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What does the Orange Crush mean for Alberta’s economy?

5/6/2015

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Total eclipse of the sun? Maybe a royal coronation? There aren’t too many events that happen only once or twice in a lifetime. But for many Albertans, one such event happened Tuesday night. After nearly 44 years, the government has changed.

Mixed together with a hockey victory that same night, Alberta is awash in emotion, much of it jubilant. Regardless of one’s feelings on the outcome of the election, everyone would have to admit it’s nice to see democracy alive and kicking in Alberta.

But another question is out there: What do Rachel Notley and the NDP government mean for Alberta’s economy?

The confetti at NDP headquarters has barely fluttered to the floor, so it’s still too early to tell precisely what will happen. On balance, new governments can bring many benefits. New ideas, new faces in cabinet, and willingness to try new policy ideas. All of that can be energizing and positive.

Still, there are some elements of the NDP platform that raise some concern from some in the business community. The increase of the minimum wage to $15 per hour is characterized as a hardship for many business owners, particularly small and medium-sized businesses who are already trying their best to avoid laying off workers.

The proposal to increase the corporate income tax from 10 per cent to 12 per cent is a fairly modest increase from one point of view. And judging by how Albertans voted late night, that point of view is where many are at. But it’s easy to demonize “corporations.” We think of rich multi-national companies in the shiny towers, corporate jets and expensive suits. But, indeed, the threshold for paying corporate tax is fairly low: profit of more than $500k. That includes a lot of medium-sized companies in the province, most of which do not own corporate jets and are trying to weather the current economic downturn. That extra two per cent could be very challenging, even disastrous, they say.

Finally, there is the issue of reviewing the natural resource royalty program. While there are no specifics, some say a review would lead to higher royalties paid by producers. A few years ago, a similar review was completed but the changes were quickly undone. At best, a royalty review ensures that Albertans are receiving fair value for the resources they own. But another review could also send signals to investors and producers that—once again—their business projections will be turned on their heads. And, at worst, it could actually drive down investor confidence and drive out investment.


But before anyone gets too worked up, it’s important to remember that all of this is in the future and will be the real stuff of politics and province-building. It will take weeks if not months for the new government to figure out how it is going to proceed. The bureaucracy within government—the deputy ministers, assistant deputy ministers and directors—have a wealth of knowledge and can provide the new government with guidance. This is part of the value and the great gift of a civil service. 


A change of government in this province is a chance for fresh ideas to bloom. The numbers suggest that our economy is fragile in parts. The gardener in me suggests that moving ahead with a combination of optimism and thoughtfulness is the key. Abertans have a role to play in that process by continuing to make their voices heard, and elected Albertans in listening to those voices. 
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