February 21st, 2020

What’s the plan?

By Medicine Hat News Opinon on November 7, 2019.


The United Conservatives have plans to reverse deficit spending over the next four years.


Then what?

While political factions across the province are hailing the recent provincial budget as either a cruel, backward exercise or the beginning of a brand new era of fiscal responsibility, the nut of Alberta’s budget problem remains.

That is, an over reliance on a single sector to drive economic activity, and that sector also providing billions of dollars in royalty revenues that are used to underwrite the provincial budget.

It was much talked about diversification in the middle of the decade, but as the UCP’s first budget was released last month, moving off non-renewable resources revenue, which has kept taxes low in this province for decades, was labelled a “luxury we can’t afford.”

That statement by Finance Minister Travis Toews contains a notion of truth in the immediate analysis. Alberta will need every penny to slay the deficit.

Another way to view it, though, is that it’ll take us four years to get back where we started.

It’s a lot to ask a six-month-old government to provide a long-term blueprint for generations of future prosperity. It’s more of a second-term project for a normal government.

This government, however, billed itself as having all the answers but is now spending half its time trying to convince Albertans less money is not a “cut.”

It’s also a government that consciously left revenue off the table when commissioning a report on to how to best improve Alberta’s fiscal situation.

By most measures against Alberta’s past, the current situation is not good.

Spending restraint is obviously key, and Albertans will have to face questions about the size and scope of the government they want.

But without income certainty, there’s little to prevent further economic shudders and new rounds of cuts and cancellations in the not to distant future.

Certainty is also key for Albertans, both resident and corporate.

Will there be full-time day care offered in two years, when today’s toddlers are preparing for school and parents need to consider their place in the workforce?

What’s going on with the pensions of 5,000 present-day workers in Medicine Hat?

Secure infrastructure funding is needed for the bidding, scheduling and financing of major projects.

Alberta needs stability, or at least it maybe thought it did in 2015, when then-premier Jim Prentice proposed a “we’re all in this together” sort of budget suggesting the return of health-care premiums and eliminating the flat tax to gird the province during tough times ahead.

He lost the election on two sentences, asking Albertans who enjoyed low, royalty subsidized taxes to “look in the mirror” and telling NDP leader Rachel Notley that “math is hard.”

For their part, the NDP didn’t play its winning hand very well.

It secured a wage freeze from most public sector workers, but spending generally grew. And while late-term deficits were lower than predicted, a more serious nod to financial restraint would have given them a puncher’s chance in 2019.

In an opposite but similar fashion, the UCP’s budget is laced with cancelled or altered grants and spending reviews, while promising a boost in business activity will balance the books.

As for resource revenue, the budget depends $6.5 billion of it this year, and up to $8.5 billion by 2022-23. The increase from 11% to 15% of total revenue over that time, and depends on the TransMountain Pipeline Expansion, which has never been described as a slam dunk.

Over the same time, transfers from Ottawa are also predicted to increase 20% over five years, and investment income too.

It’s a rosy picture, and one that most Albertans want to come true.

(Collin Gallant is a News reporter. You can contact him by email at cgallant@medicinehatnews.com)

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