2006 did not start on a good note for Ontario autoworkers. On January 23, Ford announced massive layoffs throughout North America, including up to 2300 job cuts in Canada. This comes on the heels of General Motors' plans to restructure its workforce, and reputed plans to lay off close to 1000 workers in Ontario.

These announcements come despite the fact that together, these two companies have received hundreds of millions in provincial and federal tax dollars over the past two years. Thanks to the Ontario government's Automotive Investment Strategy, announced April 14, 2004, taxpayers have shelled out $335 million to allegedly create hundreds of jobs and boost automotive research and development.

So why haven't these jobs materialized Why are plants being closed Quite simply, the North American automotive industry is in trouble. Competition from overseas, inflexible union demands, and failure to modernize are crippling Ford and GM. According to a COMPAS poll of business leaders taken in November 2005, these problems were foreseeable 5, 10, and even 20 years ago. One senior executive put it this way: "GM and the other North American auto company executives have never shown leadership or recognized their market share has changed." Yet these same companies continue to feed at the subsidy trough offered up by unthinking governments.

Based on all the available evidence, these companies will not become more competitive through corporate welfare. There are so many cases of failed subsidy schemes in Canada, it's not even funny: from Devco to Sydney Steel, Atlantic Canada has seen its share of businesses that have swallowed millions of taxpayer dollars, only to close. And since 1982, Quebec aerospace manufacturer Bombardier Inc and its subsidiaries have received $36-million in federal grants and $736-million in repayable contributions, for a grand total of $772-million. Last year the company's bonds were downgraded to junk status, and today it muses about exporting Canadian jobs to China.

Beyond the dismal record of these programs, there is another question worth asking. Why should automakers that failed to stay competitive now get cheap loans or subsidies to do what they should have done anyway: modernize and improve their business practices And why should successful automakers, such as Toyota and Hyundai, effectively subsidize their less successful competition through their taxes It's like robbing Peter to pay Paul.

But don't just take the Canadian Taxpayers Federation's word for it. Increasingly, the business community realizes corporate welfare is a bust as well. In the COMPAS poll cited above, 66% of the executives surveyed thought governments' decision to subsidize GM was poor or very poor. 49% thought that federal and provincial governments should bring an end to auto industry subsidies. An additional 13% suggested that government support be withdrawn if companies fail to protect threatened jobs as promised. Only 27% believed governments should follow current subsidy policy.

Premier Dalton McGuinty's desire to protect jobs in Ontario is understandable. But he is going about it the wrong way. Boosting Ontario's economy necessitates a level playing field for all industries, not special treatment for some. It necessitates less rigid employment laws and less government interference. The premier should cut red tape and lower corporate taxes, instead of canceling them as he did when he took office in 2003. He should look to Alberta, which has the lowest corporate taxes in Canada (11.5% compared to Ontario's 14%), laws prohibiting corporate welfare, and the nation's best-performing economy. Instead of throwing good public money after bad private decisions, he should let the market reward excellence and encourage success - and put taxpayers back in the driver's seat where they belong.