electric vehicles is still speculative, as there may still be future inventions that could be better and even cheaper.

Total government investment so far is $43 billion.

I was recently offered an electric car from a rental company in Florida because they had rented all gas cars even though I had a reservation. I refused to take an electric vehicle because of the lack of charging stations in Florida — and my destination didn’t have a charging station. I ended up getting a big truck. At least I could be sure it wouldn’t lose power as long as I kept finding gas stations.

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Looking back a few decades ago, the government, in its wisdom, decided to build an airport outside of Montreal called Mirabel. It was about 40 kilometers from Montreal and had to accommodate all the extra passengers that the other airport in Dorval couldn’t handle. Unfortunately, it ultimately failed for a number of reasons, including people not wanting to travel 40 kilometers to an airport. The anticipated need never materialized.

The airport even built a train station under the tarmac, but no trains ever reached there, nor was any railway track built. Millions of dollars were spent on this boondoggle and it achieved none of its goals. The main takeaway is that the government invested in a huge failure and suffered no real consequences. A private investor would have gone bankrupt, but the investor most likely would not have invested in the first place.

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Now the government has decided to tax the “very rich” a bit more with the increase in capital gains taxes for individuals making capital gains over $250,000, from 50% of earnings taxed to 66.6% from taxable earnings. .

Capital gains corporations will be taxed at 66.6% of capital gains, regardless of how much the corporation made. When you think of corporations, you think of Amazon or General Motors, but many of our professionals, like doctors, are set up as corporations, so it affects more than the very wealthy.

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The government estimated the increase would generate $19.4 billion over five years. What this really means is that another $19.4 billion will be taken from the profits of those people and companies that they could have reinvested. As a result, a number of these corporations may leave Canada for greener pastures or reduce their future investments, putting an additional drag on our faltering economy.

The government is investing a lot of money to attract more doctors to Canada, but at the same time, increasing taxes on capital gains will discourage those already here.

We shouldn’t worry too much because this $19.4 billion will be used to further invest in our economy.

We’ll get more apps, like the ArriveCan app, which ended up costing $56 million. It was originally supposed to cost just $80,000. I was one of those misdiagnosed by the app and ordered to quarantine even though my entry test was negative. I finally convinced the federal authorities that I tested negative, but then I had to convince the provincial authorities as well.

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We can also buy more second-hand submarines that cost $325 million a year to maintain, but rarely see water.

Finally, we can add to the hiring of other civil servants. The 100,000 additional civil servants the federal government has hired over the past nine years probably aren’t enough.

When the government says it is investing billions of dollars in various new schemes, take it with a grain of salt. This kind of investment quite often becomes a political football that lands in quite extremely expensive areas that we end up paying for for many generations to come.

We are rarely consulted on whether we want or need these mega investments.

I agree with investing more in the military to protect our country, but only if we cut back on investing in stupid and reckless things. We really have enough!

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