Alberta
Have Alberta’s Skilled Workers had Enough?
The Canadian oil and gas industry suffered another blow on Sunday, October 25, when Cenovus Energy Inc. announced a $3.8 billion merger with 82-year old Canadian oil and gas company, Husky Energy. Headquartered in Calgary, Alberta, Husky is projected to lose up to 25% of its workforce as a result of the merger, approximately 2,150 jobs – mainly in Calgary.
The news, which fell on Alberta’s increasingly restless population of unemployed workers and struggling families, many of whom believe Alberta has been left out in the cold for far too long already, has fueled ongoing discussions of a provincial brain drain.
Simply put, brain drain is defined as “the departure of educated or professional people from one country, economic sector or field, usually for better pay or living conditions”. Recent statistics show this concept is rapidly gaining traction in Alberta as residents seek to escape the increasingly grim economic landscape to pursue opportunities elsewhere, beyond the provincial borders.
As Canada’s largest producer of oil and natural gas, Alberta is no stranger to the boom and bust nature of the industry, experiencing cyclical periods of economic prosperity influenced by global conditions followed by detrimental crashes and ensuing hard times. Prior to this year, Alberta experienced a major economic crash in 2015, with the Canadian oil and gas industry suffering a $91 billion loss in revenue and layoffs reaching 35,000 workers in Alberta alone (1).
In the last 5 years, countless Albertans have struggled to regain their footing on shaky economic and political grounds, suffering substantial losses and insecurity. In this setting, the catastrophic impacts of the global COVID-19 pandemic, coupled with pipeline delays and ongoing cuts in the Canadian oil and gas sector have left many Albertans with the feeling of being kicked while already down.
According to the Government of Alberta Economic Dashboard, the price of oil for many Alberta oil producers fell 36.6% from September 2019, averaging $28.43 USD per barrel in September 2020, according to the Western Canada Select (WCS) price. The coinciding unemployment rate in Alberta was 11.7% in September 2020, down from its 15.5% spike in May 2020, but still 6.6% higher than in September 2019 (2).
At this point, it seems a number of Albertans have simply had enough. According to The Alberta Annual Population Report 2019/20, “Alberta’s interprovincial migration patterns are heavily influenced by the economic conditions in the province, and as the economy cooled, the province experienced net outflows.” The report shows that 2,733 residents left Alberta between April and June 2020.
The loss of another 2,150 oil and gas jobs as a result of the Cenovus merger comes as a disappointing yet predictable defeat for industry workers who have remained “down on their luck” for many years in Alberta. Effectively decimating industries worldwide, the pandemic has also successfully pulled the rug from beneath Alberta’s shaky footing, tanking oil and gas once more and leaving countless skilled workers with nowhere to go but out.
For more stories, visit Todayville Calgary.
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
Official statement from Premier Danielle Smith and Energy Minister Brian Jean on the start-up of the Trans Mountain Pipeline
-
Business7 hours ago
UN plastics plans are unscientific and unrealistic
-
Brownstone Institute10 hours ago
The Teams Are Set for World War III
-
Education4 hours ago
Support a young reader through the Tim Hortons Smile Cookie campaign
-
Opinion8 hours ago
The Climate-Alarmist Movement Has A Big PR Problem On Its Hands
-
Addictions9 hours ago
Why can’t we just say no?
-
Opinion2 days ago
Climate Murder? Media Picks Up Novel Legal Theory Suggesting Big Oil Is Homicidal
-
Energy1 day ago
Net Zero’s days are numbered? Why Europeans are souring on the climate agenda
-
Economy2 days ago
Ottawa’s homebuilding plans might discourage much-needed business investment