Four years of provincial policy and its effect on business
With only a few days left until ballots are cast, there is no better time to review major policy changes enacted by the Alberta NDP and their effect on business
Since assuming government in 2015 the Alberta NDP moved quickly to enact numerous policy changes. Individually, each of these policies have had a substantial impact on our local businesses. Collectively and layered upon one another they’ve eroded away at competitiveness and made many businesses no longer viable.
One of their first acts was the infamous Climate Leadership Plan (CLP) which gave us the carbon tax. Now at $30 per tonne, the tax added serious costs to transportation and heating costs business (and individuals) are subject to. At current gas prices the carbon tax effectively doubles the cost to heat a building, taking funds that could have been reinvested in the business and using them to subsidize solar panels and lightbulbs.
It can’t go without mentioning the small business tax rate was reduced by one percent to accompany the introduction of the carbon tax. Unfortunately, most businesses report the savings, when applicable, far from offset the added costs they are now subject to.
A staple of the NDP’s platform was the nearly 50% increase to minimum wage and elimination of the wage differential for servers. Restaurants, hotels, and retailers are disproportionately affected by this cost increase. In order to survive, most have increased their prices and done more with fewer staff. Many will have noticed that most restaurants are no longer using hostesses, instead relying on their serving staff to fill the gap. Restaurants Canada notes that Alberta has lost more than 10,000 foodservice and accommodation jobs and a 9% drop in average sales. Statistics also show a startling trend towards more part-time workers at the expense of full-time positions and growing youth unemployment.
The NDP also made a number of changes to the Employment Standards Code. Many of the changes were smart, reasonable changes to protect leaves of absence, such as when a family member passes. However, changes were also made requiring overtime to be banked at 1.5x rather than hour for hour and removed the distinction between regular and irregular workweeks for holiday pay, adding yet another cost to employers.
Land-use plans such as the draft caribou range initiative and the Bighorn Country region have resulted in a high-degree of uncertainty for business investment. Conservation of land and at-risk species is an important objective, yet the process has damaged the investment attractiveness of our province, and leaves much to be desired.
The last major policy change to note was the two percent increase to corporate taxes to bring the provincial rate to 12%. This increase, combined with President Trump’s tax cuts have resulted in the average United States tax rate being advantageous to Alberta’s. And as the Laffer curve demonstrates, higher tax rates do not always equate to more tax revenue and that is exactly what happened in our province as corporations moved their profits to greener pastures.
Its important to acknowledge the NDP has made important investments in our region including the new court house, degree-granting status for RDC, the QE2 overpass and the runway extension at the airport. These investments will have a lasting and positive impact on our community, yet, they also contributed our province’s ballooning debt that is now close to $60 billion with a debt-servicing cost approaching $2 billion per year.
Our province has also lost billions in private investment as capital flees to greener pastures with friendlier regulatory environments, lower tax rates, and better market access.
For the above reasons, the Alberta Chambers have put forward a campaign encouraging Albertan’s to “Vote Prosperity.” The campaign’s four pillars are to strengthen business competitiveness, grow provincial trade, build healthy communities, and improve government accountability.
Businesses are the lifeblood of Central Alberta, employing our friends and family members and providing the tax revenue that funds our schools, hospitals, and senior care facilities. Business is adaptable, but it needs a policy environment that allows it to compete and succeed, especially in weak economic times.
Unfortunately many of our local businesses aren't feeling particularly competitive or successful as of late.