What amazes me is that the Fraser Institute can say things – sometimes wild things – and there is virtually no push back. The best journalists are those that can smell a rat – and call out the so-called experts.
It’s no secret that the Fraser Institute was absolutely giddy with the former Liberals deep tax cut plan and that is reflected in the current ranking of provincial investment climates.
Fraser raves about Alberta’s limited government and low tax regime but how come the Alberta government having the second highest per capita spending in Canada – only NL higher – can be considered ‘small’ government? How can Alberta, which doubled its provincial spending per capita in just over a decade be considered fiscally prudent?
If you are a Fraser economist, it’s because of the low corporate and personal income tax rates.
If any province was getting 40%-60% of its tax revenue directly from oil (depending on the year) they too would have the luxury of setting corporate and personal income tax rates lower – would that make them any wiser or more prudent?
Any economist worth his/her salt knows that ‘investment climate’ is about more than just ‘tax’ and the nebulous ‘red tape’. It’s about the clear value proposition for investing which involves a myriad of aspects including tax policy, regulation, infrastructure, labour pool, R&D environment, supply chain, access to markets, etc.
I would like to see jounalists push back on reports such as this. I get pilloried on these pages when I say just about anything remotely controversial – and that isn’t by journalists. The media has an obligation to get clarity for the reader so they can decide fact from fiction. If Alberta is the ‘smallest government’ why does it spend more than anywhere else (except NL) by a fairly wide margin (more than 19% higher than BC on a per capita basis)?
The truth is that think tanks/research institutes that are heavily biased by ideology are problematic (and this cuts both ways the CCPA on the left would be a good example) because they ram their research through their deeply held convictions.
I don’t have a problem with conviction but when someone is posturing as unbiased – following the research if you will – and they are not – they should own up to it. I would like to see Fraser research be front ended with a caveat something like “we dislike government and our research is clearly meant to highlight this”.
My own personal view is that the Graham tax cuts were not well thought out and now the Tories are going to have to raise taxes in order to restore fiscal health. How will Fraser rate NB’s fiscal climate in 2014 if there is a deficit of $2 billion (as per Don Drummond’s forecast)?
Last point on irony. NB goverment program spending in the current fiscal year ranked 5th in Canada on a per capita basis behind PEI, NL, MAN and AB and it was about the same as SK. So we don’t have runaway spending relative to the rest of Canada. My point here is that there will need to be provincial government spending restraint – I think they will have to keep spending around 1% in nominal terms for the next few years – but it’s not like there is massive overspending relative to the rest of the country.
The point is that we really can’t cut our way out of this. It is going to have to include both spending restraint and tax increases and a longer term plan to get the GDP growth up well above Don Drummond’s forecast which was based on the previous pattern which we all agree was below where it needed to be.