Thursday, 13 May 2021

‘Investment’ the defining issue in the next Calgary Municipal Elections


As the number of candidates for Calgary’s Mayoral Seat increases, Calgarians should be very careful in choosing who should be the City’s next Mayor. With a continuing pandemic causing business closures, candidates will now claim that they are ‘pro-investment’ to help the private sector. There is no doubt that businesses need help to recover, but in my opinion the effects of closures have been so great that at least 25% of businesses may never recover. Furthermore, with the collapse of the oil industry we have seen the downtown area suffer in more ways than one. Buildings are empty, and the surrounding area businesses are suffering from the lack of customers. The area is deserted and the safety and security of citizens after dark is now at its lowest point.

As a result of this economic downturn, governments of all levels are now talking about ‘investing’, which in reality means spending tax payers’ money. While I have always supported government involvement in growing the economy, I have preferred a different approach to spending and have supported the use of policies that provides incentives and tax deferral rather than direct subsidies. When government funds businesses it is always a problem in choosing winners and losers. Whereas if government allowed business to invest and provide them with an incentive through reduced taxes or special depreciation incentive, ordinary citizens do not  end up paying  through increase taxation to fund the private industry. The reality is that there is always only one taxpayer. If governments use accumulated surpluses to fund these ‘investment’ it is means that government previously overtax citizens to accumulate these surpluses.

Surpluses should be used to reduced taxes or provide services more efficiently, and not to subsidize private businesses. The Revitalization of Calgary’s downtown, by all three levels of government, is nothing but subsidies to private owners of buildings which may or may not be converted into residential buildings. In fact perhaps only three or four buildings in that area may be converted to residential at great expense. Federal money to fund infrastructure should not be used to refurbish high rise commercial  towers, but rather should be used to improve our roads  and transportation system. This revitalization is proposed to be over ten years, this may or may not happen as the economy changes, and yet Council decided to commits millions of dollars to this project.

The other elephant in the investment room is the Entertainment Center. The City committed to ‘invest’ part of the $500 million earmarked for the project. Already there seems to be some problems due to the rising costs of material and other economic factors which may increase the costs by another $70 million. I never opposed the project but always opposed the financing  model. There is also an added City expenditure for parking in the area amounting to close to $50 million. The agreement provides too little financing from the private organization and puts too much risk on the Calgary taxpayer. Even those who support this type of funding, must realize that even after using their tax money, as users they will still have to pay a ‘ticket tax’ to use the facility. I have always preferred a model that would have used ‘tax free’ municipal bonds’ that would have provided citizens with a means to directly participate in the project and thus reduce the burden of ordinary tax payers.

Many of these expenditures have been approved with little citizen participation; in fact many of these decisions were taken by Council behind closed. Calgarians have demanded more transparency and accountability, and yet when choosing the next Mayor, very few citizens really know who have supported these huge expenditures. Two of the Mayoral candidates, Councillors Davison and Gondek, voted for every expenditure and funding decisions made by Council on these large and expensive projects, and voted for every tax increase imposed in the past four years.  So when candidates tell you that they are ’pro investment’ it really means one thing – more  expenditures and therefore more tax increases to fund similar projects. Do not be fooled by the rhetoric that it will benefit all Calgarians. While the result may be partly to the benefit of some sectors of Calgary, the greater beneficiaries will be the private investors, who will be getting tax payers money to fund their enterprises or revitalization of their buildings.

It is therefore incumbent upon Calgarians to make sure that they know who are supporting these ‘pro investment’ candidates. I venture to say that it will be large corporations, including international ones and private owners who are going to be beneficiaries in one form or another. Do not be fooled by a slick Marketing expert, because it is very easy to sell anything when you use taxpayers’ money and not your own. When you choose your candidate remember that investment really means expenditure and when it is done by the government it always results in more taxes.