Alberta
OPINION: Marlin Schmidt on water allocation in the Bow River Basin
Marlin Schmidt, MLA for Edmonton-Gold Bar, Environment and Parks Critic for Alberta’s Official NDP Opposition
The wise allocation of water in Alberta is essential to the sustainable development of an economy that works for all Albertans while preserving our precious natural heritage.
In 2007, Alberta recognized that limits for water allocation in the Bow River basin had been exceeded. No more new allocations of water have been allowed and Albertans have carefully managed the water resources in the basin since then. Fortress Mountain Holdings’ recent application to haul away and sell more than half of the 98 million litres a year it currently has the license to use threatens the careful management of water in the Bow River basin.
The original operators of Fortress Mountain were granted a license in 1968 to use 98 million litres of water per year from a tributary to Galatea Creek to prepare food and provide drinking water to skiers at the resort. The current owners claim that more than half of that allocation is not needed for those purposes and now want permission from Alberta Environment and Parks to haul 50 million litres of water per year away and sell it to the highest bidder. Allowing current license holders to subsidize their business operations with the sale of the unused portions of their licenses moves Alberta further away from the goal of sustainable development and would put the future of our river ecosystems at great risk.
Much has changed in the Bow River basin since 1968 – the demands on the river ecosystem have increased significantly with the twin pressures of population growth and climate change. Re-allocating 50 million litres of water would increase that pressure in a very ecologically sensitive area. It would also set a dangerous precedent for future allocations of water resources. If this application is approved, there’s nothing that will prevent future water license holders from selling their unused water allocations, and while the license holders may profit, our watersheds will pay the price.
Additionally, we must remember that this water allocation would be given priority over all other allocations granted after 1968 under Alberta’s “first-in-time first-in-right water” allocation system. This means that Fortress Mountain would receive priority for this use over a whole host of other users during times of extreme water shortage. Is selling bottled water really a higher priority for the people in the Bow River basin ahead of so many agricultural and municipal water uses? Most Albertans who have talked to me about this issue don’t think so.
Revenues from the sale of the water would apparently fund the goals that the owners have for the development of the resort, including environmentally sound development, living wages for staff, charitable and community activities, as well as reclamation of the site. I support those stated goals, but it should be the skiers who use the resort who pay for those activities. The other Bow River water users and the ecosystem should not be asked to pay for others’ enjoyment of a ski facility.
Alberta Environment and Parks must live up to its mandate of supporting sustainable development now and for future generations. Rejecting Fortress Mountain Holding’s water application would be a step in the right direction.
Marlin Schmidt
Environment & Parks Critic
Alberta’s Official NDP Opposition
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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