Alberta
Alberta rejects unconstitutional cap on plastic production
Minister of Environment and Protected Areas Rebecca Schulz issued the following statement:
“Every modern convenience and necessity is either made from or contains plastic, from surgical gloves to your iPhone. Despite this, Minister of Environment and Climate Change Canada Steven Guilbeault has announced that he intends to cap the production of plastics in Canada.
“This unilateral announcement is a slap in the face to Alberta and our province’s petrochemical industry, and the thousands of Albertans who work in it.
“Plastics production is a growing part of Alberta’s economy, and we are positioned to lead the world for decades to come in the production of carbon neutral plastics.
“Minister Guilbeault’s proposal would throw all of that into jeopardy and risk billions of dollars in investments. This includes projects like Dow Chemical’s net-zero petrochemical plant in Fort Saskatchewan, a $9-billion dollar project that will create thousands of jobs.
“His proposal will also fail to reduce plastic production. If the federal government limits plastic production in Canada, other counties like China will just produce more. The only outcome that this federal government will achieve will be fewer jobs in Canada.
“Last year, the Federal Court ruled that Minister Guilbeault’s decision to classify plastics as ‘toxic’ was both ‘unconstitutional and unreasonable’.
“Minister Guilbeault’s decision to cap production is even more egregious and is equally unconstitutional. Under no circumstances will Alberta permit any limit on our ability to produce and export plastic products.
“Instead of wasting everyone’s time, the federal government would be better served by taking a page out of Alberta’s plan, which diverts plastics from landfills and turns used plastics into new products. This is the promise of Alberta’s plan to create a Plastics Circular Economy, a modern miracle in which, through chemistry, we can have all of life’s conveniences and necessities while protecting our environment and reducing plastic waste.
“If the federal government refuses to abide by the constitution, we will take them to court again to defend our jurisdiction and the thousands of Albertans who work in the petrochemical sector.”
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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