Alberta Government Flip-Flops on Corporate Welfare

Alberta Government Flip-Flops on Corporate Welfare

Franco Terrazzano
Canadian Taxpayers Association

It’s a sad day for taxpayers when their government that has “committed to being responsible stewards of taxpayers’ hard-earned money” starts bragging about its corporate welfare spending. Premier Jason Kenney should immediately scrap the new business subsidy programs his government just announced and go back to focusing on cutting taxes for everyone rather than picking winners and losers.

At a recent press conference, the Kenney government announced two new corporate welfare initiatives: the Innovation Employment Grant and more money for the Alberta Enterprise Corporation which gives tax dollars to venture capital funds.

“[The IEG] will be significantly more generous than similar tax credits offered in other provinces,” bragged Finance Minister Travis Toews. “A company investing $250,000 in research and development in Alberta would receive $50,000 of support through the IEG. The same company would receive $28,000 of support in Ontario, while in B.C. it would only receive $25,000.”

The UCP is also giving an extra $175 million to the AEC, matching the entire amount of money the New Democrats and Progressive Conservatives gave the organization since 2008.

These tech subsidies are just the latest round of pork that the UCP is serving business interests. Earlier in July, Associate Minister of Natural Gas and Electricity Dale Nally announced the government would be handing out more tax dollars to the petrochemical sector.

The UCP’s new petrochemical subsidy is in addition to the $1-billion-plus Petrochemical Diversification Program that was created by the New Democrats. The PDP is the program the government’s own finance experts warned lack economic merit, could benefit businesses that would have made the investment anyways and would blow a bigger hole in the provincial budget.

It’s bad enough that the UCP is going forward with the NDP’s wasteful corporate welfare program, but the UCP’s new petrochemical subsidy doesn’t even have a cap on program costs.

The Opposition is rightly beginning to question the United Conservatives’ change of heart towards corporate welfare, calling out the UCP for “continuing the NDP legacy” of doling out petrochemical subsidies.

“When the NDP brought in the petrochemicals incentives, the UCP – not only once, not twice, many times – over and over voted against our program,” said NDP MLA Deron Bilous. “They also cried that grants were too risky. Now their program is just that; it’s grants. The hypocrisy coming from the other side is unbelievable.”

The recent corporate welfare spending spree is a turn from the good work the UCP has done lately on business taxes and a turn from the principles that helped them climb to power. The Kenney government rightly committed to not only reverse the NDP business tax hike but surpass other provinces (and even 44 U.S. states) by lowering Alberta’s business tax to eight per cent. Kenney was also right to speed up that cut recently when faced with a worldwide downturn.

Business tax cuts give every entrepreneur a chance to be a winner. Corporate welfare makes taxpayers the loser by having bureaucrats and politicians hand-pick the winners.

And Kenney knows this.

Kenney told an audience in 2017 that he “would get the Alberta government out of the business of business, out of the losing business of picking winners and losers.”

Kenney also reassured the audience that “this is something I have experience with” referencing his time with the Canadian Taxpayers Federation when he successfully pushed the Klein-government to implement a “No More Boondoggles” law to restrict corporate welfare. Kenney even added that he “would bring back legislation to keep the government out of the market.”

Only a few months ago Premier Kenney acknowledged that picking winners and losers is not a strategy for long-term economic success.”

It’s time for the UCP to drop its newfound interest in picking winners and losers. Along with scrapping this new corporate welfare spending, the UCP should go back to the economic strategy that makes every taxpayer a winner.

Franco Terrazzano is the Alberta Director of the Canadian Taxpayers Federation.