Alberta
Dr. Jack M. Mintz heads up Alberta Economic Recovery Council
We call them The New Avengers!
The Economic Recovery Council has been appointed by the Kenny government to provide insight and expert advice on how to protect jobs during the economic crisis stemming from the COVID-19 pandemic and the recent collapse in energy prices.
The Council will also focus on strategies for long term recovery from the crisis, including efforts to accelerate diversification of the Alberta economy.
Dr. Jack Mintz is the Chair of the Council. This is the first of a series of articles by Tom Braid where we will provide a look at the background, credintials and accomplishments of this group chosen to help us find a way forward.
Dr. Jack M. Mintz heads up Alberta Economic Recovery Council
The Chair of the new 12 member Alberta Economic Recovery Council is Dr. Jack M. Mintz.
This 2015 Order of Canada member is one of Canada’s most-respected economic and policy minds.
Mintz is the President’s Fellow of the School of Public Policy at the University of Calgary after serving as the Palmer Chair’s founding Director from January 1, 2008 to June 30, 2015.
Since 1978, Mitz’s published works have changed the public policy landscape in both the federal and provincial governments in Canada and beyond.
He is a much sought after speaker, writer and consultant including; World Bank, International Monetary Fund, Organization for Economic Co-operation and Development and several non-profit organizations in Canada and abroad.
Mitz also serves on the boards of Imperial Oil Limited and Morneau Shepell and is the National Policy Advisor for Ernst & Young. In October 2018, he became a Senior Fellow, Massey College in Toronto.
The University of Calgary has created, The Mintz Family Scholarship in Policy Excellence. The scholarship will support students of the Master of Public Policy program into the future.
Here are the members of the council. You’ll see more of Tom’s stories about this important group as the week progresses.
- Jack Mintz, chair
- Clive Beddoe – former chair, president and CEO, WestJet
- Robert Blakely
- Brent Belzberg – founder and senior managing partner, TorQuest Partners
- Bob Dhillon – founder, president and CEO, Mainstreet Equity Corporation
- Chris Fowler – president and CEO, Canadian Western Bank
- Rt. Hon. Stephen Harper – Canada’s 22nd prime minister
- Peter Kiss – owner and president, Morgan Construction and Environmental
- Zainul Mawji – president, Telus Home Solutions
- Nancy Southern – chair and CEO, ATCO Ltd.
- Kevin Uebelein – CEO, AIMCo
- Mac Van Wielingen – founder, ARC Financial
Troubled Monk Brews Up Hand Sanitizer for Desperate Businesses and Non-Profits
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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