Alberta
Provincial Government to slash public sector pay 2%
From The Province of Alberta
Public sector wage restraint: Minister Toews
Travis Toews, President of Treasury Board and Minister of Finance, issued the following statement on the continuation of 2019 public-sector wage arbitrations:
“As promised, 2019 public-sector wage arbitrations will continue after Oct. 31 with an updated monetary mandate that reflects the reality of Alberta’s growing debt and the unacceptable deficit this government inherited.
“The revised position comes after government took the time to fully assess Alberta’s economic situation, including findings of the MacKinnon panel report, which recommended public-sector wages be brought in line with comparable provinces to correct overspending and sustain high-quality services for Albertans.
“We cannot ask Alberta taxpayers to fund public-sector pay raises during a time when far too many workers in the private sector have lost their jobs and many others have seen significant pay cuts in recent years.
“We are all in this together as Albertans. We all have to do our part to live within our means, and that includes government. Our MLAs have rolled back their salaries by five per cent and the Premier has cut his salary by 10 per cent. This is on top of five per cent cuts to MLA salaries a few years ago.
“Public-sector pay accounts for over half of government expenses, and compensation for public-sector workers in Alberta is, in most cases, significantly higher than in other comparable provinces. During better times, public-sector wages rose rapidly – far faster than inflation and population growth.
“The revision moves from the previous position of no increase for 2019 to an average two per cent reduction for collective agreements that include a 2019 wage reopener.
“We have the highest respect and admiration for Alberta’s public-sector workers, whose dedication helps deliver so many of the vital services Albertans rely on. But we were elected to be responsible stewards of the public’s tax dollars and to get our province’s finances under control.
“Each one per cent increase of the $26.9 billion spent annually on wages means an additional $270 million cost to taxpayers, forcing a choice between higher taxes for Albertans at a time when they are facing economic uncertainty or cuts to government programs.
“The pause provided by Bill 9 gave us the clarity and information we needed to make prudent financial decisions that are in the best interests of all Albertans without continuing to pile up unnecessary and destabilizing debt. The updated arbitration mandates are based on that reality.”
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
-
Fraser Institute2 days ago
Canada can solve its productivity ‘emergency’—we just need politicians on board
-
International2 days ago
NYPD storms protest-occupied Columbia building, several arrested
-
Environment2 days ago
Journalism Misrepresent Climate Science
-
Addictions2 days ago
British Columbia to re-criminalize hard drug use in public after massive policy failure
-
Addictions21 hours ago
City of Toronto asks Trudeau gov’t to decriminalize hard drugs despite policy’s failure in BC
-
COVID-192 days ago
Canada’s COVID vaccine injury program has paid out just 6% of claims so far
-
Business1 day ago
When politicians gamble, taxpayers lose
-
illegal immigration2 days ago
Oklahoma Just Became The Latest State To Take Immigration Enforcement Into Its Own Hands