Businesses need help, but it’s important to provide the right help the right way. Premier Jason Kenney’s economic strategy has so far revolved around three core principles: lowering taxes, cutting red tape and pushing back against Ottawa. Kenney should double down on these principles to help Alberta recover and stay away from corporate welfare.
“The most robust economies are built on the effort, investment and ambition of citizens and businesses that are prepared to take risks to create wealth,” reads the government’s Blueprint for Jobs. “Government’s best role is to offer a predictable and competitive environment that allows the private sector to thrive.”
That sounds good, but some UCP politicians are starting to waiver.
“We will be focusing on various industry sectors that we know have a great future in the province,” said Finance Minister Travis Toews while foreshadowing the government’s economic recovery plan that will be released later this month. “We also believe that we can be very competitive and we have a bright future in the tech sector, in the tourism industry and in petrochemical manufacturing.”
It sounds like Toews is getting the same corporate welfare itch that plagued the New Democrats.
“Let’s reframe the headline: Jason Kenney brings back NDP economic diversification strategy,” former premier Rachel Notley said in response to Toews’ statements.
The NDP government announced billions of tax dollars for petrochemical firms, rail car companies, upgraders, tech companies and renewable energy companies. A leaked briefing note obtained by the Canadian Taxpayers Federation shows that the NDP’s own finance experts warned its petrochemical subsidies lacked economic merit, would blow a hole in the government’s budget and encourage more businesses to seek handouts. Yet these are the same petrochemical subsidies the UCP is now considering.
Canada must escape the corporate welfare trap by Charles Lammam
With the benefit of hindsight, Albertans know that the NDP’s economic plan didn’t work.
For decades, Alberta taxpayers have been burned by politicians picking winners and losers in business, and Kenney knows this. During his time with the CTF, Kenney pushed for legislation that would outlaw corporate welfare after discovering that about two dozen “Alberta government business boondoggles” burned taxpayers for $2.3 billion in the 1980s and early 1990s.
Kenney and his UCP must not take more tax dollars out of the economy to give to hand-picked businesses that either wouldn’t put their own money on the line to build a project or don’t need the subsidy. There are other ways Kenney’s government can help the recovery.
As businesses reopen, Kenney should begin by following the advice of former premier Ralph Klein and get government “out of the business of being in business.”
Kenney should also continue to focus on broad competitive measures, such as aggressively cutting red tape and continuing to lower the business tax. Kenney can bolster these measures by providing income tax relief and keeping hundreds of millions of dollars in small businesses by setting the small business rate to zero.
Finally, Kenney must make it his mission to address the elephant in the room: Ottawa. There’s not much Alberta can do if the feds continue to tighten the regulatory noose around our economy while handing more of our tax dollars to other provinces. That means Kenney must continue to fight the carbon tax, the discriminatory tanker ban, the no-more-pipelines legislation, increase Alberta’s autonomy and hold the promised referendum on equalization.
Past attempts to tax, spend and meddle Alberta’s ways out of a downturn haven’t worked before. This time around Kenney should help Alberta’s recovery by cutting red tape, lowering taxes and pushing back against Ottawa.
Franco Terrazzano is the Alberta Director of the Canadian Taxpayers Federation.