Alberta
Red Deer City Council needs these three things in next week’s provincial budget
From The City of Red Deer
Justice, health and social infrastructure are priorities for Red Deer in the 2020 Provincial Budget
The City of Red Deer is specifically looking for commitment and investment in crown prosecutors for Red Deer, a 24/7 permanent shelter and hospital expansion, as well as a commitment to maintain Municipal Sustainability Initiative (MSI) funding, which was reduced in 2019 impacting The City’s overall capital plan going forward.
“This provincial budget is unlike any other as we continue working to respond to critical social and economic challenges that we hope will be provincially prioritized,” said Mayor Tara Veer. “Investment in a 24/7 permanent shelter and funding for Red Deer Regional Hospital expansion are critical needs that must be addressed for the health and wellbeing of our city as a whole. An investment in justice, especially additional crown prosecutors for Red Deer, is also a top priority to strengthen the court’s ability to uphold charges and obtain justice for victims of crime.”
In addition, The City of Red Deer continues to be concerned about potential downloading of provincial responsibilities to municipalities resulting in potential local tax impacts.
“The impacts of provincial downloading can be significant, especially at a time when many citizens are already feeling the pressures of difficult economic times. While we support the provincial government’s efforts in furthering financial sustainability and efficiency, we are working locally to maintain service and program delivery that responds to the economic and social challenges we face today as a city, and as a province,” said Veer.
As part of the priorities highlighted at the City Council meeting today, The City of Red Deer noted its commitment to community safety and crime reduction with continued focused on advocacy for additional crown prosecutors, as well as a need for a province-wide needle distribution protocol and debris strategy, residential treatment and increased affordable housing in Red Deer.
“It is our responsibility, as local government, to build a safe community while providing stability to businesses and residents in our city, especially in times of economic volatility,” said Mayor Tara Veer. “Earlier this year, Red Deer City Council approved the 2020 budget based on the best information we have right now, and it is our hope that this provincial budget reflects and acknowledges the needs of our citizens and our community at a time when we are working to maintain services and infrastructure for 2020 and beyond.”
The speech from the throne will take place on Tuesday, February 25 with the provincial budget on Thursday, February 27. Upon release of the 2020 provincial budget, administration will conduct an in-depth review to fully understand its impact on Red Deer and its citizens.
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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