Making Sense of the Alberta Budget

David Berry writes another perspective in the National Post about the underlying philosophy of the fiscal management of Alberta and the recent budget and the issues of our royalty rates in the energy sector.

It makes me wonder if we have a more serious revenue problem in that we are not paying our way for the actual costs of necessary public services. We are using one-time non-renewable resource revenues for current public service operations.  The Alberta Advantage idea of having the lowest taxes is part of the cultural DNA of this place.  However how much lower do our taxes have to be from those of our competitors?  That is the unasked question.  The recent Budget showed that Alberta tax revenue spread is $11B less than the next lowest province.  Do we need to be $11B lower  to be competitive?

By not paying our way on a current basis we end up using capital funds from non-renewable resource revenues to pay for current expenses.  This is not right.  Albertans are proud people who believe everyone should pay their own way but we don't translate that value into paying the cost of necessary public services from taxes and user fees.  We use capital funds from non-renewable resources instead. Isn't this approach just taking away from future generations? What is the legacy we intend to leave them as a result?

There needs to be a clearing of the air on the capital side of the recent budget too.  The Sustainability Fund is  being misrepresented in the political commentary around the Budget as a "rainy-day" or a "savings" fund.  It is neither - and never was.  It was the prudent taking of resource based surpluses and banking them for future investment in infrastructure. They are earmarked funds to be used for meeting the necessary infrastructure demands like schools and hospitals.  The Stability Fund enabled capital projects to be paid for in total, without borrowing, and at a time after the boom so we could get better prices, not compete with the private sector and generate jobs to lessen the blow of the recession.  It is a win-win-win deal.

It is not creating a fiscal deficit. It is fixing an infrastructure deficit. That infrastructure deficit was created by the policy of neglect in the Klein era when there was not enough maintenance of our schools and other public facilities. Debt and deficit reduction got carried away and was done way too rapidly. It left problems of facility neglect and deferral of other facilities we needed  like schools and hospitals to respond to the rapid population growth in Alberta from people moving here in the last boom.

We bragged that we paid off the debt in about 7 years, and I believe it was done even faster than that. Debt and deficit reduction was designed as a 25 year prudent program by the then Finance Minister, Jim Dinning.  We can't just blame the Klein government for this infrastructure deficit and late response to growth pressures.  We Albertans encouraged our politicians to pursue the hyper-rapid debt pay down. We also ignored the more prudent longer range planning that was in place to smooth out the boom and bust cycles and lessen the fiscal excesses that hurt us in both parts of the boom and bust cycles.

So don't be fooled by talk of the deficit being created in this last budget - from any of the current political parties, including the PCs strangely enough.  Why have they used deficit language to describe the conversion of the Stability Fund from cash to physical capital?  The Stability Fund is being used precisely for the purposes intended and at a "bust" time when we can get better value for the taxpayer's money.

Lets also look at the Alberta Advantage of low taxes and see if we have gone too far in tax reductions.  We are at the point current Albertans are not paying our way.  We are misappropriating non-renewable resource money from future generations to be spent on us now.  We were motivated in  1993 election to to pay down the debt and deficit in large part because we felt we could not leave that burden to our children.  I wonder if we appreciate that we are spending their natural resource birthright now because we are failing, refusing or neglecting to pay our own way today.

That is just one of the adult conversations that has to be held amongst Albertans going into the next election.  I wonder if Albertans in 2011 will feel the same way we did in 1993 about our duty and obligation to future generations...or is our sense of entitlement so strong that we just don't care about the legacy we are leaving our children, socially, environmentally or economically.

Some Priority Concerns Raise Questions in the Alberta Budget

I think the Alberta Budget announced this week - Premier Stelmach's last, has a lot going for it. There is some stuff that is not great but it is by and large a progressive prudent budget.  It is delivered in the classic political technique of setting up trial balloons of pending harsh expectations, then delivering something less brutal seems like a reprieve.  So the kudos are not always the result of any pure objective analysis.  Perceptions, values and mindsets of citizens are always a big part of the art of budgeting.

The Wildrose Alliance will say we have a spending problem and dire consequences will befall us is just wrong on the facts and misleading in the analysis.  More on that in subsequent posts I expects.  Bottom line is there is not deficit in this budget.  We earmarked cash in the Stability Fund to pay for much needed infrastructure to responds to years of neglect and to catch up to the population growth we ignored in the Klein days.  Using that designated cash on hand to build schools and hospitals and roads is not creating a deficit.

What I really want to do is direct your attention to an excellent editorial in the Edmonton Journal of Saturday Feb 26.  The title captures the mood of the piece "Budget Rich in Troubling Questions."  I think there are some unsettling questions Albertans need to ask themselves about if we are paying our way for the necessary public services we demand from government.  We also have to revisit the "huge handouts ...to oil and gas companies...in the drilling stimulus program."

Read this editorial carefully and consider if these policies make sense to you on incentives and royalty breaks.  Do we really need them or should Albertans start acting like the owners of our resources and have a more mutually beneficial business-like and not serf-like relation with those we license to develop our resources.

