Laying It Out: No money in a boom, no money in a bust

By Scott Schmidt on March 12, 2022.

If you’re keeping score, Premier Jason Kenney says the province can’t spend when oil prices are down because “Alberta is broke,” and it can’t spend when oil prices soar because, “who knows? This may be our last energy boom.”

When provincial revenue suffered thanks to a commodity crash (and massive needless corporate tax cuts), the government had no choice but to download expenses onto municipalities. When provincial revenue spikes thanks to a commodity explosion (minus what could have been with proper taxation), the government must apparently show restraint.

Budget estimates peg Alberta’s surplus in 2022 at $511 million, but even as the UCP gives up a few hundred million to a gasoline tax break and a one-time utility rebate, with oil prices where they stand, even a scale-back will still result in a much higher surplus than expected.

According to its own data, Alberta gains $500 million for every dollar added to the North American crude price. The budget estimates a 2022 average of $70 a barrel, but the current price is over $100 with no signs of slowing. For every $10 over the average, Alberta rakes in $5 billion, so even if prices do slow as the year goes on, the 2022 surplus could be immense.

Now, Kenney wasn’t wrong Thursday when he told the Alberta Municipalities spring conference we don’t have the money yet, and if running a province was anything like running a household (it isn’t), waiting until we know for sure might make some sense.

First of all, if Alberta was a household our situation would be more akin to having worn down appliances, a leaky roof and a pack of kids who aren’t properly clothed or fed. And instead of addressing the home’s most basic needs, our priority has been subsidizing outside forces who dig up our flowers and crap on our lawn.

Remember this when Kenney says our debt is our biggest issue, because as the UCP slashed public services while still running increased deficits right out of the gate, it was abundantly clear Alberta’s mounting debt was not being spent on Albertans. Case in point being corporate tax cuts that paid for share buybacks, a gift to CEOs and minus-50,000 jobs before COVID arrived.

So now that we might actually bring in some money for our bend-over-and-take-it troubles, the premier is already hinting out loud that surplus cash needs to be used to pay off debt. But if we take revenue from the oil industry to pay off debts from helping the oil industry, where does that leave the rest of us?

Just as it did when Ralph Klein did the same, it will leave us decades behind.

And with the premier already calling the needs of municipalities a “shopping list,” his views on how provincial cash should be spent is obvious. Kenney clearly believes shaving a few billion off the provincial debt will save his job, but he also seems to know doing so at the expense of pressing expenditures like infrastructure or public services could be an issue for him. In order for Albertans to buy into his debt payoff plan, they need to believe “needs” are more like “wants.”

But surely Albertans have seen enough of the rising costs of living, or the growing strain on cities and towns, to know spending requests at the municipal level are a lot less “shiny new toy” and a lot more “unpaid oil taxes and expensive police.” And if the provincial government isn’t prepared to help, it will either cost them more later or you more now – either way, Kenney gets his fiscal wish and Alberta pays the price.

This isn’t to say every red cent of surplus will automatically go toward the debt, as we can already see token moves from the UCP will be used to entice extra votes next spring – remember Ralph bucks? But keep tabs on how often Kenney brings up the nearly $100-billion debt over the next year, because it’s a front for what he really believes – austerity is a way of life, not a stop-gap for when the economy slows.

When he was first elected, we couldn’t spend on Albertans because Alberta was “broke.” Low energy revenues were an easy way to sell his ideology, which from day one has been to break down public services and ready them for privatization. He didn’t worry a lick about deficits when he arrived, because deficits matter not in regards to his plans.

In fact, that lack of revenues made his goals easier – one of the obvious reasons behind his immediate move to gut taxation revenue in the lowest tax jurisdiction in the country. And also why he was able to spend two years leading up to 2019 saying debt was ruining Alberta only to add record amounts of it and not bat an eyelash.

But an unexpected boom hasn’t changed his tune, just the arrangement of it. If we couldn’t spend because we had no money, how do you sell restraint when revenues ramp up? In Alberta, historically, all you need to do is revert to the same nonsense that sold people for decades: provincial debt is bad and we must avoid it at all cost.

But if deficits are no object when we’re aiding the corporate rich, why do they all of a sudden cripple the province when used to better life for Albertans? The answer, of course, is they don’t.

Money isn’t a barrier between Alberta and a better future. But the people we put in charge of spending it sure are.