Varcoe: Incentive programs notch win as tech firm brings HQ to Calgary

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As soon as offered because the province that was not “within the enterprise of enterprise”, Alberta is squarely on the desk providing incentives and investments because it seeks to draw corporations and jobs to the province.

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In all equity, it has been this fashion for years, from the Getty authorities investing within the bi-provincial upgrader in Lloydminster and the Stelmach authorities placing cash into carbon seize initiatives, to the Notley and Kenney governments pushing petrochemical incentives initiatives provide.

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This isn’t uncommon, though it’s probably dangerous for taxpayers, as Kenney’s ill-fated funding within the Keystone XL mission in 2021 highlighted.

Nonetheless, should you’re not within the sport to supply incentives or make investments, different cities, states, counties and nations are prepared to take action.

It’s all about attracting jobs and investments.

That is a part of the explanation why the Metropolis of Calgary and the UCP authorities put funding attraction applications in place to seal the deal and get corporations to maneuver right here and create jobs.

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That was the case Wednesday, because the province’s Funding and Development Fund (IGF) introduced a $1.43 million grant to Seattle-based Applexus Applied sciences.

The personal know-how firm, which operates in 5 nations, will make Calgary its Canadian headquarters and expects to create 125 jobs over three to 5 years.

“We had been trying ahead to increasing our geography and footprint, and we had been contemplating a number of cities,” CEO Sam Mathew stated in an interview.

“We selected Calgary, primarily as a result of we noticed a really welcoming neighborhood right here, there was expertise pool. . . and the federal government has been very supportive.”

Applexus will serve clients throughout North America from its new places of work in Calgary.

Mathew famous that different cities are enthusiastic about attracting the corporate and are providing numerous incentives reminiscent of tax rebates and payroll rebates.

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Alberta “did provide the $1.4 million, which is unquestionably going to assist us offset numerous the preliminary setup prices. And that was an essential level in our consideration.”

The province’s IGF initiative was launched in 2021. Final 12 months’s price range elevated its annual funding to $15 million.

“We’re not within the sport to supply big subsidies to corporations, however generally we’d like a little bit assist simply to push issues by way of,” says Rick Christiaanse, CEO of Make investments Alberta, the province’s financial growth company.

“We’re in a aggressive market area. There have been different provinces or states on the desk. And we use this device solely in that case, to push one thing over the road.”

And the way are the selections made to supply such grants?

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Alberta Commerce Minister Rajan Sawhney stated using the fund is predicated on standards such because the variety of jobs created and capital invested, “and it has to have a big effect” on the province.

Different jurisdictions within the US have efficiently created comparable applications, such because the Texas Enterprise Fund.

“It is taxpayer {dollars}, but it surely’s additionally for the advantage of taxpayers, for his or her youngsters, for his or her jobs, and for the revitalization of our native economic system,” Sawhney stated in an interview.

“Now we have to watch out, all the things needs to be justified. However after we’re attempting to be aggressive, it is a very, excellent funding.”

That is after all not the one such program within the province.

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On a bigger scale, the Alberta Petrochemicals Incentive Program gives grants to eligible initiatives, price as much as 12 p.c of a growth’s capital price. Authorities cash is barely supplied after the ability is operational.

Scale can also be an essential aspect to think about.

The Kenney administration’s direct funding within the Keystone XL mission price the province an estimated $1.3 billion after the underpinning pipeline was torpedoed by the Biden administration.

On a smaller scale, the Alternative Calgary Funding Fund is funded by $100 million from town. Grants from this system are used “to draw and assist transformative funding” to develop expertise and drive development in key sectors.

It has thus far dedicated $77 million to 25 initiatives, creating an estimated 2,355 jobs.

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“It is a closing device when it is the fitting alternative,” stated Brad Parry, CEO of Calgary Financial Growth, which administers the fund.

“After we go searching at what everybody else is doing, we have now to have one thing in our again pocket that goes above and past, that helps differentiate our jurisdiction.”

Attracting jobs and diversifying the economic system is important for the province, given the unstable growth and bust cycles of current a long time.

However such applications are funded by taxpayer {dollars}.

“The issue with each the provincial authorities and town authorities doing what they’re doing is that there is a speculation or assumption that politicians can choose winners — and naturally we all know they can not,” stated Ted Morton, former Alberta Finance . and Minister of Vitality.

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“Just a few million {dollars} right here or there, if that is all it takes, perhaps it is low threat. However the greater dangers, like what was undertaken with the (Sturgeon Refinery), the probability of being out-negotiated and taking much more dangers than is prudent is much too nice.”

Morton, an government fellow on the College of Calgary’s Faculty of Public Coverage, has written experiences on provincial efforts to supply incentives or put money into personal sector developments, together with the Sturgeon Refinery, through which the province now owns a 50 per cent personal curiosity.

To this point, the IGF has awarded $16 million in grants to seven corporations.

By creating greater than 700 everlasting jobs and triggering greater than $1 billion in capital spending, the fund represents return on funding, Sawhney stated.

Morton believes low taxes are simpler than providing subsidies to draw corporations.

And he believes the oft-repeated however not often adopted mantra of former premier Ralph Klein – “We’re not in enterprise” – remains to be related as we speak.

“I endorse that,” Morton says.

“It was sensible counsel then – and sensible counsel now.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com