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Thursday, July 09, 2009
Free enterprise used to stimulate the Alberta economy; today, it’s government: Mark Dyrholm
Another federal-provincial partnership was announced today to create infrastructure jobs across the province. Rob Merrifield, Minister of State for Transport, along with Luke Ouellette, Minister of Alberta Transportation, announced funding for 156 infrastructure projects valued at over half a billion dollars through the Infrastructure Stimulus Fund, under Canada’s Economic Action Plan.
“Today, the Government of Canada announced investments in key infrastructure projects that will boost our economy and create jobs for Albertans,” said Merrifield. “The strong partnership between our two governments allows us to work together to ensure that Alberta’s economy remains strong and productive during these challenging economic times.”
“This co-investment in municipal infrastructure will address much-needed projects in our communities,” added Minister Ouellette. “It will also help keep Albertans working - one of the province’s priorities in these economic times.”
Infrastructure – roads, bridges, power grids, sewage, etc. – is considered by most to be what economists call a “public good” and, therefore, the proper function of government. Putting aside the very legitimate objections to this "public good" notion, government infrastructure spending should be about meeting real economic needs, like a bridge connecting two isolated markets or a highway upgrade that reduces congestion and, consequently, the cost of shipping.
When job creation drives government spending, however, it leads to the misallocation of resources. Under this scenario, the question for government becomes “How many short-term jobs will this project employ” rather than “How will this project create long-term wealth by integrating markets.”
The governments of Canada and Alberta announced funding of more than $443 million for 156 community and provincial infrastructure projects across Alberta. Together with municipal and other contributions, the total investment in local infrastructure improvements in Alberta for the Infrastructure Stimulus Fund exceeds $550 million.
If $550 million seems like a lot of money, the Alberta government intends, in total, to spend over $23 billion over three years on projects expected to create 80,000 jobs across the province. That's about $30,000 per job.
While 80,000 infrastructure-related jobs might sound impressive, in an interview with the Western Standard, Wildrose Alliance leadership candidate Mark Dyrholm reminds Alberta voters of the jobs lost in the province’s oil and gas industry due in large part to Stelmach’s New Royalty Framework (NRF).
“If Ed Stelmach had not torn up written contracts and damaged our international reputation as a fair and stable place to invest, we wouldn’t need federal government help to create jobs,” said Dyrholm, referring to the NRF which changed pre-existing royalty agreements in the oil and gas industry, bringing drilling activity in the province to a stand still despite oil trading between $60 - $70 a barrel.
According to a study by Gerry Angevine, senior economist with the Fraser Institute's Centre for Energy Studies, Alberta is now the worst place in Canada to invest in oil and gas from a tax and regulation standpoint.
“Free enterprise used to stimulate the Alberta economy; today, it’s government." said Dyrholm. "Again, we need restore Alberta’s reputation as a fair and stable place to do business within Canada and internationally. When we do this, when we undo the damage the Stelmach government has done, we’ll get Albertans back to work."
Recent studies by the Canada West Foundation and Calgary Economic Development acknowledge that Alberta’s energy sector drives job creation and economic activity even in the province’s non-energy sectors.
Posted by Matthew Johnston
Posted by Western Standard on July 9, 2009 | Permalink
Comments
Matthew does well what, it my mind, should be the general aim of this blog -- a libertarian take on Canadian politics. Such a take, to the extent it dominates, is what makes this blog is unique. It separates it both from other Canadian blogs and American libertarian blogs.
Posted by: Robert Seymour | 2009-07-10 7:30:11 AM
The problem with countering those who claim these types of plans stimulate the economy is that it's very easy to point to the jobs it creates.
It is extremely difficult, however, to correctly identify the jobs the programs destroy through "crowding out" and the inevitable rise in interest rates created by the deficits.
Posted by: Charles | 2009-07-10 7:57:13 AM
I am starting to dislike the focus on job volume rather then job sustainability a job the requires a "stimulus" is not sustainable and if kept employed for an extended period of time will likely cause job losses in other more productive sectors due to the tax burden these sectors will be forced to endure. Also stimulus backed jobs prop up prices that the free market is trying to correct which in the end costs us growth in other sectors that could be profiting or at least cost cutting from this correction.
I agree with Robert Matthew brings a libertarian focus to this blog and I enjoy his posts.
Posted by: Calgary Libertarian | 2009-07-10 8:46:02 AM
Government creates nothing, Government steals and then justifies its theft by pissing money down a black hole, "for the good of the people".
If they wanted to stimulate the economy they could get real jobs and leave the rest of us the hell alone. We can stimulate the economy to a point never seen under Parliament. Problem is the politicians and their graft and corruption gig would be left in the cold. For some reason they seem to be afraid of that and are doing their very best to look busy with their whole smoke and mirrors act.
They'll take us down yet.
Posted by: The original JC | 2009-07-10 3:05:48 PM
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