Bombardier reminds us how easy governments make it to forget taxpayer investments: Don Pittis

Gigantic pay packages for corporate executives always come with an intricate set of justifications, especially after they've generated public outrage.

"Today, Bombardier is a $16-billion high-technology company on a growth path to $25-billion by 2020," Jean Monty,head of the group that decides how much Bombardier executives deserve, declared Sunday. Monty himselfraked in multimillion-dollar salaries atNorteland Bell Canada so his opinions are not exactly those of thecommon working stiff.

Bombardier is actually a $4-billioncompany, measured in the standard way based oncapital value, but in his urgency to convince us that paying executives so much is essential, Montyforgets several things.

The unsung taxpayer

Rather thancrediting the current set of execs, it is much easierto make a case that repeated investments by Canadian taxpayers created those billions.

This is not a uniquely Canadian phenomenon.

Despite the country's celebration of the free enterprise spirit, the United States has a heavilytaxpayer-subsidized private sector.

• Bombardier defers executive pay plan after backlash
• Canada's topCEOsearn 193 times average worker's salary

The term "privatisingprofits and socializing losses" is so widespread it gets its own entry in the U.S. business definition site Investopedia: "businesses and individuals can successfully benefit from any and all profits related to their line of business, but avoid losses by having those losses paid for by society."

In the U.S., outrage over corporate bailouts has come from theright-wing Tea Party movement as much as from anyone on the left.

The Flaherty model

Here in Canada, it was Conservative leadership candidate Michael Chong who made the best case for putting conditions on government bailouts to companies like Bombardier, saying it would have been better to follow the model of Tory Finance Minister Jim Flaherty, who in 2013made concessionsto Air Canada, granting the company more time to finance its pension fund, which was in deficit at the time.

"The badly needed break was accompanied by strict regulations banning special bonuses, dividends, share repurchases and tying salary increases to the rate of inflation," Chongsaid in an email to supporters.

In the current fuss over Bombardier, most of us have probably forgotten Flaherty's helptoAir Canada. Most of us have forgotten the many, many bailouts to private sector corporations that have prevented their collapse or sale to foreign companies.

Air Canada and Bombardier arenot alone. But in Canada when we read about the success of our private-sector titans and the captains of industry that leadthem, the helping hand from taxpayers is almost never mentioned.

Invisible handout

We hear about the free market'sinvisible hand that propels private-sectorcompanies to success, but we hear little about the invisible handout from taxpayers.

From its days as a money-losing snow tractorcompany, Bombardierhas been helped so many times by now-forgottentaxpayer infusions thatin many ways it is a creation of the Canadian government, funded by your taxes.A CBC article from three years ago outlinedsome of that history.

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Air Canada, a literal creation of the federal government, has been given taxpayer help many times since. CN Rail is similar. Telus was once a government-created and owned company. So was Potash.It is seldom noted that the Alberta Energy Company that developedthe oilsands was a taxpayer creation.

These are not exceptions. Taxpayersupport for Canadian industryhas been the rule.

Carmaker General Motors got an enormous bailout from the Canadian and Ontario governments after its bankruptcy in 2009 and the previous Conservative government sold off the shares it had taken in partial compensation at a loss.

Making taxpayers proud

And it'snot just the bailouts. Jean Monty's BCE became a giant becauseof its original status asfederally regulated monopoly.

Canadians have every reason to be proud of the investments they have made in creating our business giants.

But when it comes to taking the credit, the office in charge of justifying the bosses' pay is always well funded.

There are plenty of reasons given: bosses elsewhere are paid more; the current bosses are irreplaceable; they might run off to get more money someplace else.

If the Bombardier raises which have been partiallydelayed but not reduced in the face of the backlash don't go through, will theexecutives abandon their rich pay packets?

Such justifications are often suspect. At Postmedia,for example, several executives gotretention bonusesand left shortly afterwardall while the company was losing money and laying off staff.

• Bombardier defers executive payplan after backlash
• Canada's topCEOsearn 193 times average worker's salary

From their positions of power, company executives always seem convinced they deserve to be paid more regardless of whether the company is failing or boosted by good luck.

Unless government handouts come withstrictrules that prevent giant pay hikes, company bosses seem prone to assuming the improvement in business conditions that follows is simply evidenceof their cleverness and hard work.

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