Politics: government involvement in corporations

Self-tutoring about government involvement in business: the tutor mentions an example.

Apparently, Quebec’s government is injecting $413 million into the Airbus A220 program; Quebec’s total contribution to the program might now be at around $2 billion. To put this in perspective, Quebec’s GDP is thought to be $452 billion in 2024.

Premier Legault (of Quebec) points out that about 3500 Airbus jobs in Quebec are with the Airbus A220 program. At an average salary of $87,500, which Legault acknowledges being above the provincial average, that’s a pretty impressive payroll: 3500×87500 = $306 250 000: just over $306 million.

The article I read seems to suggest that Quebec’s investment amounts to a 25% share in the program, which Airbus is meant to buy back by 2035.

From an income tax point of view, the Feds get about $14 865, annually, for each of those workers; Quebec itself gets $14 036. In total, Quebec gets $49 126 000 ($49 million, 126 thousand) while Ottawa gets $52,027,500 ($52 million, twenty-seven thousand five hundred), per year. This assumes no deductions, etc; it’s just based on income tax rates.

If Quebec has invested $2 billion to get $49 million per year, that’s a rate of return of 2.5%. However, if you consider what the Feds are getting as well, then the return on investment, for all Canadian governments combined, is 5.1%.

Even 2.5% seems respectable enough as a dividend, looking around at typical ones nowadays.

While the situation is complex, it does seem that the Quebec government’s investment in the Airbus A220 program could be seen as a smart move.

Source:

ctvnews.ca

canada.ca/revenue-agency

dividend.com

ibisworld.com