Alberta spends the most on business subsidies — despite questionable benefit, report says
Province also had least transparency on programs, U of C study concludes
Alberta spends more than other provinces in Canada on business subsidies, despite evidence that the subsidies actually provide questionable value, according to a report from The School of Public Policy at the University of Calgary.
The federal government and the country's four largest provinces (Alberta, Quebec, Ontario and B.C.) spent a combined $29 billion on subsidies in 2014-15, including on spending programs, tax incentives and direct investments, according to a report published by economist John Lester and the university's school of public policy on Wednesday.
Subsidies are designed to support research and development, help businesses access financing and create jobs in high-productivity industries, or more controversially, to bail out struggling businesses.
"Per person subsidies were $640 in Alberta, about $100 ahead of the next most generous jurisdiction, Québec," Lester wrote.
"Alberta also stands out by having the least transparent public reporting of business subsidies."
The province only began publishing tax expenditure estimates in 2013, while the other provinces studied had records dating back 10 years, and the only way to find out what program each subsidy was used for was through filing access to information requests.
Lester estimated that Alberta's government spent $2.6 billion on subsidies that year, $585 million of which were delivered through spending programs.
Fifty-eight per cent of subsidies in Alberta were delivered though the tax system.
Small businesses and agriculture were the two most subsidized industries.
Lester wrote that the spending on subsidies may not actually have the impact governments intend.
Half of overall subsidies failed to improve economic performance, he said, and another 11 per cent had no explicit objective or convincing rationale for their efficacy.
But, he acknowledged that while it's possible to assess the value of subsidies intended to raise income, it's impossible to study the subjective value for programs with a social objective.
Alberta's spending on subsidies is set to increase in 2017-18, Lester wrote, due to grants, loans and tax credits announced as part of the province's jobs plan.
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- An earlier version of this article stated that Alberta spent $585 million on business subsidies in 2014-2015, but that was just the portion of subsidies the province spent on business programs.Jan 11, 2018 2:23 PM MT