Alberta’s economy is a hot topic in this election and each of the parties is making promises on how they plan to keep it rolling.
The United Conservative Party said it will “develop programs similar to the Alberta Petrochemical Incentive Program for more capital-intensive technologies.”
Meanwhile, the Alberta NDP promised to diversify Alberta’s economy and grow the province’s energy sector by introducing the Alberta’s Future Tax Credit, a refundable tax credit of 20 per cent on capital investment in new emerging sectors.
But UCP leader Danielle Smith claimed Alberta has a strong economy, partly spurred by corporate tax cuts in 2019.
Let’s look at that claim.
Employment in Alberta
According to the UCP’s website, the party claimed it created over 42 times more net new private-sector jobs than the previous government did in their four years.
Nearly 190,000 more Albertans are employed in the past four years and workers earn more per week compared to any other province, the website read.
“While we represent just 11.7 per cent of Canada’s population, we’re responsible for nearly a quarter of all jobs created in Canada between March 2022 and March 2023,” the UCP said on its website.
But a recent report published by economist Jim Stanford and the Alberta Federation of Labour shows a different story.
The report suggests the province has below-average job creation. Alberta only started to regain pre-COVID peak levels of employment starting in December 2021 and total employment continued to grow at a “moderate pace” since then, the report read.
According to the report using Statistics Canada data, employment in Alberta only grew 4.2 per cent from 2018 to 2022, compared to 5.2 per cent across Canada.
The report also suggests the employment rate declined by 1.4 percentage points within this time frame.
Wages in Alberta have also declined: the report suggests real wages declined at an annual rate of 0.8 per cent from 2018 to 2022. In comparison, real wages grew by 0.7 per cent in Canada as a whole within that time frame.
“I’ve been very critical over the years of what has come to be known as trickle-down economics,” Stanford told Global News.
“I’ve been skeptical that that would unleash the sort of economic momentum that is often promised … There’s a downside for those who aren’t getting their taxes cut and aren’t getting other favors given to them.”
‘Alberta’s economy is booming’
The UCP also said its strong business policies have attracted workers and investments to Alberta.
According to the UCP’s website, the province attracted 45,526 net new residents from other provinces in 2022.
“When we cut taxes in 2019, investment returned to Alberta,” Smith said at Wednesday’s new conference.
“More Albertans started opening businesses and now more Albertans are working than ever before in our province’s history… more Canadians are choosing to move to Alberta for the opportunities we have, thanks to a strong economy.”
However, Stanford’s report suggests that Alberta has the slowest rates of economic growth in the country.
He said the UCP’s corporate tax cuts actually weakened investments slightly initially, which fell more dramatically during the beginning of the COVID-19 pandemic in 2020. Capital spending remained weaker in 2021, Stanford wrote in his report, suggesting there was no visible impacts on investment spending from the corporate tax reduction.
Alberta’s average annual growth in real GDP from 2018 to 2022 was 0.4 per cent, compared to Canada at 1.3 per cent.
Real GDP growth per capita in Alberta also decreased during this time, compared to the rest of Canada.
“I think what our research shows is that the promised payoff in terms of increased investment and growth, and overall prosperity has not come,” Stanford said.
“If there’s one metric on which the trickle-down strategy has indeed ‘worked’, it has been to boost the profitability of the private business sector, which is the deliberate goal.”
An economic outlook published by Alberta Central also suggested the province is not experiencing an economic boom like it did in the 2000s and the mid-2010s despite oil production rising to “unprecedented levels.”
According to the report, the lack of boom directly results from a much smaller share of oil revenues staying in the province.
The report also suggests the energy crisis and high prices caused by the war in Ukraine could be a catalyst for a faster transition away from fossil fuels, which means weaker investments in oil and gas. This affects other industries in Alberta such as construction and manufacturing.
Comments