Posted on Jan 23, 2020

Long before Alberta lost 50,000 jobs, public service had doubts about premier’s corporate handout

Briefing materials created by Treasury Board and Finance officials during last spring’s provincial election campaign show that Premier Jason Kenney went ahead with his $4.7-billion corporate handout despite serious concerns from officials that the reductions would not achieve economic goals.

In the April 2, 2019 material, obtained by the Alberta Federation of Labour and released by the Alberta NDP caucus today, Treasury Board and Finance officials analyze the 2012 study by Erget Ferede and Bev Dahlby that was relied on by Kenney to justify his terrible platform promise. The officials concluded the study could not reliably predict economic growth in Alberta given current economic conditions.

“Alberta has an economy sufficiently heavily weighted to the oil and gas industry that estimates of tax rate change responsiveness from many other jurisdictions may be unreliable in the Alberta context," the officials wrote.

The documents go on to note that taxation on oil and gas companies related to those in other competing jurisdictions, “does not appear to be a barrier to investment in Alberta. Other considerations including market access constraints, and regulatory challenges are the primary barriers to investment in the oil and gas industry in Alberta, not the lack of marginal effective tax rate competitiveness.”

“Jason Kenney gave away billions for a corporate handout he knew was built on a faulty study." - Rachel Notley

“Jason Kenney has continued to mislead Albertans by claiming that economists unanimously support his failed plan,” said NDP Leader Rachel Notley.

Corporate filings show the five largest energy companies in Alberta received the bulk of the giveaway and used the money to reward shareholders and buy back shares. Husky Energy received $233 million in giveaway before laying off Alberta workers and investing in Wisconsin and Newfoundland. 

“The Albertans who paid for Kenney’s corporate giveaway are the parents hit with hundreds of dollars in new school fees while their child’s classroom gets more crowded,” Notley said. “It’s the senior whose spouse was kicked off their drug coverage plan while being treated for a serious disease. It’s the Albertan living with a disability whose support payments will fall behind the cost of living each year. It’s the Albertan forced to abandon their post-secondary education due to soaring tuition costs and higher student debt interest rates.”

Toby Sanger, Executive Director of Canadians for Tax Fairness, also says the evidence does not support corporate tax cuts as a means to create jobs.

"Proponents of corporate tax cuts keep on claiming they’ll lead to higher investment, economic growth and more jobs,” Sanger said. “Instead, we’ve consistently seen the opposite — declining investment and fewer jobs, as governments have cut funding for public services to pay for corporate tax cuts. Meanwhile, billions in corporate tax cuts have overwhelmingly benefited corporate executives and the wealthy, often foreign, owners of these corporations. We’re seeing exactly the same thing happen with Jason Kenney’s corporate tax cuts.”

Notley renewed calls for Kenney to scrap the corporate giveaway in Budget 2020.

“Albertans deserve a Premier who makes decisions they sincerely believe are in the province’s best interests, based on evidence,” Notley said. “Jason Kenney chose his own ego and extremist opinions over the evidence and professional advice presented to him, and we are all paying the price.”