How do I convince a colleague that plagiarism in a grant proposal is bad?
It seems that you have already tried to convince him, and it has been unsuccessful. I don't know what else you can do to convince him.
I would say that if I found plagiarism in any part of the work, the entire work, as well as the authors become suspect. It would very likely be automatically rejected.
My advice to you, is to stop working with him or, if you continue, to make sure your name is not affiliated at all with those proposals.