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?

Harper Dances with Deficits

What a difference a week makes. What a difference a month makes. A week ago Prime Minister Harper was convening a Seinfeld-like First Minister’s meeting on the economy and offering nothing and the discussions were about as equally energizing as to what to do. But he can say he consulted with the Provinces before he makes his anticipated unilateral decisions. Stelmach was right to stay in Europe and his offer to “phone it in” made sense when we see the results of what was a three hour exercise in political – not economic - process.

In the election Harper was skillfully man-handling the Liberals and manipulating the media with the old saw of Liberals being taxers and spenders. He was carpet bombing the messaging and describing the dire warnings that would result from a Liberal vote. To let the likes of Dion, as advised by Paul Martin, would be risking deficits...and that, we were told, was a risk that was not worth taking.

The Harper Cons campaign mantra was that the economic fundamental of the country is strong and Canada was going to be OK in the face of the market meltdown. He milked the symbolism of a small group of banking insiders ranking the Canadian banking system as the best of a bad bunch. A 60 second reflection on that “positive news” was hardly reassuring.
Since then Harper has made $75B of taxpayer’s cash available to those excellently run banks so they could have some bad loans bought up. This is to convince the banks to start lending again.

So far the banks have not taken up any of this Harper largess with our tax money. The prime lending rate has been cut and cut again and the Bank of Canada has also injected more liquidity in the Canadian banking system. Now he is poised to bail out the automotive industry in consort with the lane-duck Bush bunch. It all seems so Trudeauesque, who equally failed years ago to convince us with his election rhetoric and silly sloganeering that “The Land is Strong.”

Now Harper is backtracking on his infamous fiscal frugality and flirting with deficit spending coming out of the G20. Of course government should be spending for infrastructure and to create jobs and cash flow in such tough times. Especially when the banks and business will not, or cannot, step up to the plate to do so. But why did the Prime Minister mislead us during the election campaign over instituting such an obvious means to address such serious matters? Is it because Harper thinks that Kim Campbell was actually right? That election campaigns are not the place to discuss issues of significant concern to the country?

If you looked up mendacity in the dictionary you should not be surprised if you were to see Steven Harper’s picture. Harper has proven himself to be a shrewd and canny campaigner and a powerful political enforcer. He has a long way to go to prove himself as a good governor but the times are begging for such leadership. As for Harper becoming a statesman, one has to wonder if he is even slightly interested or capable of such status given his purpose and passion for personal political power.

Stelmach to Harper - Stay Out of Alberta's Business!

I was going to write a blog post on Premier Stelmach’s entry into the federal election and his taking on Prime Minister Harper’s intervention into Alberta’s business. This is very unusual, especially for two fiscal conservatives to be engaging this way but I applaud Premier Stelmach for in engagement. I then read Paula Simons Edmonton Journal column today and she says it so much better than I can as a Progressive Conservative partisan.


I was thinking of the irony of Harper’s isolationist attitude about Alberta’s future as he signed the famous Firewall letter and now he imposes himself into Alberta’s business. I think it may be better for us if he continued to ignore Alberta instead of interfering in our business.
I see Stelmach’s style is so different from Harper. Harper build firewalls and imposes barriers.


Stelmach, on the other hand is in Toronto and Montreal to explain how Alberta is a partner in the national economy and ecology. Harper is oblivious to the devastation the global market meltdown will have on Canadians. Stelmach is calling on his fellow Premiers to have an emergency meeting to deal with the impacts on citizens across the country. You would think the man who wants to stay Prime Minister would be taking this lead.


Stelmach has enough on his plate fighting ENGOS on oil sands issues and now he has to fend off the Prime Minister - a fellow Conservative but no friend of Alberta of her jurisdiction. With friends like these…!