Notley unveils job-grant program as part of Alberta budget

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A new program in Tuesday's budget invites Alberta's employers to apply for a grant that awards up to $5,000 for each job they create.

While Alberta Premier Rachel Notley's government says it hopes the oil-dependent province's economy will improve in 2016, the grant program is a sign it's preparing for at least two years of weak job growth.

The $178-million Job Creation Incentive program begins Jan. 1 and is expected to "support" the creation of 27,000 new jobs in both 2016 and 2017. Grants of up to $5,000 per new full-time equivalent position will be available on a first-come, first-served basis to small, medium and large corporations, registered charities and other non-profit entities. The initiative is a variation of a New Democratic campaign promise from last spring's election to reward Alberta businesses that create jobs "in tough times" through a tax credit.

"It's good for business. It's good for the people who perhaps otherwise could have been left out," Alberta Finance Minister Joe Ceci said on Tuesday.

Oil prices are languishing well below $50 (U.S.) a barrel and the province's energy producers are girding for an extended period of losses. The momentum from a slate of construction projects that had already been committed to when oil prices began their decline 15 months ago has kept many Alberta workers busy this year. But energy-sector layoffs are expected to continue through the winter and by the government's own estimate, unemployment will increase in 2016 before finally starting to recover in 2017.

Each employer will be able to access up to 100 of the grants, and the government will judge whether new jobs have been created by examining employers' net staffing levels from one year to the next, based on insurable-earnings data submitted to the federal government. The program will be reviewed to see whether it will be extended past 2017.

"It won't be needed forever," Mr. Ceci said.

The government insists the Job Creation Incentive program is just one of a host of economic-development initiatives laid out by the provincial government, including a significant uptick in infrastructure spending – $34-billion on big-ticket items such as schools, roads, bridges, health facilities and equipment over the next five years – and a push to make more capital available to small and medium-sized businesses.

However, critics immediately questioned whether the program will work as intended, and whether it will be too difficult to verify whether positions are actually being added.

"I suspect it's not going to be very effective," said economist Jack Mintz, president's fellow at the University of Calgary's school of public policy.

Firms are not going to hire someone, at a cost of tens of thousands for the year, for a $5,000 incentive, he said. At the same time, Dr. Mintz – who also sits on the board of directors for Imperial Oil Ltd. – said a grant is better than a tax credit, since a lot of Alberta businesses aren't earning any profits right now.

Greg Clark, Leader of the Alberta Party, said he's not convinced the initiative will create jobs.

"I want to see an investor tax credit in this province, so businesses and entrepreneurs can decide how best to deploy that capital. That will create real new jobs," said Mr. Clark, who is the only MLA representing his party.

"This job-creation tax credit is absolutely open to abuse – you fire a whole bunch of people Monday, you hire a whole bunch of people Tuesday. Are they old jobs? Are they new jobs? I don't know. Taxpayers are now paying for that. That's not right.

"It's also a huge amount of money."

The federal government has dabbled in different kinds of tax credits for small businesses to stimulate new hiring. But even former Bank of Canada governor David Dodge – hired by the Notley government to help craft a plan for building roads, schools and hospitals – told reporters on Tuesday that job-grant programs are great in theory but hard to operate.

With a report from Carrie Tait and Jeffrey Jones in Edmonton