By Ross McKitrick
Letter to the Editor
Anyone remember the Sprung Greenhouse fiasco? In 1987, Newfoundland Premier Brian Peckford attempted to boost local employment by subsidizing the building of a massive hydroponic greenhouse operation that its inventor, Philip Sprung, said would turn the province into a world leader in green produce. His plan had failed in Alberta, but in Peckford he found a gullible partner willing to abandon common sense and start signing over other people’s money. During the construction phase the premier pointed with pride to the hundreds of jobs apparently created. Meanwhile the province kept signing cheques and promising that cucumbers and economic renewal were on the way in equal measure.
Cucumbers did start appearing. The problem was each one cost $1.10 to grow, and the wholesale market price was just over 50 cents. The greenhouse went bankrupt and ceased operations by 1990. The jobs vanished, and the tiny province was left with $14 million in debts to pay.
Never forget: jobs are created by profitable businesses, period. Industries reliant on subsidies do not generate jobs, they destroy them. Subsidies create short-term jobs that have to be financed by new taxes on profitable activity, which drives away long-term investment and ends up costing jobs.
Ontario was not the first region to fall for the scam. Spain did years ago. Recently an independent analysis showed the plan destroyed 2.2 jobs for every one created. Over the past month Spain has slashed subsidies for green power producers and capped the size of the sector. France has also begun eliminating subsidies in the wake of a report showing that, after the temporary, subsidy-driven construction jobs end, the price hikes and tax increases will lead to long-term declines in jobs and growth.