Reaction to this afternoon’s Budget Speech is bound to be completely predictable

Posted on October 27, 2015, 12:25 am
10 mins

ILLUSTRATIONS: A mosaic planned for some future Legislature renovation showing the Opposition and Government positions on the budget. Below: A scene from the Kabuki theatre in which actors portraying Premier Rachel Notley and Finance Minister Joe Ceci contemplate the books left them by the PC government … or something. Below that: Finance Minister Joe Ceci and Finance Critic Derek Fildebrandt.

Reaction to this afternoon’s Alberta Budget Speech should unfold in a completely predictable fashion.

When written about after the fact by modern journalists, this kind of political event is termed Kabuki theatre, which is to say, we all knew that was going to happen.

KabukiAlmost no one who uses this specialized journalistic term has actually seen a classical Japanese Kabuki theatre performance. But then, almost no one who uses the journalistic term for its opposite, Kafkaesque, which means weird, we had no idea that was going to happen, has ever read anything by Franz Kafka either.

But trust me on this, this afternoon’s performance, which will start as soon as Finance Minister Joe Ceci tables the budget just after 3 p.m., will unfold as pure Kabuki.

Yes, the actual details of the budget should be interesting, and mostly unknown until the speech is tabled. But the theatrical bits are all pure formula:

Everyone expects Mr. Ceci to explain that things are bad, the result in part of economic factors beyond Alberta’s control and in part because of economic mismanagement by the previous Progressive Conservative government.

The first part of this statement is unquestionably true. Almost everything else that will be said by all of the players will be a matter of opinion or interpretation, or both. Some of these, of course, will be more soundly grounded in fact than the rest.

Everyone expects Mr. Ceci to say that because of the NDP government’s prudent decision to continue spending on essential services, needed infrastructure and efforts to diversify the economy, things will be kept on track until conditions improve. This will come about through higher commodity prices in the world beyond our government’s control and through the sound economic stimulus provided by the government at a time when borrowing costs are low. In addition, he will probably say the very wealthiest few in our society will be asked to pay just a little bit more.

Everyone also expects Mr. Ceci to state that by 2019, thanks to the government’s sound fiscal management, Alberta’s budget will be balanced.

Ceci-RRA press release that has almost already been written will reinforce these points with quotes from Premier Rachel Notley and others.

After the speech, everyone in attendance will repair to the Legislature foyer to be interviewed by the media, purveyors of both Kabuki and Kafka.

There, everyone expects Wildrose Opposition Finance Critic Derek Fildebrandt to concede, as if reluctantly, that the NDP is right about the previous government’s mismanagement but wrong about everything else.

Everyone expects him to warn that the spending planned by the government will only accentuate the massive deficit Alberta has already been running, and to remind Albertans of the need to tighten our belts and waste less money on unneeded government services. He is expected to warn that increasing taxes will make Alberta less competitive. And if we don’t do something about debt and deficit now, he may even say, we will be robbing our grandchildren!

Everyone expects Mr. Fildebrandt also to say the budget must be balanced as soon as possible, and to do so we must immediately stop living beyond our means. He will remind voters that the NDP party platform originally predicted the budget would be balanced by 2017, it was then revised to 2018, and now, quelle horreur, it is said to be scheduled for 2019. What’s next, he may well wonder aloud, 2020?

A press release that has almost certainly been written will reinforce these points with quotes from Wildrose Party Leader Brian Jean and others.

Then again, perhaps Mr. Jean will take on this job on himself and relegate Mr. Fildebrandt to silence in a back corner. The ambitious Wildrose finance critic sat silently in yesterday’s warm-up for today’s performance, far from his leader, as if he had been discovered to be naughty.

If the spokesperson changes, however, the message will not. We are certain to be presented, by the Government and Opposition, with two versions of the economy starkly at odds with one another.

Fildebrandt-LAs for the Progressive Conservative Party, Leader Ric McIver will likely argue that the policies announced by Mr. Ceci are not so different from those of the previous government, and therefore would have been sound if the PCs were still in power, but that now we should do something more like what the Wildrose Party is proposing, because they aren’t sound any more. Or something. A press release? Perhaps they’d better not.

