With the provincial election looming, some Alberta business leaders are telling the provincial government to rein in spending despite rising oil revenues and a robust financial outlook.
Some businesses say they also don’t expect taxes to sink any lower, even though Premier Ralph Klein has mused about the idea of eliminating the province’s income tax now that the provincial debt is about to be retired.
All this comes as non-renewable resource revenues soar due to record oil prices that have recently flirted with a $50 US-a-barrel pricetag.
“In a province with an anticipated estimated budgetary surplus of anywhere between $5 billion and $11 billion, the business community will certainly receive a few plums,” predicts Keith Brownsey, a political scientist at Mount Royal College in Calgary.
Mark Norris, the province’s minister of Economic Development and MLA for Edmonton-McClung, also hint at what those benefits could include.
“In my talks with industry, there is general satisfaction with the taxation levels in Alberta, but moving to our stated goal of corporate taxes being eight per cent would be a good move,” Norris says.
“Not only would it put money back into the hands of the wealth and job creators, but it would send a signal internationally that Alberta is business- friendly and wants to remain so.
“There have been talks about doing away with the corporate tax altogether and getting more head offices here, but we are not there yet,” he adds. “Overall, the biggest request is not to change the rules and keep regulations to a minimum, and that is what we are committed to.”
Toss in an anticipated provincial election later this year and expectations on the government will be high, analysts say.
At least two organizations – the Calgary Chamber of Commerce and the Canadian Federation of Independent Business (CFIB) – are in the process of surveying their members on what concerns they might have and where they would like to see government spending directed.
“The chamber has undertaken a significant study and will release a list of recommendations to the province in mid-September – recommendations that protect the economic competitiveness of our city and our province, and further build our national and international profile,” says Murray Sigler, president and CEO of the Calgary chamber.
“Our province is now in a unique, enviable position and one that was attained though hard work,” adds Sigler. “Considering this, and leading up to a provincial election this November, the chamber does raise a need for a continued eye on spending taking place in a competitive tax regime.
“In addition, (we) will look for further commitments toward municipal infrastructure and heath reform – issues that help to promote the economic competitiveness of our region.”
Meanwhile, the CFIB is also moving forward with a poll of its membership in Alberta, which comprises 9,200 small- and medium-sized businesses.
“We’re putting together a survey of our members on what the focus should be, now that we’re debt free,” says Corinne Pohlmann, the CFIB’s director, provincial affairs, Alberta and N.W.T.
In 2001, the CFIB conducted a similar survey on what the province’s spending priorities should be once it cleared its debt. There was some support for putting money away for future generations, but also for spending a little on infrastructure, education and then health care. But Pohlmann notes that at the time, the province didn’t have a capital account with dedicated funds for infrastructure.
Also in the last survey, half of all CFIB members wanted to see a reduction in taxes, 25 per cent thought the government priority should be program spending and 25 per cent said saving for the future was the right thing to do.
“My sense is it won’t be too much different today, but that’s what we want to find out,” says Pohlmann.
She expects to have the results in next five to seven weeks.
For his part, Brownsey doesn’t anticipate taxes falling drastically.
“We have a low-tax regime and they (the business community) understand that we can’t go much lower in taxes – but they can demand accountability regarding finances and stability regarding policy and rules regulations,” he says.
“Accountability, stability, transparency and some management of the province’s finances are necessary,” Brownsey adds. “With oil at $50 US a barrel, Bob the chimp could have a surplus in Alberta.”
The Canadian Taxpayers Federation (CTF) is also calling on the Klein government to control spending and to completely eliminate health premiums.
“If past performance is an indicator of future performance, then we can expect more spending increases again with very little tax relief,” says John Carpay, the federation’s Alberta director.
Most of the group’s 20,000 supporters in Alberta are business people, adds Carpay, noting there was great disappointment with the (provincial) tax increases in 2002, most of which are still in effect.
Combine this with spending on government programs that has gone up 75 per cent in eight years, from $12.7 billion in 1996-97 to $22.3 billion in 2004-05, according to Carpay, and CTF members are troubled.
“They want Premier Klein to return to his conservative roots, where he used to say a dollar is best left in the hands of an Albertan consumer or investor rather than being spent by politicians and bureaucrats. But that was a long time ago. He hasn’t been speaking that language or implementing those policies in the past six or seven years,” says Carpay.
Government spending hikes are also a concern for the CFIB.
“Since 2000 we’ve seen spending increase by more than 25 per cent overall and we need to make sure when a problem arises that the government is not going to just throw money at it,” adds Pohlmann.
“It’s almost like we’ve entered a new phase where we’re debt free. There no longer is an obligation to put money toward the debt.”
Pohlmann also suggests that an election call is the government’s way of looking for a new mandate in terms of managing the gushers of money that are coming in.
“From a business perspective, what these companies are looking for from the next provincial government is some focus. What is your plan for Alberta now that debt is not an issue? What is your vision for 20 years from now and how are we going to get there?”
The province recently launched a public consultation survey called It’s Your Future. The goal, the government says, is to give Albertans an opportunity to help set the policies in a debt-free province.
Estimated to cost $500,000, survey results will be released in October.
Albertans have until September 24 to respond by mail or through the Alberta Government website.
But some feel the move is an empty gesture.
“They’re continually doing these (types of) consultations,” said Brownsey. “This says they have no idea of what they want to do, other than to stay in power.”
(Laura Severs can be reached at laura@businessedge.ca)
