Alberta
“Albertans want jobs, not an ‘aid package’ Alberta Environment and Parks Minister says Tech Mine must be approved
From the Province of AlbertaTeck Frontier project: Minister NixonMinister of Environment and Parks Jason Nixon issued the following statement on Alberta’s position regarding the Teck Frontier oilsands mine project:“I want to be crystal clear. Albertans are proud people. We have never viewed our relationship with the federal government as one based on charity, and we’re not about to start now. “Albertans want jobs, not an ‘aid package’ from Ottawa. “Teck is not a political gift – it deserves to be approved on its merits. If the federal government takes seriously its commitment to science-driven, evidence-based decision-making, then it will accept the recommendation of the regulatory agencies and approve it. In our view, the federal cabinet’s pending decision on the independent joint review panel’s recommendation to approve Teck Frontier is in no way linked to Alberta’s ask regarding an equalization rebate (or other unrelated requests). “The project has undergone a rigorous 10-year review, including a recommendation for approval from the independent federal regulator. Teck has played by the rules endorsed by Ottawa – including by the current federal government. To arbitrarily reject the project at the eleventh hour for political reasons would send a chilling signal to international investors. “The Frontier project will directly employ up to 7,000 workers during construction and up to 2,500 workers during operation. An estimated $70 billion in taxes will be collected over the life of the mine, along with billions of dollars of economic activity that will ultimately spread throughout all of Alberta and Canada. “All of the 14 directly affected First Nations have reached agreements with the company, and Frontier will provide large numbers of jobs for Indigenous Canadians. They recognize that responsible resource development can serve as a path to prosperity. “Teck has committed to leading environmental standards for emissions, water and reclamation. The Teck Frontier project will have emissions of approximately one-half of the oilsands industry average, and lower carbon intensity than half of the oil currently refined in the United States. The company has also recently committed to going net zero by 2050. “We do not view a decision on Frontier as something to be traded away or politicized. For us this issue goes beyond politics – Albertans want approval plain and simple. “Prime Minister Trudeau has emphasized his desire to work with Alberta and to preserve national unity. It’s time he backed up his words with action. “Albertans are watching closely.” |
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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