A debate about Government investment? Absolutely. But let’s stick to the facts.
April 12, 2016 Montréal
Opinion Letter by:
Sylvain Lévesque, Ph.D.
Vice President, Corporate Strategy
If you want to spark an animated discussion around Canadian dinner tables these days, all you have to do is raise the topic of government investment in Bombardier. Few subjects are more polarizing than government funding for private enterprise. That’s because most people fall squarely on one side or the other of the ideological divide on this issue.
As a member of Bombardier’s leadership team, I am completely at ease with this debate. In truth, I encourage it. The only caveat? Let’s stick to the facts.
Bombardier, like many technology and aerospace companies in Canada, has benefited from government investment; and we are grateful for the support. It has helped Bombardier become one of the world’s largest train and airplane manufacturers. Many Canadians share my pride in knowing that our sons, daughters and neighbours build the products that connect the world in commerce and make global travel more efficient.
Unfortunately, when the debate turns to the numbers (How much has already been invested in Bombardier and what has been returned to taxpayers?) too much misinformation has been injected into the conversation. So, let’s set the record straight.
Following the acquisitions of Canadair (1986) and de Havilland (1992), Bombardier received a total investment of $586 million, excluding the C Series, from the federal, Quebec and Ontario governments. This investment supported the development of innovative new aircraft, mainly the CRJ regional jets, Global Express business jet, and the Q400 turboprop aircraft. Thanks to the success of these programs, Bombardier has returned $733 million or 125% of the original investment to its government investors. This number will continue to grow as Bombardier delivers additional aircraft into service in the coming years.
We anticipate a similar repayment profile on the $467 million the governments have invested in the C Series, with payments beginning later this year when the aircraft enters into service.
The wisdom of additional C Series investment is currently the subject of much heated debate. An important yet often overlooked aspect of this debate is the more than $16 billion of tax payments generated since the initial Canadair investment. This includes corporate, property, dividend, and employee taxes.
Combining the direct program repayments and taxes paid, Bombardier has been the source of almost $17 billion in government revenue, a very favorable return for the total $1 billion combined investments including the C Series. The return is even greater when you include the billions of dollars of taxes paid by the thousands of Canadian suppliers who support our activities.
Another fact often lost in the debate is that 93 percent of Bombardier’s consolidated revenue, and therefore its government tax payments, are generated outside of Canada. In other words, Bombardier injects significant foreign dollars into the Canadian economy, which creates jobs and helps to fund government-spending programs.
Again, we welcome debate on future government investment. When having this debate, however, let’s be honest about the economic impact of past investments on the Canadian economy. In this case, the facts speak for themselves. Over the past three decades, Bombardier has proven to be a sound partner for governments and taxpayers alike.