22 June 2021
Dr. Trevor Hancock
One of the frequent complaints by the proponents of neoliberal economics and small government and their corporate supporters is that there is a lot of waste in government. All manner of things get described as a waste of taxpayers’ money (and they are always called taxpayers, not citizens), but the focus is usually on various forms of social support, especially welfare programs that are said to be abused.
Yet the public largesse devoted to what federal NDP leader David Lewis, in 1972, memorably called “corporate welfare bums” vastly exceeds the amount ‘wasted’ in welfare fraud and similar issues. Particularly problematic is what has to be the greatest waste of all; government subsidies and support for businesses whose activities and products actually harm our environments and our health.
This happens because there is a narrow and short-term understanding of societal benefit that gives credit for investments made and incomes generated here and now, while discounting or even completely ignoring the harm done to the environment, to people elsewhere and to future generations. Clearly, this has to stop.
It is worth understanding the many ways in which subsidies and other forms of support are provided. According to Vanessa Corkal, a policy advisor with the International Institute for Sustainable Development (IISD), writing recently in the National Observer, “a subsidy is a financial benefit given by a government to a specific industry or sector”. Those subsidies come in the form of grants, tax or royalty breaks (foregoing revenue intended to support Canadians) and less obvious forms such as loan guarantees.
But it doesn’t stop there. Beyond subsidies lie ‘supports’ (such as wage subsidies) and ‘externalities’ – the cost of all the damage caused by the industry and its products (such as health impacts or pollution) that the industry does not have to pay for.
The list of unworthy corporate recipients of government (read tax-paying citizens) support is long, but surely right at the top must be the fossil fuel industry, followed by industries such as mining, forestry, agriculture and fisheries (of which more next week).
So in the midst of an accelerating climate crisis, why is a single penny of public funds going to the fossil fuel industry? And yet billions of dollars are being spent, both here and around the world, to expand and support the production and consumption of fossil fuels. It is sheer madness, suicidal, in fact.
A report this month from the IISD looked at international public financing for natural gas expansion in the Global South. The authors found that this amounted to nearly USD 16 billion per year from 2017 to 2019, four times as much as was invested in wind or solar. The problem is that this risks locking “countries into a high-carbon pathway, imperilling their economic future and the global climate.”
Also this month a report from the Tear Fund, a Christian charity devoted to tackling poverty, found that “between January 2020 and March 2021, G7 nations committed more than US$189 billion to support coal, oil and gas, while clean forms of energy received only $147 billion. In other words, fossil fuels received more than half of the total support to energy-intensive sectors”.
In Canada, a recent report from the Cascade Institute at Royal Roads University pegged the cost of federal subsidies alone to the fossil fuel sector at $1.9 billion in 2020, with ‘support’ adding another $18 billion, while the cost of externalities was estimated to be $63 billion.
Here in BC, according to STAND.earth’s May 2021 report on the issue, in 2020/21 the NDP government “spent $1.3 billion on fossil fuel subsidies — 8.3 percent more than the previous year”. Of this, $421 million was for the Deep Well Royalty Program, a tax loophole for fracking operators. Shockingly, STAND.earth reports that in 2020/21 “the NDP government gave the oil and gas industry almost five times as much money in subsidies as it earned in oil and gas royalties”.
In its 2020 Manifesto for a Healthy and Green Covid-19 Recovery, the World Health Organisation said it well: “Stop using taxpayers money to fund pollution.”. Governments must listen, stop pandering to the large corporate welfare bums and actually do something to protect citizens from corporate-created harms.
© Trevor Hancock, 2021
Dr. Trevor Hancock is a retired professor and senior scholar at the University of Victoria’s School of Public Health and Social Policy.