Alberta
Here are the people who will set the tone for Alberta’s financial future
From The Province of Alberta
Blue Ribbon Panel to assess Alberta’s finances
The Alberta government has appointed an independent panel of experts as a key first step in getting the province’s budget back to balance.
The Blue Ribbon Panel on Alberta’s Finances has been directed to do a deep dive into Alberta’s finances and economy. The focus will be on identifying areas to eliminate waste, duplication and non-essential spending to create the space to fund government’s key priorities.
“Albertans elected a government committed to getting our fiscal house in order, and reversing the province’s dive into debt. This exceptional panel will offer great experience and expertise to give us an honest read of the province’s finances, and a road map for fiscal responsibility.”
The panel will provide advice in a number of areas to get government’s budget back on track, including on:
- Government’s fiscal outlook and department and agency expenditure trends and cost drivers.
- A plan to balance the budget by 2022-23 without raising taxes, and a new fiscal framework that includes requirements for future balanced budgets and a plan to retire the province’s accumulated debt.
- Government’s budgeting, fiscal planning and public reporting processes and systems for operating and capital.
- The business investment climate in Canada and its impact on the Alberta economy.
“By identifying inefficiencies in Alberta’s current fiscal situation, we can begin making plans to bring balance to the province’s finances. We will do this while remaining committed to ensuring the future of high-quality, frontline services for Albertans.”
The Blue Ribbon Panel members:
Janice MacKinnon, chair: MacKinnon is chair of the board of Investment Saskatchewan, chair of the board of directors of the Institute for Research on Public Policy and a former finance minister with the Government of Saskatchewan.
Mike Percy, vice-chair – Percy was previously an Alberta MLA and former Stanley A. Milner professor and dean of the Alberta School of Business at the University of Alberta. Percy was also the chief of staff to Premier Jim Prentice.
Kim Henderson, member – Henderson is a principal at Sproat Advising. Her previous roles include deputy minister to the Premier, cabinet secretary and head of the Public Service, Province of British Columbia and deputy minister of finance with the Province of British Columbia.
Bev Dahlby, member – Dhalby is a Distinguished Fellow and research director, School of Public Policy at the University of Calgary.
Dave Mowat, member – Mowat is the former president and CEO, ATB Financial.
Jay Ramotar, member – Ramotar has held many deputy minister postings with the Alberta Public Service, including Service Alberta, Solicitor General and Public Security, Health and Wellness, Infrastructure and Transportation and Treasury Board.
Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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