Alberta Must Fix its Own Fiscal House Now & Not Pass the Problems on to Future Generations.

Alberta's Fiscal Challenges!
I am confused by the fiscal messaging coming out of Alberta these days. Albertans are into some tough times and more to come from what we are being told. With chronic low natural gas prices and other adjustment in our budget assumptions we can’t expect to rely on resource revenues to sustain our program spending.

There are some other realities that have put us in an operating accounts deficit position. However, let’s be clear Alberta has billions stashed away in various accounts – other than the Heritage Fund. We are borrowing the short fall instead of using the cash reserves. I think that is a good idea given the extremely low interests rate these days.

We are told we have almost a $1B of deficit from last year, then $4.7B in this year and now ballooning to $6.2 B. We can expect an even larger deficit next year even after we cut $2B of spending and Health Minister Liepert is reported to say he doesn’t think you can make that kind of cut in the system in one year in a recession. Recently we have been told by Minister Liepert that our leaner more efficient new health care system will tack on another $1B of deficit this fiscal. That is ironically the same amount as health care premiums used to generate before we scraped them.

What Can Be Done?

Go To Ottawa for More Money!
Part of the deficit “solution” being considered by the Alberta government is to go to Ottawa for more money to help out cash strapped Alberta, particularly for health care. Ottawa has rightly told Alberta we must be a “have-not province” before that would happen. Alberta is far from being a “have-not” province so we will have to find our own solutions to the health care budget shortfall.

Since Harper is now known to be low-balling his own budget deficit estimates according to the Parliamentary Budget Office who predict a structural deficit will prevail until at least 2014 the likelihood of Canada bailing out Alberta are between slim and nil.

Lots of Room to Raise Taxes & Still be Competative!
Alberta’s taxes are also extremely low compared to the rest of the country. Perhaps our taxes are too low especially if we can’t sustain our quality of living and public services as a result. Minister Evans noted in a Calgary Herald Opinion Piece in May 2009 that “…if Alberta had the same tax system as other provinces, Albertans and Alberta businesses would pay between $10B and $18B more in taxes every single year….”

Ted Morton is recently quoted in the Calgary Sun saying Alberta will have to cut spending and raise taxes. “The shortfall is so big. We can’t keep loading debt on the next generation. That is not what conservatives do” according to Minister Morton.

Why Not Charge and Collect Responsible Royalty Rates?
Well let’s talk a bit more about intergenerational fairness and the fiscal realities of Alberta today. What if we actually collected the royalties owed by the energy sector and stopped the high subsidy rates. The Auditor General estimates the Alberta government leaves about $2B per year on the table from uncollected royalties in the conventional oil and gas sector every year from 2006. In addition we subsidize natural gas drilling between $1.5B to $3B in foregone royalties. We are doing this at a time when commodity prices and supply gluts tell us it is folly to drill for more gas because all more supply will do is ensure prices stay low and Alberta’s royalty take will continue to languish.

By not charging reasonable royalties and not collecting those royalty rents on the non-renewable resources owned by Albertans the government is irretrievably squandering the birthright of future generations of Albertans. That is something Minister Morton says Conservatives don’t do.

Eliminate Flat Tax or Keep it & Put in a Sales Tax!
The other thing we could do is to eliminate the flat income tax and return to a progressive tax model. Alternatively we can retain the flat tax but institute a sales tax based on consumption and add a progressive tax element back into our system and raise much needed funds. This would bring in enough money to cover the deficits and still leave Alberta as the most tax competitive province overall.

Can we Look Our Kids in the Eye if we Don't Resolve the Problem Now?
It was way back in 1994-94 when our government consciousness caught up with the fiscal sentiments of Albertans and took on the challenge to eliminate the accumulated debt and stop deficit budgeting. One of the key motivations of the people of Alberta at the time was the unfairness debt and deficit was to future generations. Debt and deficits were seen as mortgaging the future of our children. When the task was accomplished Premier Klein said “we can look our kids in the eye again.”

Well we have the same shame now in looking future generations in the eye as we fail refuse or neglect to charge and collect responsible and reasonable royalty rents from our non-renewable resource energy sector. By failing to require and enforce restoration and reclamation practices for roads, wells sites, seismic lines and other disturbances inherent in the development of the energy sector we leave a negative legacy for our children to contend with. By not having adequate protection and enforcement of land, water and air standards we put an additional burden on future Albertans.

The 2010-11 Alberta Budget cycle has just started. The news is not good but the solutions are in the hands and within the power of Albertans to take on, control as resolve “adults.” It will take political will to accomplish the tasks but Albertans forced the political will on its politicians before - in 1993-94 over debt and deficit. Will Albertans once again take personal responsibility to resolve and adjust to the current fiscal realities and choose not to delay or defer them as a burden on future generations?

It's Time for Rethinking and Reforming How Albertans Govern Themselves

I just read an interesting blog post by Sue Huff. She is a School Trustee with the Edmonton Public School Board and, obviously, a Blogger. She has just posted a thoughtful and practical piece on the controversy surrounding the recent comments by Minster Evans and MLA Doug Elniski. I really like her comments - because she agrees with my own views.


She ponders in her post about the impact these politicians who were "speaking their minds" will have on political discourse in our democracy. Will party discipline trump free speech? Will focus group tested safe messaging replace personal opinions of politicians? Will our governing class become incurious about new ideas? Will politicinas get spooked and become insecure in their values and beliefs? Will they respond by retreating to a political foetal position in the face of the realities of new media?


