EDMONTON (660 NEWS) — Husky Energy laid off hundreds of employees in Calgary on Tuesday, now the NDP is crying foul, saying the company took advantage of a government tax break designed to help the oil patch and turfed workers.
Calgary-McCall NDP MLA Irfan Sabir was very critical of the UCP’s decision to give the company so much money.
“We warned this government that their corporate handout wouldn’t work,” Sabir said.
But Energy Minister Sonya Savage was quick to respond in what position the UCP was left in after the past government.
“We are at a jobs crisis because of failure for four years by the NDP,” Savage said.
As oil and gas employees continue to lose their jobs, Alberta’s government continues to point fingers, but is finding blame that easy?
Accusations of who is to blame are flying at the Alberta legislature in the wake of Tuesday’s layoffs, but the issue is far from black and white, or in this case, blue and orange.
Associate professor of economics at the University of Calgary, Trevor Tombe, said there are many different factors to observe.
“We should look at this with nuance. Based on evidence and data, tackle the trade-offs, and that’s not really what we’re seeing in the legislature right now,” Tombe said.
The argument is centred on a drop in the corporate tax rate from 11 per cent to eight per cent by 2022, which the NDP says amounts to $4.5 billion.
Sabir continued to say the company was taking money from the province, but people were still unemployed.
“Husky made a quarter of a billion dollars from the Premier’s handout but is cutting jobs not creating them,” Sabir said.
But the change in taxes will show a different number for Husky Energy.
“The tax reduction will change investment behaviour and economic activity in the province which makes the revenue loss to the building less than $4.5 billion, something on the order of $500 million a year is a much more reasonable estimate,” Tombe added.
“The premier said this huge giveaway would create jobs, particularly in the energy sector,” Sabir said.
Rimbey-Rocky Mountain House-Sundre MLA Jason Nixon said that Sabir and the NDP were not very successful in bringing in jobs during their term.
“That member was part of an NDP government in this province that oversaw the largest job loss in the history of this province,” Nixon said.
Tombe also added that bringing down taxes on business can still create economic growth, and other companies setting roots in Calgary is proof.
“Is there a large and robust empirical research literature in economics that suggests lowering the corporate tax can increase investment and spur economic activity, the answer is pretty clear that it’s yes.
“So, for the opposition to say that it cost $4.5 billion is I think a little misleading and for government to suggest that this tax reduction is the reason why Telus, for example, made their big investment is a stretch as well,” Tombe adds.
However, tying specific incidents or decisions by corporations to a tax break is difficult to do.
“That’s right, so there’s a thousand things going on in the economy every day affecting individual decision as family and households and company investment decision so investments may rise and fall for decision which go well beyond a tax change,” he said.
Tombe said whenever there are cuts to taxes, there are usually cuts to spending to balance the books, something we’ll likely learn more about when the budget is tabled Thursday.