The Crazy Train of Corporate Welfare

Why Government Funding Announcements Aren't Always Good News

Photo Credit: Wikimedia Commons

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If you want to understand how society really works, following the money is usually a good start.

And sometimes that money comes into town by rail.

Finally, after what seemed like a frustrating few years for local stakeholders behind the scenes, a big bag of cash was announced for Huron Central Railway, the entity that operates the freight rail service between Sault Ste. Marie and Sudbury.

Two levels of government and the company are kicking in $10.5 million each to make a collective $31.5 million ‘investment.’

What’s never explained in a candid or public manner is why these Russian doll entities - with parent companies that sometimes rake in billions a year - aren’t able to support themselves.

That point was hit home in a short but powerful letter to the (SooToday) editor (found here).

There’s been no explanation thus far about how Huron Central Railway is going to be sustainable moving forward. And it’s now become ‘normal’ that they simply dangle the possibility of shutting down and expect various levels of government to approach them with their hat in their hand.

To add some pressure, the City of Sault Ste. Marie earlier enlisted two ex-mayors to lead a lobbying ‘task force.’ CAO Malcolm White informs me that these positions didn’t include compensation and were merely endorsed by Council, which is important.

There are some rules for political lobbying in Canada, at both levels of government (a small handful of municipalities have lobbying rules, too). In general, lobbying rules don’t apply if someone is working for government or they’re not being compensated for their efforts. So, as far as I can tell, they were acting on their own and in a volunteer capacity.

The task force weren’t the only boots on the ground though.

Lobbying records from the provincial and federal government show that the Canadian parent company of Huron Central Railway (Genesee & Wyoming Canada) has employed a variety of professional lobbyists to get the ear of policymakers.

Yes, the rail line receiving required maintenance and upgrading is a good thing.

Yes, there are a variety of industries along the tracks that consider it a life line.

Yes, this type of infrastructure is crucial for economic development and sustainability in Northern Ontario.

Yes, freight rail services drastically reduce the load on highways, which is safer and more environmentally friendly.

Yes, rail lines in Southern Ontario attract more attention and funding from government.

The only thing at issue here is whether the public ought to write a cheque whenever the company comes knocking.

In 2019, the American parent company of Huron Central Railway (Genesee & Wyoming, Inc.) was purchased for $8.4 billion.

To put that in perspective, the amount of funding announced earlier this month represents 0.375% of the American parent company’s sale in 2019. That’s just over one third of one percent.

If government is going to subsidize private industry, why not actually have a stake in the assets (and potential profits)? Deregulation and privatization are often sold on the argument that they allow the competitive edge of industry to drive down costs through ‘efficiencies,’ which releases the burden of taxpayers.

But is that the case if a series of public handouts are required along the way?

Think about the issue another way: If the rail line is indeed critical infrastructure (and it surely is), why let a corporation that keeps threatening to pull the plug control it?

Are our governments actually getting long-term safety and security for critical infrastructure with their occasional injections of cash?

If they are, we should expect those details to be laid out in a clear manner, since that’s our money.

We need to call these funding announcements what they really are: corporate welfare.

Alas, another day, another handout.

And, of course, another photo op.

But we should hold our applause until we know this’ll be the last public cheque the company is cashing.