Sue Huff exemplifies the kind of leadership and trusteeship I was calling for in my paper presented to about 250 Alberta school trustees at the recent Alberta School Boards Association Summer General Meeting. In the paper entitled "A Contented Oyster Never Made a Pearl" I called up school School Trustees to take a leadership role in rethinking and reforming how we govern ourselves. She gets it and her recent blog post is all the proof you need to support that conclusion.


I think we need a more mature governance model in the face of Alberta's declining democracy. Sue makes a reinforcing point when she speaks about "The voting process in Alberta seems shallow to me; people vote for whoever showed up at their door, the party their family has always voted for, based on a 1/4 page flyer or the recommendation of a friend who is deemed 'up' on politics." We elect our governors. If we do a bad job in choosing who we grant our consent to govern us to, who is really to blame?


Citizens of Alberta have to re-imagine their place and what is accepted practice for politicans in our representative democracy. I applaud the kind of "unguarded" personal thoughts we have recently seen from two Alberta politcians. They have created forums for a broader and deeper discussion about Alberta society. For me it's all about free speech. I say use it wisely or lose it to mediocrity or mendacity!

Looks Like Albertan's Are Back to Being "Blue-Eyed Arabs"

I find gems every now and then in Hansard. Most of my readers have lives and do not spend a lot of time on the detailed happenings in the Legislature, I do for professional reasons and often come across these gems. I will share them from time to time.

One that struck me was Kevin Taft's speech in reply to the Budget. He puts the petroleum wealth of Alberta in terms of how much there is for each Albertan. Our total reserves may be second to Saudi Arabia, which I would dispute - the Saudi's have not really updated reserve estimates for decades. Kevin Taft put reserve comparisons in per capita terms. Here is an excerpt from his speech on April 23rd:

Dr. Kevin Taft Alberta Liberal Leader - MLA Edmonton Riverview
"Alberta’s petroleum riches are even more impressive when measured against Alberta’s small population; on a per capita basis Alberta has 51,900 barrels of recoverable oil reserves, tops in the world. In other words, for our small population, per capita we have the largest oil reserves
in the world. Second is Kuwait, then the United Arab Emirates, and then Qatar. Saudi Arabia, which we always assume is incredibly wealthy in petroleum, actually ranks fifth on a list of petroleum wealth per capita. Alberta ranks first."

"I think that’s something we should all remember when we’re weighing out how we manage this
wealth. Now, that’s just oil reserves. If you add in natural gas reserves, our wealth rises even higher. Natural gas reserves are almost 57 trillion cubic feet, and there’s perhaps another 500 trillion cubic feet of coal-bed methane. So we have here staggering wealth."

Iris Evans in a recent speech to the Edmonton Glenora and Riverview PC party faithful noted this "managing our future, savings and long term investment policy" is going to be the focus of her time as Alberta's Minister of Finance. By the looks of it Albertans will need a new mind set to think long term. Adopting a Genuine Progress Indicator model of measuring real growth - not just GDP would be a great place to start a change of mind set.

Alberta Budget Not Likely To Introduce Big Changes - But Next Year Will Be Different.

It is Budget Day in Alberta tomorrow. I do not have any inside information but have some thoughts and speculations.

I do not anticipate any significant changes from the draft budget that was done and ready to go before the election was called. Since the Budget speech is so soon after the Cabinet and Committee structures were announced there is not a lot of time to rehash the original positions.

There will be budget increases for some departments to cover inflation costs and some growth pressures and recent AUPE wage and benefits negotiations. There is no indication that there will be the big bucks needed to resolve the staffing shortages in areas like community based nor-for profit agencies in the disabilities services sector, children’s services, women’s shelters and long term care.

For the record and full disclosure I am working on this issue with the Alberta Council of Disability Services. We are talking about $200M to get these people paid at the 50 percientile level of government workers doing equivalent work. This will not happen overnight but the Premier is aware of the problem.

I expect there will be lots of budget focus on capital expenditures as the province continues to fix up the as-built maintenance deficiency and new facilities to respond to growth pressures...schools, hospitals and roads.

There is a recognized need to build new structures and retrofit existing buildings to a more eco-friendly standard. That will add costs in the short term but pay off in reduced operating and environmental costs long term. That is a hopeful sign that a new full cost accounting approach for capital expenditure will become the norm.

There is a lot to do in refocusing the fiscal framework for Alberta but my guess is most of it will be deferred for the next budget. That process will likely start by this Thursday and be about more savings and more spending both operational and capital accounts. There ias one thing for sure...Iris Evans is going to be busy – very, very busy this spring and summer.

The Heat is On Over Smoking in Public Places.

Thx to the SurrealityTimes blog for bring this news story to my attention. This is more evidence that the public is making a difference in our attitudes and concerns for each others wellbeing and shifting and shaping our own behaviour changes as a result. Congratulations to Capital Health for this leadership.

I wonder if the smoking ban in public is at the tipping point as public policy now. I recall the Libertarians’ opposition to fluoride in our water and the seatbelt debates of the past. More recently we have had the voluminous over illuminous diatribes over the science around climate change. The more things change the more they remain the same?

Now we are seeing the Libertarians adding heat but not much light as they position for the final political battle on smoking in public places as a personal over our collective health…both physically and fiscally.

This is a most appropraite issue to be resolved politically because it is a community health issue. It is not a human right nor an individual rights issue. Alberta's former Health Ministers like Gary Mar and Iris Evans have tired to get a smoking ban in public places past the PC caucus but to no avail. Will Hancock succeed this time with a new leader in charge? Perhaps. but only if the citizenry makes it known by writing to the provincial politicians to say that they support and insist on such a policy.