Alberta
Alberta concerned with another federal intrusion into provincial jurisdiction
Response to federal government housing announcement |
Minister of Seniors, Community and Social Services Jason Nixon and Minister of Municipal Affairs Ric McIver issued the following statement on the federal pre-budget housing announcement:
“Alberta’s government has deep concerns about the federal government’s April 2 housing announcement. To date, the Government of Canada has not provided adequate or appropriate funding to Alberta for housing and are once again bypassing provincial jurisdiction by not consulting or even notifying provinces about the new program. This is another example of the federal government’s long history of ignoring the province’s jurisdiction and playing politics with important issues like housing.
“The announcement will only make it harder and more expensive to build homes and will also heavily limit the kinds of homes that can be built. It is a continuation of the Government of Canada’s punitive green agenda by attempting to ban natural gas by 2030 and nationalize housing. Unlike the federal government, we know that at a time in which construction of homes and purpose-built rentals is at an all-time high, imposing roadblocks on building will shut people out of the rental and housing market and discourage new construction, making the problem worse.
“Additionally, the federal government has not been clear about how they plan to distribute this funding. No information has been provided about whether funding will be provided per capita, to ensure it is not used for political gain. They have also not been clear about whether they are finally willing to meet their obligations when it comes to housing on-reserve, as to date the federal government has not upheld its responsibilities for housing in Indigenous communities.
“Alberta is already on the right track, with new statistics released by BILD Alberta showing our government’s plan to focus on increasing supply in the market is working. The Calgary region saw 1,674 total housing starts in February, which is 57 per cent higher than the 20-year average for February, and the second-most starts in a February in Calgary’s history. In Edmonton we have seen1,642 total housing starts, making this the second-busiest February on record. Further, with 2,325 housing starts in January and February, Edmonton has begun the year with the second-highest number of housing starts in its history. Together with our partners, we are supporting $9 billion in housing investments to provide affordable housing for 25,000 more families by 2031.
“We are leading the country by having the fewest regulations and fastest permit approval times to enable housing construction and increase the supply of homes. That is why we reject the idea that the provinces and territories should not be involved in this decision, as we are best positioned to understand the local housing needs and concerns of our communities. If the federal government wants to actually remove red tape and make housing more affordable as they claim, they will instead listen to our calls to remove the carbon tax so that building costs are lowered, and shovels can get in the ground faster.”
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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