Op Ed by Gil McGowan
April 15, 2016 in the Edmonton Journal
Albertans know what the provincial budget would have looked like if the Wildrose or Progressive Conservatives were in power.
In the face of an unprecedented global collapse in oil prices and a 90 per cent drop in provincial resource revenue, they would have engaged in an orgy of spending cuts.
Front-line services like health care and education would not have been spared.
It’s what the PCs did every time Alberta faced a recession over the past 25 years.
And it’s what the Wildrose promised in the last election.
So, how deep would the cuts have been?
In last year’s election campaign, the Wildrose promised to the balance the books by 2018. To achieve that goal, an analysis prepared by economist Hugh Mackenzie shows that they would have had to cut spending by $10 billion in 2017.
Cuts of that magnitude would have led to 22,000 job losses in the public sector and another 16,000 in the private sector, as the impact of the cuts rippled through the economy.
This would have been on top of the 27,000 jobs that have been lost so far as a result of low oil prices.
Mackenzie calculates that the approach outlined in the Wildrose platform would have entirely wiped out the fragile recovery that Alberta has been experiencing over the past year.
It would have also ushered in a second, even larger, recession — something that might be termed a “Wildrose Recession.”
The good news for Albertans is that the Notley government has wisely decided to reject a return to Klein-style cuts. Instead they’ve decided to do what governments should do: stimulate the economy and help individuals, families and businesses weather the storm.
They’ve done this by maintaining spending on core public services like health care and education and ramping up spending on public-sector infrastructure.
The Notley government is also spending $250 million over the next two years on measures aimed at job creation, mostly in the form of investment and job creation tax credits for business.
And they’ve earmarked $480 million to help Albertans who have lost their jobs cover their bills and look after their families while they search for new employment.
A government that throws people a lifeline instead of an anvil in choppy seas is something new for the province; but it’s exactly what Alberta needs in these challenging times.
Predictably, right-wingers are enraged by this budget.
They say that the public sector needs to “share the pain.” But laying off nurses and teachers isn’t going to bring back jobs lost in the energy sector — it would just add to the ranks of unemployed Albertans and further drag down our economy.
If there’s one problem with the new budget, it’s that it doesn’t go nearly far enough to address the Alberta government’s real problem: its revenue problem.
For every dollar it spends on services, the Alberta government currently collects only about 75 cents from stable revenue sources like income and corporate taxes.
Successive PC governments bridged this yawning gap between revenue and spending by using royalty revenue as if it was ordinary revenue. In a sense, they were perpetrating a fraud on Albertans.
They tried to convince us that they could provide middle-of-the-road services with bargain-basement taxes. But it was a facade that could only be maintained as long as oil prices remained high.
So what’s the solution? Revenue reform, that’s what.
If we had a tax system like the one in Saskatchewan, the Alberta government would have been able to balance its budget this week — even with oil at $40 a barrel.
Just some food for thought — for the Notley government’s next budget.