Corporate welfare is on the rise in Alberta. While politicians are picking and choosing which businesses they favour for subsidies, they’re taking that cash out of the pockets of other job creators, restricting the growth of other industries and businesses that put food on tables.
While the government is increasing taxes and acting as if those increases are out of necessity, it is also increasing the tax burden for future generations. The Alberta government is borrowing heavily, with the debt level in line to hit a record-setting $72 billion by 2020. Someone has to pay for it sooner or later.
But handouts to government-friendly businesses aren’t required. Alberta businesses have long thrived on their own. Corporate welfare is only one of the many unnecessary expenditures taken by the government. And it didn’t start yesterday. While Alberta once shied away from big government subsidies to big business, leaving more room for the organic growth of job creators, these programs found new life under Premier Ed Stelmach in 2006 and have grown since.
Subsidies to business have grown substantially under Premier Rachel Notley. And unfortunately for aforementioned future generations of taxpayers, the biggest bills are yet to come.
According to a new report from the Canadian Taxpayers Federation penned by Mark Milke, between 2011 and 2017 subsidies to business and forecast costs extending beyond that point will total more than $6.7 billion.
In Alberta’s corporate welfare du jour, green is the new black. Of that cash, 67 per cent is for green initiatives and/or renewable energy projects. Across Canada, corporate handouts have trended away from traditional subsidies and toward so-called green projects. That’s not to say the traditional taxpayer drains aren’t still receiving their cheques – Quebec-based Bombardier, for example, has been sopping up tax dollars for years and continues to do so. But as our report tracked the trends in corporate welfare, we found green is in.
The Alberta government, and indeed governments from coast to coast, have a terrible track record with picking winners and losers on which to waste taxpayer money. In Alberta, the government has wasted billions of dollars in the name of economic diversification with no real return for taxpayers, according to Professor Ted Morton at the University of Calgary. There’s no reason to believe their judgment will improve just because the handouts are directed toward green companies. The intention may be good, but it’s the outcomes taxpayers have to pay for.
Future generations should be more concerned with the potential big costs coming down the pipe. Albertans could be on the hook for $25.1 billion in toll payments to the North West Upgrader bitumen refinery.
Alberta businesses haven’t been asking for handouts. They’ve been asking – sometimes begging – government to get out of the way. Governments at all levels are spending money they don’t have – expanding new programs such as government daycare and hiring almost 3,000 new government employees at the provincial level; and councillors voting in salary increases for themselves in Edmonton. The justifications for spending beyond their means are unacceptable, such as Mayor Don Iveson’s response: “It is what it is.”
If governments stopped spending excessively on compensation and programs including corporate welfare, they could step aside and make room for genuine economic growth – the kind job creators in Alberta have been creating for decades without a wink, smile and a handshake from some politician looking to score votes.
Paige MacPherson is Alberta director of the Canadian Taxpayers Federation.