Critics Slam Government’s $1.7M Italpasta Investment

Brampton, ON – The federal government’s recent announcement of a $1.7 million investment in Italpasta, a Brampton-based pasta manufacturer, has stirred significant debate over the efficacy and rationale of such subsidies. The investment, which aims to create just 10 jobs, has left some questioning whether taxpayer money is being judiciously spent.

Economics professor Stephen Gordon of Laval University expressed his astonishment on social media, noting that the investment equates to $170,000 per job, which he considers an embarrassment rather than an achievement.

Robert Gillezeau, assistant professor of economics at the University of Toronto’s Rotman School of Management, echoed these sentiments, suggesting that the investment is politically motivated rather than economically sound. He argues that such spending introduces inefficiency into the market without a solid economic rationale.

According to Filomena Tassi, the minister responsible for the Federal Economic Development Agency for Southern Ontario, the subsidy will help Italpasta increase production to meet growing demand. The press secretary, Edward Hutchinson, stated that the $1.7 million is a fully repayable loan intended to purchase new equipment, which will triple production while reducing energy consumption and the company’s carbon footprint.

The debate extends beyond Italpasta. Prime Minister Justin Trudeau and Ontario Premier Doug Ford recently announced substantial subsidies for electric vehicle (EV) plants, including Honda’s first EV assembly plant and a new EV battery plant. The combined federal and provincial contributions amount to $5 billion, projected to create 1,000 new jobs. However, this investment translates to $5 million per job, raising further questions about the cost-effectiveness of such subsidies.

Kent Fellows, assistant professor of economics at the University of Calgary’s School of Public Policy, criticized these subsidies, noting that they do not create new jobs but rather reallocate existing ones, thereby introducing inefficiencies.

Fellows further argued that the subsidies are not supporting new technologies or research and development that could spur economic growth. Instead, they are merely redistributing jobs within the economy. He also pointed out that the automotive supply chain is highly integrated across the Canada-U.S. border, suggesting that the plants’ location in Ontario may not significantly impact spin-off job creation without further subsidies.

Aaron Wurdick, director of the Macdonald-Laurier Institute’s domestic policy program, noted that the entire EV ecosystem, from main plants to parts suppliers, and even vehicle purchases, would likely need continued subsidies, questioning the sustainability of such financial support.

Gillezeau suggested that the government could find more impactful uses for these funds that would better promote economic growth or redistribution. Investments in baseline infrastructure that benefit all firms could have a more significant and widespread economic impact.