Let's Not Squander This Recession but Use it to Revisit the Role of Government.

There are other elements to consider around the recent declaration by Premier Stelmach that there will be no tax increases on his watch. Deficits are also tax increases by other means because the pain is deferred to the future - usually to be repaid on someone else's watch. So it is arguable that running a deficit is a defacto tax increase just not on the current watch.


But there are other considerations too. The tobacco tax was not a money grab, it was a health promotion and prevention issue behind the tax increase last April. The research shows that more expensive smokes are and the less visible they are - like the elimination of the "power wall" displays, the less likely kids will start and get addicted to tobacco. There is also a health prevention argument around the liquor tax. Eliminating them both government reduces revenues to offset deficits (tax increases by other means) and increases the social and health risks associated with these legal but sometimes lethal products. I am not a prohibitionist just a realist.


The last additional point I think is worth noting about eliminating the revenue side from the fiscal took box of government is the issue of the role, efficiency and effectiveness of government. The old Klein approach of simple-minded across the board cuts and damn the consequences is not likely to be the Stelmach approach this time. However, there may be stuff government can do without, stuff we can do better and other stuff that needs doing particularly in a prolonged recession like we are in these days. This is the time to do that kind of revisiting and revamping of the relationships and roles we expect from government.


This recession is a perfect opportunity to revisit and redesign the role of government and our relations to it, as business, service providers and citizens. We can improve delivery and be clearer on what we expect of the public sector and our governance model. We can retool the private enterprise sector and community based social service sector too. The goal is not just efficiency, as important as that is, but it must be more focused on the effectiveness of the outcomes and how we achieve them using government as a vehicle.


This is a quest for better questions as much as it is better answers. We have the Governance Secretariat looking at these matters focused on agencies boards and commissions. We need the same thing to happen in the link between government and the social services sector and the private enterprise sector too.


Lets not squander this recession. Let's make sure we come out of it better focused, better equipped and better able to meet the challenges in the 21st century realities. It would be such a waste of an opportunity. We can't merely try to revive, restore and sustain the inadequate governance, economic, environmental, social and technological models of the past.


Premier Stelmach is hinting at this approach in some follow up comments to his no recent tax increase declaration. Lets hope he makes it more explicit and actionable.

Budget Deficit + No Tax Increase = Serious Social Service Cuts for Albertans

Hunker down Alberta - and get ready for a raft of the public sector job cuts plus social services and community based program cuts. This is the only logical conclusion to come to based on the "no tax increase" announcement of Premier Stelmach today.

Given the game plan of the government, that stated with the Premier's reported comments today, of no tax increases, the multi-billion dollar budget deficit monster will only be tackled by program and staff cuts. Unless natural gas prices rebound dramatically, like right away, and they stay high for the rest of the year, Alberta has a chronic revenue problem. With a glut of natural gas on the market and stored oil supplies growing, prices for these commodities are not likely to escalate soon and not enough to deliver us from the fiscal evil we are facing.

Will there be a bunch of social services program downloading on municipalities too? This is going to be helpful just when as many as 60 Alberta municipalities are into formal dissolution processes that would terminate their municipal status. They are doing this because they can't sustain themselves on property taxes and current grant levels anymore. That should be interesting if social services downloading happens.

We have been told by our government that they are going to run some serious operational budget deficits right now and looking forward into the next few years. Cumulative deficits have a nasty habit of tuning into long term debts. We're Albertans. We know that because we have been there.

What a difference from February 2008, just before the last election, when Premier Stelmach said our PC government would never put Alberta back into a deficit position. Now he is saying deficits are back. The Premier's response to new deficits has been to reaffirm that there will be "no tax increases" on his watch. And to ensure the message hits home he is going the extra mile. He is actually reversing the recent tax increase on liquor that was passed in the April 2009 Budget.

News reports indicate that the liquor tax cut will cost the public purse $180m a year - just at a time when Alberta needs all the revenues it can get its hands on. This tax cut is even more unnecessary than Bill 44 was. It is enough to drive you to drink.

Media reports also quote the Premier as saying the liquor tax decrease can be in place this weekend. Funny how we cut a sin tax so assuredly and so swiftly but we can't figure out to ensure we are getting all our non-renewable energy resource royalites accounted for and properly collected.

What is going on? We have serious problems balancing the public purse. Understood!. We are running large deficits in health care. Shift happens! We have record deficits in our general accounts and they are getting larger. And our policy response is to absolutely rule out tax increases?

Not only that, but our official government policy is to go a step further to prove the point that taxes are not going to increase in Stelmach's Alberta. Damn the torpedoes. We have to put some serious emphasis to the political point about no tax increases. We have to announce an immediate reduction a liquor based sin tax? What gives? Is this the essence of the new fiscal plan for Alberta?

The only other option left, and that is actually within our control, is for Alberta us to get after the record deficit by government dramatically reducing social program spending. The biggies of health, education, children's services, seniors and social services can't be protected from cuts - especially with this brand of fiscal folly.

Our most vulnerable citizens, like the sick, elderly, children-at-risk and the disabled have just been put on notice that they are going to become even more vulnerable. Their caregivers, especially those community based not-for-profit agencies, have just been put on notice. They already have to squeeze their nickles until the beaver shits. More program and other cuts have yet to come, but rest assured, they are coming! So theses social service agencies better get a firmer grip on that nickle and start squeezing that beaver even harder.

This is ridiculous. All options need to be on the table to help Alberta address the fiscal force fields we are facing. Eliminating tax policy entirely as an budget option is all about pure political ideology and illogical fiscal policy. What is going on? I see half a policy step forward and three policy steps back these days in Alberta.

You are a wiser man than that Premier Stelmach. Reconsider your comments and conclusions. Do it right away before even more irreparable damage is done to the Progressive Conservative brand in Alberta. Bill 44 was bad enough. This is beyond the pale.

HERE IS AN UPDATE LINK TO THE CANADIAN TAXPAYERS FEDERATION NEWS RELEASE PRAISING PREMIER STELMACH FOR ANNOUNCING NO TAX INCREASES AND QUOTING MINISTERS LIEPERT, SNELGROVE, MORTON, EVANS SAYING ALL OPTION TO ADDRESS DEFICITS HAVE TO BE OPEN. Note to Reader - all these Ministers sit on Treasury Board with Premier Stelmach. The plot thickens.