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McGuinty's playing with the cool kids Add to ...

mgee@globeandmail.com

With a budget deficit of $18.5-billion, your provincial government is strapped - but not so strapped that it can't find a quarter of a billion in the pocket lint to pay some Frenchmen to set up a new video-game studio in Toronto.

Premier Dalton McGuinty says that a $263-million grant to highly profitable French game developer Ubisoft will create 800 jobs over 10 years. "By investing in Ubisoft, we're building Ontario's economy now and for the future," said the premier at a slick announcement this week, looking all new-economy in an open-necked shirt.

If that kind of talk makes an alarm bell go off between your ears, no wonder. Again and again, governments have argued that they simply must spend public funds to attract, save or nurture one kind of leading-edge industry or another.

Aerospace was once a government darling, too. Think of all the millions that went into keeping Toronto's de Havilland Canada aloft. Next it was biotechnology, a favourite of Mr. McGuinty's Liberal government, which is credited by biotech firms with providing more than $3.2-billion for research and innovation. More recently, the "creative" industries have been in vogue. Remember the $6-million that Toronto and the province put up for the Lord of the Rings musical? (It flopped.) And don't forget that subsidy sponge, the auto industry. We all know how that turned out.

Gaming has become the new apple of Mr. McGuinty's eye. Ontario, he argues, can't afford to be left behind in the global competition to build a diversified, knowledge-based economy. "This is an anchor investment," he said. "It will catapult us a great distance forward."

Video games are a $68-billion global industry, growing at around 10 per cent a year, even in the depths of recession. It employs bright young things, pays them nicely and builds on Toronto status as what Ontario calls "the third largest television, film and digital-media cluster in North America."

Underwriting a thriving company such as Ubisoft that can already boast $111-million in annual profits may cause some taxpayers to raise an eyebrow, but "it's a competitive world out there," says Mr. McGuinty, and digital media is a "surefire winner."

Is it? Ubisoft executives say they are in love with Toronto and promise to spend $500-million of the company's own money here, which is awfully big of them. But game developers are a footloose bunch, jumping from place to place in search of talent and government handouts.

Many of those new-media types now active in Canada were lured here from Europe. Britain's industry is steaming over Canada's talent piracy and the British government is considering tax measures to lure developers back.

Who is to say they won't jump across the pond when the tax picture changes. Or when currency-exchange rates make Canada less desirable. Or when all that government money helps inflate salaries for the creative people that game developers need.

That sort of thing is already happening right here Canada. Prince Edward Island, for example, is fighting to keep Longtail Studios, a small but successful developer, from relocating to Nova Scotia for tax reasons.

Even if Ubisoft were to stay in Toronto forever, there would be reason to doubt whether it makes sense to splash so much money on it.

That quarter-billion has to come from somewhere, much of it from good Toronto businesses that don't have the buzz factor to attract an open-collared premier. Their tax burden will rise, and their business will suffer, while the cool kids in the video-game industry collect government cheques.

Follow on Twitter: @marcusbgee

 

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