There is a lot to unpack in the Alberta government’s economic recovery package.
There’s a 40 percent boost in infrastructure spending over the $7 billion or so already in the provincial budget. There’s a quick acceleration of the UCP’s promised corporate tax cut, dropping the rate immediately to eight per cent and possibly costing the treasury up to $500 million in foregone revenue over the next two years.
There’s a gaggle of incentive programs for innovation and tech and a new agency to market the province to companies looking for fresh opportunities.
There are restrictions on temporary foreign workers and immigration to keep jobs open for Albertans. Apparently there are sector by sector initiatives coming “in days to come” as the government reveals details on its reboot.
It’s all a broad brush, somewhat scatter shot initiative aimed at hard-starting an economy that is barely on life-support.
And it is a long-awaited admission on the part of the UCP government that oil and gas is not the only game in town and not the respirator that will pull the province out of this Covid-driven recession.
Premier Jason Kenney mentioned pipelines and petrochemicals in passing on Monday when he unveiled the recovery plan. There will be a plan to attract investments in petrochemicals and there has already been the announcement of a $1.5 billion investment in the Keystone XL pipeline. But unlike virtually every other economic pronouncement Kenney has made as premier, the energy sector did not take centre stage.
In fact there was a refreshing change in tone and vocabulary. There was no bellicose blaming and shaming of Ottawa or environmentalists bent on destroying the provincial economy.
Suddenly diversification is the watchword of the day. Mixed in with old-school corporate tax cuts, a hotly debated stimulus which may or may not lure a company or two to the province, were some surprising new directions.
Finance Minister Travis Toews, despite facing a ballooning deficit, said there is “good debt and bad debt.” Borrowing for targeted infrastructure is good debt, apparently —a declaration which could have comfortably been uttered by NDP finance minister Joe Ceci five years ago.
Kenney served notice he will be gunning for Bay Street, with a plan to attract “FinTech” companies to repopulate Calgary’s empty downtown towers. Low taxes, low lease rates and lower cost of living all make Alberta the only responsible choice for corporate head offices, the premier suggested.
There’s even mention of money for music and the performing arts.
There’s little doubt economic recovery is desperately needed immediately for the province. Alberta is currently wallowing in an “official” unemployment rate of 15 per cent but the true figure is somewhere in the 20 to 25 per cent neighbourhood when job seekers who have given up are added in.
The economic recovery plan is targeted to create 50,000 jobs, says the premier.
The devil, of course, is in the details.
The jobs which can be assured from the recovery plan are short term or low income. Construction jobs from the big infrastructure boost don’t last forever.
Toews pointed out one of the sectors which will be affected by the shutting down of temporary foreign workers is hospitality. So Albertans will be required to fill vacancies in an industry not known for generous wage rates as tourism and restaurants reopen post-Covid.
The creation of permanent high paying jobs and meaningful diversification of the economy are dependent on factors that can’t be guaranteed. The corporate tax cut is not tied to performance guarantees. It does nothing for the many companies in Alberta which are far from making a profit this year on which they will have to pay taxes.
The details are scant on the Innovation Employment Grant, the program which replaces a popular pair of tax credits from the previous NDP government to kickstart tech and digital industries. Toews pegged the cost of the UCP initiative at $60 million, not a giant sum when compared to handouts in the oil and gas sector.
But at least a pandemic and an acceleration in the decline of the global metro-economy have driven home to the Alberta government that the future requires some thinking out of the usual box.
Now the question is whether Kenney’s package contains some strategic treasures or it’s just full of foam rhetorical packing peanuts.
Photo Credit: CBC News
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