April 18, 2019 6:58 pm

Chambers of commerce look forward to see UCP plan to turn around Alberta’s economy

Premier-Designate Jason Kenney addresses the media the day his after his election victory in Edmonton on Wednesday April 17, 2019.

THE CANADIAN PRESS/Jason Franson
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Premier-designate Jason Kenney declared Alberta is “open for business” on Tuesday night after his United Conservative Party won a majority government in the provincial election.

The first orders of business for the premier-designate will be to repeal the carbon tax and reduce the corporate tax rates for larger corporations.

READ MORE: Alberta Premier-designate Jason Kenney says UCP received ‘mandate of historic proportions’


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But Sandip Lalli, CEO and president of the Calgary Chamber of Commerce CEO, said a new government won’t immediately turn around the fortunes of businesses in Calgary or the province.

“It’s not like we woke up [the day after the election] and we have market access for energy [or] we have new customers,” Lalli told Calgary Today on 770 CHQR on Wednesday. “It is going to take the first six months.”

LISTEN: Calgary Chamber of Commerce’s Sandip Lalli joins Calgary Today to discuss what Calgary businesses hope for from a UCP government

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Lalli said she and other Alberta businesspeople would like to see the finer points of the vision the UCP have for the province.

“What we’re looking forward to is understanding what is that long-term fiscal plan. That will provide certainty to business and to investors, and that’s going to equate to the fact that we’re open for business, we’re open for growth.”

Carbon tax a moot point

Alberta Chambers of Commerce president and CEO Ken Kolby doubts that scrapping the Alberta carbon tax will change the ledgers of businesses in the province, since the federal carbon tax will likely kick in when the provincial one is gone.

“I guess it’ll be up to the courts to determine whether it’s constitutional for Canada to levy a carbon tax on all the provinces,” Kolby told Ryan Jespersen on 630 CHED on Thursday. “That remains to be seen.

“Unfortunately, I think with the repeal of the Alberta carbon tax we’ll be sending more money to Ottawa.”

LISTEN: Ken Kolby of the Alberta Chambers of Commerce joins Ryan Jespersen to discuss some of the UCP campaign promises for business

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But Kolby said it is a signal to businesses of the direction that the recently-elected government plans to take the province.

“It is indicative of how the new government is going to look at the effect of layering costs on business,” Kolby said Thursday.

READ MORE: Transfer of power in Alberta begins following Alberta election

University of Calgary economist Trevor Tombe said the carbon tax has not been as big an economic headwind as some rhetoric has stated.

“This magnitude on a tax on carbon might shave about 0.1 per cent off of economic growth each year between now and 2022,” Tombe told Jespersen.

LISTEN: University of Calgary economist Trevor Tombe casts a close eye on UCP campaign promises with Ryan Jespersen

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“The proposal to scrap the carbon tax is really one to narrow its coverage, to remove its implication from home heating, fuels and gasoline,” Tombe said. “But Alberta will maintain a carbon tax on large emitters and that covers a little over half of Alberta’s emissions already.”

READ MORE: Ontario’s court challenge against federal carbon law gets underway

Corporate tax a key to competitiveness

For Lalli, the reduction of the corporate tax rate can both help stimulate the economy and keep cities like Calgary competitive.

“Studies have indicated that a couple-point change can stimulate and broaden the economy and the tax base,” Lalli said.

READ MORE: Communities surrounding Edmonton among best to start business: report

“It’s fine to talk about the jurisdictions in Canada, but where are we losing investment capital to?

“We are competing in a global marketplace, so the fact that we’re the lowest in Canada doesn’t necessarily mean we’re competitive to where investments are coming from,” the Calgary Chamber CEO said.

READ MORE: Lower price discounts to boost Q1 oil profits but sector still faces uncertainty

Kolby agreed that the lowered corporate tax rate — which the UCP promises to reduce to eight per cent from 12 over the next four years — will improve Alberta’s competitiveness.

Tombe indicated the effects of that tax change on the province’s economy would be small.

“Lowering that corp rate might boost growth by maybe 0.1 — maybe 0.2 on the high end — per cent per year as it’s being ramped down,” Tombe said. “But this is not something that would really lean strongly on [when putting that up] against the big reduction in the pace of Alberta’s recovery that we’ve seen (since 2015).”

READ MORE: Ottawa extends deadline for Trans Mountain decision to June 18

But Jack Mintz, president’s fellow at the University of Calgary’s School for Public Policy, points to other reasons for the corporate tax rate cut.

“Dropping the corporate rate four points will do two things,” Mintz told Rob Breakenridge on 770 CHQR on Thursday. “It will encourage more investment, but also it will help protect some of that tax base.”

LISTEN: Jack Mintz of the School of Public Policy joins Rob Breakenridge to discuss doing Bill C-69 better and ways to change taxes in Alberta

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Mintz gave the example that, if a corporation has operations in Alberta and Texas, under the NDP’s 12 per cent corporate tax rate, that corporation would likely want to move more of their operations to Texas. A lower rate in Alberta could help keep more of those operations in the province, therefore helping protect the size of the province’s tax base.

UCP’s Bill 2

The United Conservatives propose that Bill 2 will be The Open for Business Act, which would include a lowering of the minimum wage for workers 17 years old and younger, making changes to holiday pay and banked hours and a reduction of so-called “red tape.”

For Kolby and the Alberta Chambers, Bill 2 will be welcomed by the business community.

“One of the biggest issues we had when the employment standards and labour relations code changed is that there was a lack of consultation with those individual businesses that would in fact be affected,” Kolby told Danielle Smith on 770 CHQR on Thursday.

LISTEN: Alberta Chambers of Commerce president and CEO Ken Kolby joins Danielle Smith to look at Alberta business under a UCP government

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Kolby also suggested that the business community should be consulted before government begins to cut some of their red tape.

“I think what is more essential is we should put it out to businesses to find out what their regulatory irritants are,” Kolby said. “I think you’ll probably see that there are regulatory irritants in all three orders of government.”

Looking forward

Lalli hopes the Kenney government will continue the work the Notley government started in balancing Alberta’s economy.

“There’s been such an effort and momentum towards innovation and companies are doing great things in multiple sectors — continue that,” Lalli said.

But Tombe said any changes early in the UCP’s term will not be an immediate tonic for the province’s economic woes.

“You cannot turn an economy like Alberta’s on a dime,” Tombe told Jespersen. “Government can influence growth rates at the margin, maybe boost it by a couple fractions of a point here or there. But we’re not going to see an immediate or large reversal. That will take time.”

Kolby has seen previous economic recoveries, all fuelled by the energy sector, and hopes this time will be different.

“I’ve seen this rodeo four times in my lifetime and every time we get into the depths of recession, we say, ‘We have to diversify, we have to diversify,’” Kolby said. “And then when the price of oil rebounds, we forget about what we were talking about — having to diversify the economy.”

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