Now, if elite-policy-making opinion for the past decade has tended to support the Wildrose view, as it is predicted here, mainstream economists have been siding with the NDP.

Writing in the New York Times on Friday, Nobel Prize winning economist Paul Krugman celebrated the election in Canada of Justin Trudeau’s Liberals. The party, he said, was “finally willing to say what sensible economists (even at places like the International Monetary Fund) have been saying all along.” That is, that modest deficits and stimulus spending are the policies the evidence supports for circumstances like the ones we now face on this continent. “And they weren’t punished politically – on the contrary, they won a stunning victory.”

To keep it simple for U.S. readers, Dr. Krugman didn’t mention that Mr. Trudeau’s stunning victory in October was heralded by Ms. Notley’s in May – also based on an electoral strategy of being prepared to say what sensible economists have been arguing all along.

Remember also that a $6-billion Alberta budget deficit – as has been predicted in the lead-up to today’s budget – would amount to a mere 1.8 per cent of Alberta’s Gross Domestic Product. To put this in perspective, the U.S. federal deficit in 2009 was 9.8 per cent of GDP.

Moreover, as the Parkland Institute showed in a useful commentary on the expectations for today’s budget, some of the claims likely to be made by the market fundamentalist opposition parties are simply not true:

  • Spending in Alberta is not “out of control” – it’s been about the same for the past seven years.
  • Nor does Alberta spend more than other provinces – it hasn’t been the highest spending province for 20 years.
  • Nor is Alberta’s debt out of control – indeed, it has no net debt, that is, it is the only province whose savings exceed its total debt.

Of course, the PCs can rightly take credit for those points, even if they dipped into savings to give an underserved impression of budget balancing.

Regardless, as Maclean’s Magazine argued in a useful commentary on Alberta’s fiscal situation last week, no matter what the Wildrose Party says today, the projected deficit is “hardly sky-is-falling territory.”

Indeed, the evidence has long suggested that the deficit doom-saying of the last decade was mainly driven by politics, not economics, specifically the desire of the market fundamentalist right to gut the public sector, shred the social safety net and hand the state over to the private sector.

These are all things the NDP was elected to prevent.

Well, the house lights are flickering. Cue the cries of joy and anguish! It’s time to hurry to our seats and prepare to watch the performance.

This post also appears on Rabble.ca.

5 Comments to: Reaction to this afternoon’s Budget Speech is bound to be completely predictable

  1. Athabascan

    October 27th, 2015

    Whereas a number of federal NDP are available for work, there are many more right-wing fanatics and purveyors of market fundamentalist myths trolling for work.

    I expect they will descend upon Alberta and seize the opportunity to make themselves relevant now that emperor Steve has been deposed.

    As you say, all very predictable.

    Reply
  2. political ranger

    October 27th, 2015

    Actual economics have not graced this provinces political thought-processes since at least the time the drunken idiot Klein and his mean-spirited drinking buddy Steve West assumed control. Come to think of it, not a lot of thought processes either.

    It remains to be seen just how (or even, if) thoughtful Notley’s gang will be. This government and its’ institutions are starting from a long, long ways back.

    Reply
  3. Chris

    October 27th, 2015

    There is more than one economist in the world. You just happen to pick the one who’s work reinforces your left-wing bias. Step away once in a while from Mr. Krugman and his shining Nobel medal, leave behind the Parkland Institute for a couple of hours every week and explore the world out there Dave. Your blog post is the most predictable thing to occur this budget day.

    Reply
  4. October 27th, 2015

    The comments might be predictable but there might also be some truth in some of the comments made by the Wildrose MLAs.
    I don’t think that we should be borrowing for day to day expenses.
    I also don’t think that we need to be spending so much for infrastructure. Fewer infrastructure projects might be best until the oil patch is a little more robust than it is right now.

