Max Fawcett is a freelance writer and a former editor of Alberta Oil magazine and Vancouver magazine.
If at first you don’t succeed, try, try again.
That appears to be the philosophy behind the recovery plan that Alberta Premier Jason Kenney announced on Monday, one that was highlighted by an acceleration of his government’s previously announced corporate tax cut, a reannouncement of planned infrastructure spending, a new incentive for the tech sector that replaces a pair of tax credits his government eliminated a year ago, and the creation of yet another organization dedicated to correcting alleged untruths about the province’s environmental reputation.
If nothing else, it offers conclusive proof that his government does believe in recycling.
But this blue bin of previously announced spending and previously attempted policies is a long way from the “bold” plan that was promised. It also stands in stark contrast to the work happening at other levels of government, both here in Canada and around the world, where everything from basic incomes to job guarantees are being seriously discussed. Even former Progressive Conservative prime minister Brian Mulroney recently argued that Canada should adopt a guaranteed basic income, double the population through immigration, and create the conditions for a pan-American trade agreement. In that light, the Alberta Recovery Plan seems almost pitifully timid.
Then again, Mr. Kenney clearly worships at the altar of that old but alluring god: supply-side economics. That’s why he led his announcement this week with the news that the planned reduction of Alberta’s corporate tax rate to 8 per cent, which had been scheduled to happen in 2022, was being bumped up to this past Canada Day. Never mind that Mr. Kenney’s so-called “job creation tax cut,” which first took effect last Canada Day, didn’t create any new jobs (Alberta actually shed thousands of them). It also didn’t prevent a major company like Encana – sorry, Ovintiv – from leaving the province altogether. But this time, Albertans have been assured that the tax cut will get the job done.
That job includes poaching companies from key markets around the world. And because its $120-million “War Room” apparently can’t hack it, the governments plans to create something called “Investment Alberta” that will “define and defend Alberta’s leadership on environmental, social and governance standards” as well as offering “concierge services” for potential investors.
But that campaign won’t just be limited to international markets such as Houston, Singapore, and London. It will apparently also take aim at Bay Street and its multibillion-dollar financial industry. “All those banks and insurance companies down on Bay Street …. we’re going to be telling them they can save money for their shareholders, for their workers, for their operations, by relocating financial and fintech jobs to places like downtown Calgary and downtown Edmonton,” Mr. Kenney said.
This is a curious strategy for a government that has repeatedly expressed a desire to change the terms of equalization in Canada, and which would necessarily require Ontario’s political support to make that happen. It’s also a plan that is almost guaranteed to fall flat; it was a burgeoning separatist movement in Quebec that drove many of them out of Montreal and into downtown Toronto a generation ago, and it’s hard to imagine that any financial company of size and consequence would choose to run toward another potential constitutional conflict.
It might be even harder to imagine a flood of tech companies relocating to Calgary or Edmonton. Yes, the Alberta Relaunch Plan includes a new refundable tax credit for tech companies, but it replaces a pair of credits that the UCP removed last July – ones that tech-sector leaders have said are essential to making Alberta competitive, and whose removal sent a clear message about where Alberta’s priorities lay. Tech companies and their employees are driven by considerations that go beyond tax rates; after all, if it was just about finding the lowest-cost place to do business, the beating heart of the U.S. tech sector would be North Carolina, not California.
But Mr. Kenney has staked his political future on his ability to deliver jobs and economic opportunity to Albertans, and time will ultimately tell whether his decision to double down on the logic of supply-side economics will pay off. If it does, he’ll almost surely win re-election in 2023. If it doesn’t, Alberta will serve as another data point in the growing body of evidence that suggests corporate tax cuts are more effective at rewarding the shareholders and executives of said corporations than encouraging them to hire new employees.
One thing is clear: in a moment that called for bold ideas and innovative solutions, the Alberta government decided instead to opt for orthodoxy and ideology. And looking to the past is rarely a good way to build the future.
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