Spending-for-recovery plan draws critics’ fire
The provincial government’s plan to spend its way to economic recovery and job creation was panned Tuesday by critics.
The NDP provincial budget sets aside $34 billion over five years for infrastructure, $178 million over two years for job creation and $299 million in 2015-16 for the new Ministry of Economic Development and Trade.
It authorizes the Alberta Investment Management Corporation to invest $540 million from the Heritage Savings Trust Fund in Alberta companies, makes an additional $1.5 billion available to ATB Financial to loan out to entrepreneurs and businesses, and invests $50 million over two years in the Alberta Enterprise Corporation to develop a venture capital market.
“That program, respectfully, sounds like a bit of a farce,” interim Progressive Conservative Leader Ric McIver said. “One of the things it’s going to do to create jobs is use three per cent of the Heritage Fund for high-quality Alberta investments. What’s not mentioned is, today, 100 per cent of the Heritage Fund is available for high quality Alberta investments, if you can find them.
“So I don’t know what they’re going to do, whether they’re going to change the rules on the Heritage Fund.”
Alberta Party Leader Greg Clark is certainly no fan of the Job Creation Incentive Program, which he kept calling a tax credit. The New Democrats campaigned on the idea of such a tax credit last spring, but in Tuesday’s budget it was introduced as a grant program that could support as many as 54,000 jobs over two years, with as much as $178 million.
“I don’t like the job-creation tax credit one bit,” Clark said. “I want to see an investor tax credit in this province, so businesses and entrepreneurs can decide how best to deploy that capital. That will create real new jobs. This job-creation tax credit is absolutely open to abuse. You fire a whole bunch of people Monday, you hire a whole bunch of people Tuesday. Are they new jobs, are they old jobs? I don’t know.”
A baseline number of employees will be set and each company applying for the $5,000 maximum grant per new job will have to prove that it has experienced a net increase in employment to qualify for the grant.
That sounds a bit clunky to Amber Ruddy, Alberta director of provincial affairs for the Canadian Federation of Independent Business.
“The way it’s structured could be problematic for small businesses — first-come, first-served, and up to 100 employees — that doesn’t sound like a recipe for success for small businesses,” Ruddy said. “Small businesses don’t have compliance teams or HR departments to figure out the complex rules to get access to this capital. A better way to spur economic growth would be to keep taxes low up front, rein in that regulatory burden, and control debt and this budget does very few of those things.”
“Our small business confidence is at an all-time low right now and the debt is a huge concern to business owners,” Ruddy said.
McIver doesn’t like the idea of a government legislating access to up to $55 billion in debt — 15 per cent of nominal GDP — calling it “frightening for Alberta’s grandchildren.”
“They don’t even pretend to be fiscally responsible I thought they might actually make that pretence today, but they did not. I agree we need the infrastructure, but you must have a plan to pay back the borrowing you do. The government next year will start borrowing for operating, not even for capital. They’re borrowing to buy the groceries. I don’t know many Albertans that think that’s a good idea.”
They’re borrowing to buy the groceries. I don’t know many Albertans that think that’s a good idea.