The debate over 'industrial policy' may be over — or it may be just getting started

The most interesting thing about question period is often what's not said.

Last week, for instance, the Official Opposition asked not a single question about the federal government's decision to provide as much as $13 billion in subsidies over the next decade to Volkswagen to help get a massive battery plant up and running in St. Thomas, Ontario.

The Conservatives might plead that there were simply other matters — the public sector strike, the Pierre Elliott Trudeau Foundation — that required their attention. But their relative silence was conspicuous, especially given Pierre Poilievre's history of deriding "corporate welfare."

Not that Poilievre has been completely silent on the issue — after the details were announced, the Conservative leader asked the parliamentary budget officer to provide analysis of the deal. A month ago, when the basic outline of an agreement was first reported, Poilievre also posted a series of pointed questions to Twitter.

Trudeau seized on that tweet last week and practically dared the Conservative leader to oppose the deal. But at this point it doesn't seem Poilievre is prepared to do much more than haggle over the price.

Poilievre's relatively restrained response could be put down to simple politics. The Conservatives might be loathe to to condemn something that will provide employment to people in southwestern Ontario — in a riding held by a Conservative MP, no less. The enthusiastic involvement of Ontario's Progressive Conservative government likely also makes it harder for Poilievre to criticize the deal.

But Poilievre's approach to the Volkswagen deal is a lot like his muted reaction to the government's introduction of tax credits for investment in clean energy. In last month's budget, Finance Minister Chrystia Freeland laid out more than $16 billion in new supports for firms and investors — but Poilievre couldn't summon an opinion. 

Having already come out against other policies meant to reduce emissions — including carbon pricing and clean fuel regulations — Poilievre might have few options left beyond supporting the subsidization of clean technologies. The only hint of a climate plan to come from the Conservative leader so far is his insistence on "technology, not taxes." And at a forum in January, Poilievre said his approach would include "incentivizing through financial instruments."

But perhaps the relative lack of condemnation from the Conservative side reflects a new consensus on government support for industry — what might be broadly defined as "industrial policy."

Though Freeland's explicit embrace of industrial policy has furrowed some brows, it would also be a mistake to say that industrial policy is "back." It never really went away, even if the term itself has fallen out of fashion.

"While the term industrial policy fell out of favour throughout most of the last three decades," says a January 2021 report from the Brookfield Institute, "governments never stopped intervening heavily in the economy, in Canada and elsewhere. Whether through regional development agencies, sector strategies, or regional industrial benefits policies, Canadian governments have aimed to build competitive industries while avoiding geographic concentration of wealth and employment."

By one estimate, the federal government committed $14 billion to business subsidies in 2015.

It would be difficult to tell the story of Canada without considering the role played by industrial policy — by everything from John A. Macdonald's National Policy to the government support and involvement that helped kick-start the development of Alberta's oilsands.

Even Stephen Harper's Conservative government ended up committing billions of dollars to General Motors and Chrysler to keep the two auto giants afloat in the wake of the Great Recession.