Public enterprises, not corporate tax cuts, will strengthen Canada

“Ottawa … needs to dare to lower corporate taxes and eliminate overregulation,” thundered an editorial in the Globe and Mail last week.

Dare to lower corporate taxes? The Globe makes this sound like a bold, new idea, rather than the widely debunked “trickle down” theory that has concentrated wealth at the top, with precious little trickling down.

The corporate world is swimming in profits. As a share of Canada’s GDP, corporate profits have soared in recent years, reaching an all-time high in 2022. Lowering corporate taxes will further enrich wealthy shareholders — but it won’t defend us against Trump’s takeover fantasies.

Making the rich richer isn’t a nation-building strategy.

If we’re truly interested in bold ideas, we should free ourselves from the notion that the only way to build a country is to cater to corporate titans.

In earlier times, Canada broke away from this market-dominated mindset and created some truly impressive public enterprises — that is, enterprises owned by government, which means owned by all of us collectively.

Many of these public enterprises were established because the private sector, fixated on creating lucrative monopolies, wasn’t meeting public needs.

For instance, in the early 1900s, Toronto business tycoon Henry Pellatt was trying to lock up monopoly rights to transmit power from Niagara Falls. But a highly motivated citizen’s movement demanded “public power” and managed to push Ontario’s Conservative government to create Ontario Hydro as a public utility.

Hydro became an affordable source of energy fuelling the province’s rapid growth and the model for U.S. president Franklin Roosevelt’s Tennessee Valley Authority.

Similarly, after First World War, the powerful owners of Canadian Pacific Railway were poised to consolidate their railway monopoly, leaving Canadians, particularly westerners, at the mercy of one transportation company. But public pressure led Ottawa to create the Canadian National Railways (CNR) — a highly innovative public enterprise, which developed the first radio-equipped transcontinental train.

CNR went on to establish North America’s first coast-to-coast radio network, making isolated Canadian communities no longer reliant on U.S. radio stations. In the 1930s, by popular demand, the CNR network was transformed into the CBC, Canada’s public broadcaster, with Prime Minister R.B. Bennett proclaiming it would keep Canadians “free from foreign interference or influence.”

Public enterprises reached a zenith in Canada during the Second World War, when Ottawa created more than two dozen Crown corporations that led the country’s massive industrial war effort. A Crown corporation called Victory Aircraft, for instance, developed aviation expertise that was later used in the supersonic Canadian jet known as the Avro Arrow, one of the most advanced aircraft of its time. Sadly, it was scrapped in 1959, apparently at Washington’s insistence.

Most of our public enterprises have been privatized in recent years, as business has aggressively pushed the notion that the private sector always does things better — despite no real evidence this is true.

Locked in this mindset, governments today create “public-private partnerships” (P3s), which are structured to benefit private investors, driving up the costs of projects with no public benefit. These P3s bear little resemblance to the real public enterprises that were crucial to Canada’s development.

Prime Minister Mark Carney has pledged to bring government back into housing — as in the postwar era — with a “Build Canada Homes” initiative. This sounds promising, as long as it steers clear of the P3 model.

Carney has talked of the need “to build things we never imagined, at a pace we never thought possible.”

Imagine if this ambitious, nation-building vision wasn’t restricted to the corporate world, but could include enterprises created and owned by all of us collectively.

This article originally appeared in the Toronto Star.