Alberta’s job mirage
The Alberta NDP has been claiming a victory for central- planning economics in recent weeks, pointing to a TD Economics report predicting strong GDP growth of 3.7 per cent in Alberta this year — tops in the country. But a closer look reveals this isn’t really an NDP policy success story — the TD report forecasts economic bouncebacks f or oil- producing provinces Saskatchewan and Newfoundland and Labrador as well.
Why is Alberta’s economic rebound predicted to be strongest? According to the TD report, Alberta’s economy has more room to climb upwards because it fell into a deeper hole, with “largerthan- expected 3.8 per cent contraction” in 2016. “The rebound in Saskatchewan is expected to be more modest than Alberta’s given that the contraction was shallower,” notes the report.
Even with TD’s strong Alberta forecasts, “the level of economic activity in 2018 will remain below 2014 levels” — and things may well turn out yet worse. The NDP also cites a Bloomberg survey of economists as evidence that Alberta is doing well. But the Bloomberg survey predicts 2.9 per cent growth this year and 2.4 per cent next year, well below TD’s prediction of 3.7 per cent this year and 2.6 per cent next year.
What about the return of j obs to Alberta? The NDP recently bragged that “nearly 49,000 jobs were created here over the last year,” which refers to the increase of 48,500 jobs for the 12 months ending June 2017. But it turns out — even if we ignore the decrease of 14,400 jobs in July — that this employment “recovery” is actually just a mirage: 41,900 of the 48,500 jobs were in the public sector, financed by deficits of over $ 10 billion at the provincial level and of nearly $ 30 billion in Ottawa.
For a clue as to how well this strategy works, Alberta need only to look to the inglorious example of Ontario, where from 2003 to 2015 private sector employment grew a paltry 7.0 per cent while public sector employment increased by 23.0 per cent. Over the same time period, Ontario’s real GDP per capita increased only 6.9 per cent, compared to 13.0 per cent in the rest of Canada.
This government employment growth ignited a public debt explosion in Ontario under the Liberals — and the debt is exploding yet faster today in Alberta under the NDP. Nevertheless, Finance Minister Joe Ceci claims that the NDP’s “approach is working” — which is true, I suppose, for those whose incomes are paid for by the taxes of current and future generations of Albertans. A key pillar to the NDP approach, according to Ceci, is the government’s investments aimed at creating jobs and diversifying the economy.
The logic is that Alberta is most prosperous when investments in the economy are made by NDP politicians. The NDP imagines that it alone possesses the knowledge on how best to deploy economic resources to create the best jobs and the most prosperity — and that people who actually run profitable job- creating businesses possess no such knowledge.
No wonder Ceci, in his first budget speech, declared t hat c orporations were “undercharged” and that the tax rate must be raised from 10 per cent to 12 per cent. In his next budget, billions in green corporate welfare was announced as part of the Climate Leadership Plan. Here again we see the NDP taking a page out of the Ontario Liberal book of policy failure.
When the Ontario Liberals were elected in 2003, they immediately raised taxes on corporate and personal income — just as the Alberta NDP did — before drowning the province in green subsidies and red ink. Albertans are right if they are skeptical of claims of NDP policy success. Polls suggest that such skepticism abounds, with the latest poll showing the United Conservatives solidly ahead of the NDP, no matter who the Conservative leader is. It seems that, unlike in Ontario, Alberta’s voters are less easily fooled.