At some point, Albertans will have to decide whether they are progressive or conservative. This clash of political ideals wrapped up in Alberta’s ruling party seems to make sound, sensible governance impossible.
When Alberta is awash in oil revenue, successive Progressive Conservative premiers have bowed to the pressure of their progressive ministers to spend and build. When the taps are tightened, these same premiers apply the brakes, cut programs that were deemed necessary just a few years or an election ago and mull over raising taxes.
And then the boom and bust cycle repeats itself.
Premier Alison Redford gave a televised State of the Province address to try to explain to Henry and Martha why the government hasn’t a clue how to run the province. Instead of taking responsibility for spending waaay more than the government takes in, Redford blamed the Americans for increasing their domestic oil production and lowering the price, thereby creating the $6-billion gap in revenues. She takes no responsibility for having no plan to diversify the Alberta economy or to rein in government spending.
The premieress has made her preference clear: she doesn’t want to see new taxes. But what if there is no other choice? Can she raise income taxes and user fees without appearing to break another year-old election promise? Higher taxation if necessary but not necessarily a sales tax?
When Alberta was flush with oil revenue from 2006-08 and had no plan for its spending or savings, the government unwisely eliminated $1 billion health care premiums. Is that how vital services such as health care, education and social assistance should be funded? Tied to the coattails of vagaries oil and gas royalties instead of the certainty of taxation?
This government went all-in last year, betting on high oil royalties to wipe out its $886-million deficit. But lower oil prices and the so-called “bitumen bubble” have instead led to a shortfall and what is now projected to be a deficit of more than $3 billion. With a B. As in B.S.
The government is pushing this difference in price between Alberta’s bitumen and West Texas Intermediate crude as some new, unforeseen phenomenon. It’s been around as long as the dinosaurs in cabinet. Finance ministers didn’t bring up the price difference six or seven years ago when the spread was larger but Alberta had a surplus of billions to squander.
How does Alberta get off this economic roller coaster? There is no easy way to claw back spending on politically popular programs and services when the economy takes a dip — and hope to get re-elected. Is a sales tax the answer to stabilizing provincial revenue? How about a harmonized sales tax and reducing income taxes? Would that affect Alberta’s perceived tax advantage? Would a sales tax and reduced corporate taxes spark the economy? If we’re all taking home more money would we mind paying a sales tax?
If a sales tax can be sold to Albertans as means to even out the dips in the roller coaster, it must be coupled with reforms to runaway government spending.
And that would mean breaking or delaying billions in election promises to special interest groups, school boards and municipalities.
The Redford government will present its $40-billion —give or take a billion —2013-14 budget sometime in March. And it may take the next six weeks for cabinet to decide whether we are in for another round of Kleinian-style spending cuts, borrowing to fund capital projects, creation of a new savings plan, corporate tax hikes or some combination.
But more than likely this government will spend whatever savings we have left and once again tie its success to higher energy prices.