Alberta finance minister on defensive after 'job creation' tax cut spurs spending elsewhere
Corporate tax breaks to make province ‘competitive’ but at what cost?
The Alberta finance minister says the massive tax cut given to corporations in last week's budget means the province is open for business, but some are questioning, at what cost?
"We believe it's the government's responsibility to create that very competitive, broad-based environment and let capital flow to those sectors, industries and businesses that will sustainably grow and compete and create jobs for Albertans," Travis Toews told Alberta@Noon on Monday.
He's defending the billions in tax cuts his government handed out, saying it makes Alberta the most competitive in Canada and even the cheapest tax regime compared with 44 out of 50 states in the U.S.
The UCP says the cuts total $2.4 billion over four years.
But there's another way to look at that, says the leader of the province's Official Opposition, who say the cuts will add up to $4.5 billion in lost revenue.
"We are paying more, we are getting much less, in order to subsidize a major handout to profitable corporations, and we are not actually making progress on the deficit or debt, compared to the plan we had in place," said NDP Leader Rachel Notley.
"Our plan was different. It would have taken a year later to balance the budget and we weren't handing $4.5 billion to corporations like Husky, who took $233 million and said, 'Thank you very much, we are now going to invest in infrastructure in Newfoundland and Labrador and the U.S.'"
Toews says a move away from supporting green energy is a move away from influencing the market.
"If government starts picking winners and losers, using a targeted, boutique tax-credit approach, the likelihood is that over time we are going to get that wrong," he said.
But some argue that, as Canadians, we do pick favourites. That's done through the direct and indirect subsidies the oil and gas industry already receives — more than $3.3 billion every year — and with the federal government's purchase of the Trans Mountain Pipeline at a cost of $4.5 billion.
"We will not interfere with the marketplace," Toews said, of renewable sources of energy like solar and wind.
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"Green energy is becoming more competitive through technology improvements. We will not spend taxpayers' money distorting the marketplace in energy investment. When we use hard-earned taxpayers' dollars to support one type of energy generation option over another, it provides an unlevel playing field."
The United Conservative Party's first budget, released last week, is full of cuts, reductions and infrastructure delays, which Toews says is, in part, about long-term stability.
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On top of roughly 1,600 jobs cut in the public sector, mostly through attrition, the departments of environment and agriculture will each have about nine per cent less to work with.
"We had to find savings," Toews said.
"Every department is looking to find efficiencies, remove redundancies, move service delivery to the 21st century."
Toews says the cuts to agriculture will allow the industry to continue to compete globally by allowing producers and industry groups to "lead the conversation on research.
"Our goal is to do more with less."
AISH support 'very, very great'
One of the changes that has troubled advocates is the de-indexing of the Assured Income for the Severely Handicapped program (AISH).
Toews says Alberta is still ahead of other provinces.
"We actually spend $400 more per month than the next highest province in the country. Our support of those that are in need is very, very great. We are privileged to be able to support the needy in this province at that level," he said.
But Notley says that's not the whole story.
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She says when her government asked the UCP about using B.C. as a comparison for AISH income levels, they were accused of fear and smear during the election.
"Jason Kenney says, 'That's not onerous.' He earns more than $200,000 a year. He has a $120,000 a year indexed pension, the richest pension of any politician in the country. He can give a [billion-dollar] handout to corporations but thinks folks on AISH need to contribute $30 a month to subsidize that handout," she said.
"I think those are the wrong choices."
Cuts to post-secondary funding, at widely varying levels, are about making public schools more sustainable, Toews explained, adding the government will effectively choose winners by funding programs with greater job potential.
"Supporting programs where there is a high correlation with a strong probability of a job or career opportunity at the back end of programs," he said, is a goal.
"Our average cost per full-time student is $10,000 higher than the other large provinces. We need to deliver education in a more cost-effective way."
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Notley says it costs more per student in smaller provinces due to economies of scale, so to cherry pick comparisons to Ontario and Quebec is misleading.
As to private schools not facing any cuts?
"This is Year 1 of a four-year fiscal plan," Toews said, adding the education minister would be working hard on the file.
"I can't speak to the long-term plan."
While Toews says education funding is being maintained, Notley says removing growth funding is a cut by another name.
"We know we are going to have 60,000 new kids enter our schools over the next four years with not one single new teacher to greet them at the door. Our education system will suffer as a result of that," the Opposition leader said.
"They had promised to fund enrolment and they didn't do that."
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The mayor of Edmonton says municipalities are facing different, less visible cuts from this budget than the announced nine per cent.
"That's on top of a 42 per cent reduction we had previously agreed to," Don Iveson said.
"What's really at issue here is that our partnership agreement in the city charter fiscal framework was a revenue-sharing deal. In addition to the base amount of money being eroded, our share on the upside has also been eroded. If government revenues increase by three per cent, our transfer will increase by 1.5 per cent, rather than also by three per cent."
Notley says the UCP's first budget is only marginally fiscally different than what the NDP was on track to do, but changes are in other areas.
"There's a long laundry list of things that are going to seriously impact the quality of life for Albertans."
- A previous version of this story stated the NDP's claim of $4.5 billion in corporate tax cuts as fact, when it is the party's estimate of lost revenue as a result of the cuts. The UCP says the cuts will cost $2.4 billion.Oct 28, 2019 6:20 PM MT
With files from Alberta@Noon