    While I do think it is fine to borrow some money for infrastructure, draining the contingency fund and borrowing money in this way– that ensures that we spend $1.3 billion in debt servicing charges —is not smart.
    Why don’t we put in a sales tax instead? Why don’t we use some of the money from the Heritage Trust Fund? I’m guessing that neither of these very strategies would go over well with Conservative voters so the NDP government has decided to borrow instead.

    This is poor fiscal planning in my opinion.

    No one has thought to reduce costs by laying off staff either. I think there should be some downsizing of the government employees and certainly at the ABCs (agencies, boards and commissions). Instead of tackling the problem of the excessive amounts of cash being paid to employees at ABCs and certainly in some managerial positions and executive positions where the deliverables are non-existent we have no downsizing of the labour pool. Why is the public sector protected in this way when the private sector is haemorrhaging jobs?

    Sooner or later the government of Alberta will have to cut jobs at the government and at the ABCs. In addition it will have to look at the compensation packages as well. I imagine if they don’t do this, there will be even more debt to look forward to.

    Debt if used properly is fine for Alberta; but I don’t think it is being used properly here.
    I don’t imagine the oil patch is going to recover for a while and if the government of Alberta continues to borrow without any sort of consideration of pruning the costs of labour, I imagine that we will be voting for a new government in four years.

    I know the Tories were responsible for many of the messes in government for the past 44 years but they aren’t governing now. From this point on, I think the NDP government will now have to take responsibility for the fiscal messes. I think there should be a realization that we cannot spend like this and we aren’t doing our kids any favours by having what Mr. Jean says is a fantasy.

    http://globalnews.ca/news/2301470/live-coverage-albertas-2015-provincial-budget/

    “The NDP’s first budget is a complete fantasy,” said Jean.
    ********************

    This budget is rather imaginative. The Wildrose Party is doing a good job holding the government of Alberta accountable. This is public money. We want it spent productively. Your comments on Mr. Fildebrandt seem rather jolly but I believe, Mr. Fildebrandt is actually speaking for a lot of voters in Alberta and he is doing his job very well.

    Mr. Fildebrandt is supposed to be asking why the debt-free date for the province–is moving further and further away. He is also supposed to question why we prefer to put our daily expenses on a credit card that costs us a lot of interest when we could spend less and maybe borrow from the Heritage Trust Fund. We could even put in a sales tax. It’s hard to do these less popular things but they would make more sense than paying interest for living expenses.

    Reply
    • Dave

      October 29th, 2015

      I can understand the seemingly logical reaction of holding off on infrastructure projects during difficult times, but I also disagree. I know it’s hard to get economists to agree on much, but my understanding of traditional economics is that holding off on government spending during bad times just makes the bad times worse. Such austerity measures have been tried in Greece (admittedly a much worse situation) with terrible results. It does depend on what the projects are, but most agree that spending on infrastructure during recessions is a good thing. Interest rates are low and the private sector is, understandably not spending much right now. As the economy speeds up, the government can back off.

      Wildrose reactions to the deficit reflect the current mantra of right-wing factions. For some reason, they have latched on to the notion that all deficits are terrible. Once again, economists disagree, saying that small deficits are quite manageable, noting that it’s more appropriate to consider the size of the deficit in relation to the state’s GDP. In Alberta’s case, the deficit is quite reasonable.

      I agree that the NDP will have to take ownership for what happens going forward, but I’d just point out that the cupboards wouldn’t be so bare if the previous PC governments had managed things better. When you have a province that has insisted, for no particularly good reason, in not bringing in a provincial sales tax, cutting corporate taxes to unsustainably low levels and giving tax breaks to those who need them least, you create a situation where the government has very little to work with. I know that the goal of the new right is to cut government operations to the bone, but they might want to be careful what they wish for. Just visit some 3rd world countries if you want to see what a place is like when you have a wealthy few, where the majority are poor, infrastructure in nonexistent and where the government is dysfunctional and has nothing to work with.

      I guess the real debate would be what the population can reasonably expect from government. As much as an election represents that debate, it would seem as though the people of Alberta have spoken.

      Reply

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