Scrap the Montreal metro cars deal

McGill Tribune

Last Thursday the Quebec National Assembly passed Bill 116, permitting the provincial government to hand a $1.22 billion contract for the construction of 468 new Montreal metro cars to a consortium led by Bombardier without going through a bidding process. This bill was proposed by the government and rushed through the legislature because a Spanish company, CAF, has argued it could build the same number of cars for nearly half the cost, as it is currently doing for the Chilean capital of Santiago. Many people have argued that Bill 116 may directly contravene international trade regulations, and could lead to reprisals, not least from Spain, whose prime minister has already written Charest “expressing his annoyance” about what he sees as unfair protectionist tactics. Additionally, the Bombardier contract wastes nearly half a billion taxpayer dollars—perhaps more should CAF successfully sue.  Montreal’s opposition council leader Richard Bergeron, who opposed the deal, has already guessed the company will seek to do so.

Proponents of the Bombardier deal argue that it will keep jobs in Quebec instead of giving them to foreigners. Specifically, Charest claims 775 jobs will be created by the contract, mostly in La Pocatière, a town in southeast Quebec with a large Bombardier plant. However, any economist or Quebecer acquainted with even basic mathematics must recognize this as complete bunk, and hardly more efficient than the Montreal Gazette’s facetious counterproposal of giving “each of those 775 workers $60,000 a year for the next five years to stay at home.” The newspaper claimed Quebec could even then afford to buy the new metro cars from the Spanish company, and still save money in the process. Moreover, in light of CAF’s offer to build a factory somewhere in Quebec in order to produce the cars, the Bombardier contract seems especially indefensible on economic grounds.

Another strain of argument, somewhat related to the first, though less frequently offered, is the typical nationalist “maîtres chez nous” routine: We must keep jobs in Quebec, we must keep Quebec financially viable, and we must reward Quebec companies, not foreigners. Quebec Solidaire Member of the National Assembly Amir Khadir, supposed darling of the provincial left, announced his party’s support for Bill 116 by gushing over the Bombardier corporation, which, he said, “respects our laws, the environment, pays its taxes, and respects our language.” However, it’s difficult to see what Bombardier, in dire fiscal straits as it already is, has done to deserve such a lavish gift from the people of Quebec. If a Spanish company is able to make the exact same cars—and within the necessary deadline, no less, as the Montreal Transit Society has warned that its current cars will be so that service will have to be cut in three or four years—for nearly half the price, Bombardier is doing something wrong. If a company has to rely on possibly illegal intervention from the government in order to win contracts, then it has much bigger problems. It would be better for Bombardier to lose this contract now and reorganize itself appropriately than to artificially keep their business going by resorting to inflated prices and favourable treatment from the provincial government.

Protectionist language from Quebec politicians seems additionally hazardous in light of the free trade agreement the province is currently negotiating with the European Union. Several commentators, arguing against the Bombardier contract and Bill 116, have imagined the Charest government would be none too happy if Bombardier or another Quebec corporation were treated by a European government the way Quebec has treated foreign companies in the course of this affair. It is also important to point out that many companies and countries outside Spain may be looking across the pond and not liking what they see. To hope there are no repercussions from such treatment would be to engage in wishful thinking.

The Tribune is not the first to suggest that the provincial government’s support for the Bombardier deal might have something to do with an upcoming special election in the riding where the company’s La Pocatière factory is located. If the Charest government’s position is motivated even if only in part by such political aims, it will not soon be forgiven by voters—nor by their enablers in the provincial opposition parties, the Montreal City Council, or the press.

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