Canadians will not find out details about the multi-billion-dollar subsidy promised to Volkswagen Canada for a battery plant in Ontario until after the money goes to the European automaker.
The Senate national finance committee was told April 25 that the Department of Industry would not discuss the $13 billion subsidy for the St. Thomas, Ontario, electric vehicle battery cell factory, according to Blacklock’s Reporter.
“The agreement is not public,” said Jean-Philippe Lapointe, director general of Industry Canada, in testimony before the committee.
“It is a confidential agreement between the Government of Canada and the company, but through proactive disclosure at one point in time we are able to disclose expenditures that have been covered under contribution agreements.”
According to Lapointe, the federal government monitors the “spending of the recipients.”
“When we see the expenditures aren’t happening—you see, companies have to claim for their expenditures and then they are reimbursed,” he said.
“Within a specific project like the one you have mentioned, we obviously have a contribution agreement. There are conditions regarding the timeline of the project, the period of time for claiming expenditures, and the period of time for reimbursing those expenditures.”
Quebec Sen. Éric Forest asked if the government could specify the timeline involved. “So you have a timeline? Is that public? Can we have access to that?” Forest asked. He didn’t receive an answer.
“This is a major investment. We’re talking about funding to produce batteries for Volkswagen,” said Forest.
The plant is estimated to be on the receiving end of $13.2 to $13.7 billion in federal subsidies, in addition to $500 million from the province of Ontario.
Questions
During a review of a budget document entitled “Main Estimates,” senators had more questions about the financing being provided to Volkswagen.
“I want to ask about the $13 billion for the Volkswagen deal. Is any of that money in your ‘Main Estimates’?” asked Newfoundland and Labrador Sen. Elizabeth Marshall.
James Burns, senior policy director at Industry Canada, responded, “Unfortunately I am not in a position to answer that question.”
“You don’t have any information on it at all?” asked Marshall.
Burns replied, “At this point in time I don’t have any information on that.”
The senator said: “I am just trying to get an impact of what that $13 billion is going to be on the government’s deficit. If the budget projects over five years, I would think the money is in there. But if it’s not, it is going to have a big impact on the deficit and that’s what I am trying to find out.”
The Trudeau Liberals claim taxpayers will recoup the subsidies within five years of the factory’s opening in 2027. There was no further explanation provided.
Secret Contract
On May 10, the House of Commons industry committee will be allowed to review an uncensored copy of the Volkswagen contract, after Conservative MP for Nova Scotia Rick Perkins made the motion on April 24.
The federal government has claimed the subsidies being provided to Volkswagen will result in the creation of 3,000 new factory jobs.
“My suspicion is there are no job commitments,“ Perkins said on April 25. ”These plants are highly automated. The claim of 3,000 jobs I think is a padded number.”
According to Perkins, Canada “will likely pay to match a US$7,500 subsidy per battery that is then shipped to the United States since Volkswagen has no assembly plants in Canada, and they send the finished cars back and sell them at retail prices.”
MPs are not allowed to photograph the contract or take notes. They are not allowed to bring any electronic, personal, mobile, or recording devices of any kind into the meeting, and are only permitted to review it with a committee clerk supervising, in a room with no cameras or phones.
“It’s about protecting the integrity of the contracts,” Liberal MP Andy Fillmore said.
The meeting will be a closed one, and Industry Minister François-Philippe Champagne is scheduled to attend and testify for two hours.
Peter Wilson contributed to this report.
