How did the 2017 Alberta budget stack up against your business priorities?

Posted by: Kaitlyn Mason on April 3, 2017

In this blog, the Chamber’s policy team outlines the policies tabled within Alberta budget 2017, along with some of the possible implications. So how does the budget meet our businesses’ priorities? Will the budget promote business and job creation? All this and more.

Much of the recent policy focus in Alberta has been geared towards climate leadership. We have made major policy changes in order to leave future generations with a sustainable and healthy environment. While this is important, we must also leave future generations with a shot to succeed financially. Tens of thousands of dollars in per person debt, and a weakened business community is simply not what we want the next generations to inherit. 

While job and economic prospects are not the only factors that people consider when deciding where to live and raise a family, they do play a prominent role. And the best way to increase jobs, is to reduce the burden placed on the business community. 

Although we are disappointed with the budget, we must applaud the government for not increasing business taxes, and continuing with the investor tax credit programs That being said, how did Alberta’s 2017 budget stack up against the business community’s priorities?  

1. A return to fiscal discipline 

While some positive strides were made by keeping spending growth within population, inflation and economic growth – as we recommended – we can hardly consider this budget a win for fiscal discipline. Our province’s debt has risen to $45 billion and is expected to reach $71 billion by 2019-20. That’s over $16,000 of per person debt within the next few years. Total expenditures have also climbed to nearly $55 billion, roughly $4 billion more than what was tabled in last year’s budget. 

This year’s deficit is expected to reach $10.3 billion, which is lower than last year’s $10.8 billion shortfall. 

However, with no reduction in spending, the balance is expected to be made up with more debt, tax revenue and a higher price of oil.  

Over 40% of Calgary business leaders support significant cuts to public services to fix our budgetary challenges and to get our spending in order. In fact, these same sentiments were echoed by broader Alberta.

According to a Mainstreet poll released prior to the provincial budget, the number one priority among Albertans was tax relief.

The number two priority? Reducing spending to get the deficit in order.

Neither of these priorities were tabled in the budget. 

2. Embrace performance-based budgeting 

Despite some of the highest levels of government spending in Canada, Albertans do not see the highest performance results in critical areas of public service delivery. Couple this with high public employee earnings – the public sector earns nearly 8% more than their industry counter parts – and it's clear that we need to improve the delivery of our services. 

While effort was made to reduce and freeze the salaries of the highest paid agency CEOs and political staffers, no real strides were taken to improve the structural inefficiencies of service delivery. 

3. Innovation and entrepreneurship supports 

It’s unlikely that we will be seeing a $100/barrel price of oil any time soon. As such, the road back to economic prosperity will need to be led by innovation and business creation.  

The best way to discourage business creation and innovation is to reduce the earnings that business owners receive for their hard work and risk taking.  

The provincial government does deserve credit for efforts made to encourage innovation and entrepreneurship. The investor tax credits (AITC & CITC), the cuts to the small business tax rate, along with the development incentives for the clean technology sector will make it easier for Albertans to invest in new technologies and take the entrepreneurial plunge.  

4. Revised revenue model

Hope is not a strategy. 

Alberta needs to get off the royalty roller coaster. We cannot continue to make funding and program decisions based on the volatile price of a global commodity. We cannot base our budget, financial future and expenditure patterns on assumptions of future hope. We need to formulate our economic strategy based on practical, realistic and current data. 

Hoping that the price of oil continues to climb, and that our economy will rebound is not a strategy for success.

Instead, we must turn to reliable and empirically-proven policies for business and job creation.

Reduce red tape, spend within our means, reduce barriers to trade and labour mobility. These are the proven paths to prosperity and must be emphasized within every economic strategy.

Zoe Addington is Director of Policy and Government Relations, and Gianfranco Terrazzano is an Economic Policy Analyst at the Calgary Chamber.