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Government Spending Will Not Be Calgary's Silver Bullet

At worst, economic development funds become political slush funds that channel corporate welfare into votes.

07/31/2017 16:24 EDT | Updated 07/31/2017 16:24 EDT

When times are tough, people are on the hunt for a quick fix, that one solution that will change the game. In Calgary, there's been much political musing about such a silver bullet to kick-start the city's economy.

It's not surprising. The floors of downtown office towers are sitting vacant. "CLOSED – THANK YOU FOR YOUR BUSINESS" signs hang in the windows of businesses that had been operating for decades. Downtown parking lots sit half-empty.

There are some positive signs of a slow turnaround, but no one is more eager than city politicians looking to score votes in the upcoming municipal election to find that silver bullet that will accelerate a recovery. There is a common misconception among government busybodies that the government must do something.

This urge has led to multiple proposals for job growth in the city.

1. The NHL Arena Project


First, there's the arena project. Like pro sports team owners have done in so many cities across North America, the higher-ups at the Calgary Flames are pushing the city to spend taxpayer money on an NHL arena project, with the total price tag of their original proposal pegged by the city at $1.8 billion — double the owners' estimate.

Calgary Flames president Ken King threatened to move the team if taxpayers don't pony up for their for-profit arena and Flames president of hockey operations Brian Burke later reiterated the threat.

The bullish push for spending is working on some councillors, who have openly mused about what Calgary would look like without an NHL team.

rabbit75_ist via Getty Images
In Calgary, there's been much political musing about such a silver bullet to kick-start the city's economy.

Others have bought into the claim that the new arena would spark tremendous economic growth. Calgary Economic Development joined the chorus, saying a new arena is key to attracting business.

When the economic impacts of pro sports complexes have been studied, it's been found that time and again, taxpayers were duped. Sure, economic activity occurs around the complexes, but not new economic activity that wouldn't have happened in the city otherwise, without massive taxpayer subsidies to wealthy businesspeople.

2. Hosting The 2026 Winter Olympics


The second idea that some are touting to bring big economic growth is hosting the 2026 winter Olympics in Calgary. There may be many good reasons (like civic pride) for hosting the Olympics in Calgary, but economic growth is not one of those reasons. There's not much interest in the 2026 winter games because cities like Boston have shied away from risking taxpayer cash on an Olympic-sized money pit.

It would be truly history-making if Calgary's Olympic games didn't have cost overruns beyond the estimated $4.6 billion cost. Unknown security costs alone could run up the tab. While the Olympics might generate pride, they also leave taxpayers in host cities with daunting bills to pay, so taxpayers must be aware of that risk and know it's no job creation magic trick.

At best, these funds transfer money from job creators to government to pick winners and losers. At worst, they become political slush funds that channel corporate welfare into votes.

3. Economic Development Funds


Finally, is there any (bad) idea more (unfortunately) Canadian than economic development funds magically strengthening a struggling economy? Calgary city councillors recently agreed to take $10 million from the city's rainy day fund and put it into an economic development fund for the downtown core.

Frankly, if economic development funds were any kind of snap solution, the Atlantic Canada Opportunities Agency and other regional development funds out east would have meant jobs at home for the Maritimers who now live in Alberta for work. At best, these funds transfer money from job creators to government to pick winners and losers. At worst, they become political slush funds that channel corporate welfare into votes.

The reality is that none of these ideas are going to snap Calgary's economy back into shape. But all of them are guaranteed to take money out of the hands of the people who are trying to create jobs today. The best thing government can do at this point is step aside.

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