Monday, March 01, 2010

Being Fiscally Responsible - A Progressive Alberta Perspective

The term “fiscal responsibility” in Alberta has come to have, within the Progressive Conservative Party, one meaning: debt free. This has always been seen to be a desirable state, but not an essential one in most countries. Yet, in Alberta the idea of being debt free is almost religious. Yet the debt owed to the environment, to those in need of our help and to future generations is not being “accounted” for in the thrust to a debt free Alberta.

There is another approach to fiscal responsibility, one which seeks to balance the obligations for responsible finance with the social and economic obligations of government, acting on behalf of the people. This approach has these requirements:

1. Spend intelligently. Government spending should be focused on securing outcomes linked to a vision and strategy for the Province. This requires the balancing of investment in the future (education and environmental policies, for example) with consumption based spending (a significant proportion of health spending is consumptive). It also requires the government to ensure that it is safeguarding the well-being and interests of the vulnerable, supporting innovation and enabling cultural institutions, which shape our experience of Alberta.

2. Tax appropriately. Alberta has pursued a strategy of being a low tax jurisdiction. That strategy is now failing – at least as far as corporate taxation is concerned. It is also failing in another way. As the public see cuts to education, school closures, non profits who deliver social services being starved of cash and other developments, they know something is out of place. Alberta should tax according to the revenue requirements of the vision and strategy for the Province. It should be committed to accessible and affordable education, for example, and tax appropriately. There is something wrong with a jurisdiction that makes it more difficult for students to study at College or University while at the same time encouraging gambling – gambling and sin taxes produce more revenue for the Government than oil.

3. Borrow responsibility. There is nothing wrong with debt. Almost every Albertan has some. The question is at what risk and at what cost. Imagine if the Province had a debt limit of 10% of the entire revenue from other sources – what could we invest that money in?

4. Be accountable. Show the planned intent of an expenditure, show the outcome and tell us whether the outcome is in line with what was intended when the expenditure was made. There is still too much that is “hidden” and has to be dug for. There is also a need to show the risk associated with an expenditure – for example, what is the risk associated with the significant reduction in funding to Alberta’s post-secondary system announced in the recent budget? Do we know?

5. Be transparent. Accountability and transparency are close cousins, but not the same thing. For example, what is the rationale for the Premiers decision that, while he is Premier, there will be no new taxes and no increases in taxes. Showing us the rationale for this and sharing the debate that must have taken place in Treasury Board would be transparency. Show us the full costs to the environment of the current policy towards oil and gas exploration and mining. Be transparent about intent as well as the actual flow of money.

If these were the foundations of fiscal responsibility for a progressive jurisdiction, then Alberta may become a better place.

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