It is Saturday Morning - Time for a Creative Diversion

Here is something that is worth watching if only for the sheer enjoyment of design and creativity.
http://www.youtube.com/watch_popup?v=qybUFnY7Y8w
(H/T to Paul Traynor for the link)
Enjoy.

Honesty in Politics: Oxymoron or Obligation?

Duff Conacher of Democracy Watch has published a very important article on honesty in politics entitled "Is the 'High Road' Closed to Politicians?"  

Here is his closing statement:

"It is no wonder that the No. 1 reason non-voters give for failing to cast a ballot is lack of honesty in politics, or that dishonesty is voters’ top concern when it comes to government accountability.

Politicians need to be held accountable for their honesty just as the rest of Canada’s citizens are every day. It’s time for our political leaders to prove their worth by passing a strong honesty-in-politics law, giving voters a reason to trust them again."

Albertans have told us in research done under Reboot Alberta that Integrity, Honesty, Accountability and Transparency are the most vital values we want in our politicians.  We also know we are not getting the necessary commitment to those values under the current political culture.

The all to common responses of citizens to this democratic deficit has been to withdraw from politics and forfeit our responsibilities of making an informed and active choice about who we want to govern us.  In Alberta this is especially true when 60% of us can't even be bothered to cast a ballot to state our preference for how we should be governed and by whom.

The Edmonton Sun has run a very insightful Editorial today on the impact and danger of ideology over evidence and dogma over ideas.  It really sets out the changing dynamics in Alberta politics in a way I see and hopeful for  real change to happen.

Trust in democracy, our politics and our political culture is not a given any more.  People just don't trust our institutions any more - because most of them have done so much to betray our trust.  Trust is a judgment call that measures the reliability of someone to act and perform as expected and will not fail us, let us down or mislead us.

The political culture of spin and messaging is all about deception dynamics that create distrust as a result.  We need to insist on integrity, honesty, accountability and transparency from our politicians, the political parties, the institutions we rely on to make our society function like the media.  We also have to rise up to the responsibility of citizenship and not be intimidated by fear or coercion of authorities that use bullying and intimidation to compel compliance. 

We need to actualize the spirit of Reboot Alberta and as citizens take back Control of our democracy by informed active participation in politics.  We need to create viable political Alternatives to the one-party state we have let dominate our democracy in Alberta.  We need to Delete the power of those in politics for personal power broker reasons and not in the spirit of servant leaders.

We need new faces, and a fresh start and a return to moderate progressive policies that are based on integrity, honesty, accountability.  We need an alternative like the Alberta Party to shape up and shake up the system that has long since stopped serving the greater good.

Some Context on Public Education in Anticipation of the Alberta Budget

The Alberta government called off the tripartite talks with Alberta's teachers and school trustees out of the blue.  Very strange since it was such a good initiative.  The idea of extending "labour peace" with teachers and trustees beyond the August 2012 date of the current agreement would enable a continuing focus on improving and transforming what is already an excellent public education system. One wonders if all the good work of public dialogue behind Inspiring Education will not be lost.

So now we apparently have a deficit budget provincially.  That budget, like all budgets, is a political projection based on assumptions and political purposes that we will see more clearly on budget day February 24th.   All indications are that we can expect the fiscal hawks and privateers to jump at this opportunity be pushing for more private sector competition for teachers and school boards as the solution to public education..  This is the same tactics they use in health care and social services, only more subtly with language designed to obscure their real intent.

In anticipation of the propaganda and rhetoric about our financial crisis I think some honest and accountable conversations have to take place.   Here is a link to one of those "movies" from an American source but the principles about public education work in our Alberta.  It is about 6.5 minutes long and worth a watch.  (Hat Tip to School Trustee Esme Comfort for the link)  It is an interesting "debate" between an anti-unionist and a teacher that has resonance in Alberta.

I like the way it puts perspective on the roles and relationship of the government to teachers.  I like the explanation of where public education fits in our social contract with the responsibilities we have for current and future generations.  Those are the same questions we face for the future of Alberta as we Learn Our Way to the Next Alberta.  The facts used by the privateers in their arguments to say government is the problem and the competitive marketplace is the solution are selective, simplistic and shallow.

This clip shows the inability or refusal of the libertarian mindset to see the interplay of various aspects that influence public policy issues like health, education, environment and other necessary public services.  Sound bite politics are not consistent with good governance. We really need to focus on good governance and not so much on power-play politics if we are going to realize our potential as a province.

We all have a stake in ensuring our public education system in Alberta is able to meet the needs of kids today and for the future they will face.  That is core to the Alberta Aspiration of thinking beyond being the best in the world but being the best for the world.  Learn more about these thoughts and ideas at the evening public lecture on March 17 with Pollster/Author Michael Adams and Professor/Author Jean Twenge at the Sutton Place Hotel in Edmonton.  Click here to get tickets online.