Does Alberta have a financial crisis? No.
There is a complex answer to this question. It begins with a set of assumptions being made by Government and ends with a question of the competence of one of the longest serving Governments in the world.
Let’s start at the beginning. Alberta is anticipating a budget shortfall because the Government misunderstands the nature of the problem. As the Premiers Council on Economic Strategy made clear, the dependency on oil revenue for funding a great many Government operations represents a predictable problem: it is not a sustainable way of funding Government operations (see pages 95-100).
The so-called $7 billion “shortfall” is actually a myth. The real shortfall is in producing an intelligent response to the current conditions. Such a response looks to replace oil and gas revenues as a basis for operational spending with progressive income tax, sales taxes and revised corporate taxation and oil and gas revenues. This will take some time, but right now is the time to start. Alberta is ready.
The current government seems to have rejected these options on the grounds that it may affect Alberta’s competitive position. Yet our competitive position is more about the attractiveness of Alberta as a place to invest, live, work and play – the quality of education, social care, social services, health care and recreational services – than it is about taxes. No one likes paying taxes – we do what we can legally to avoid doing so – but we pay them because we value what they provide. As one of the wealthiest places on the planet (our GDP per capita is higher than anywhere else in North America), there is plenty of room for more taxes. Ideology gets in the way of collecting them.
The Government also espouses a narrative that says we should balance the books. This is another non-sense idea. We can chose not to without it impacting our credit rating, especially if the debt relates to needed infrastructure and investments for our future. With interest rates at a very low level and our credit rating high, it is a really good time to invest in our future. A reasonable debt to GDP ratio (between 25% and 30%) makes sense for a petro-state like Alberta.The Taxpayers Federation is not the conscience of Alberta (who elected them?) - our publicly elected officials are. Just listen to the Mayors and Councils or school trustees to realize we can do better.
Of course we should make sure that all of our spending is efficient and effective, which is why results based budgeting and management makes sense. We should also systematically rethink how government does it work – do we really need over 650+ people working in Alberta Education, for example? Wouldn’t we make more progress on implementing new policies and practices aligned with Inspiring Education if we had just 150 people in this Ministry? After all, its at the level of the school that real change occurs. So we should look at all expenditure and question them. Taking a 9% axe doesn’t really do this, it just leads to bad decision making: why use a hammer when what we need is a sniper?
So when we hear “there is no alternative” to the strategy this Government wishes to pursue, know that there is. It is one which is not liberal, conservative or progressive, just sensible. It is called rethinking government. Do it now – it is a fantastic moment for new thinking.
Does it look like this will happen? No. We have a Government that is stuck in a paradigm that is no longer fit for purpose. This is the competence issue. At the exact moment when we need inspired leadership, we do not seem to have it. After what seems like a Government in power for ever it has run out of imaginative ideas, despite a new leader. What we need now are public figures demanding change in how we approach this terrific opportunity to do the right thing.