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 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.
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 for the Canadian Taxpayers Federation.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
