Two views of Alberta third-quarter financial update: Steady as Joe goes, versus Faster, Pussycat! Cut! Cut!

Posted on February 24, 2017, 1:36 am
6 mins

PHOTOS: Alberta Finance Minister Joe Ceci, on a day when the sun was really shining. Below: Former premier Ralph Klein, the haze on fond memories as painted by his portraitist; interim PC Leader Ric McIver; Wildrose Jobs Critic Glenn van Dijken; and Alberta Party Leader Greg Clark.

Despite the expected Opposition histrionics, Alberta Finance Minister Joe Ceci’s third-quarter financial update yesterday had a distinct whiff of expectations management about it.

Yes, the economy is improving – indeed, the Conference Board of Canada started the day with a prediction Alberta would lead the country’s economic growth this year. But not too much good news just yet, thank you very much, Mr. Ceci seemed to be saying as he updated Albertans on the Oct.-1-to-Dec.-31 quarter and forecast what the rest of fiscal 2016-2017 should look like.

After all, Alberta’s NDP government may want to pour out a little more good news later – a little oil on troubled waters, as it were. (Probably the wrong metaphor to use in this province just now, everything considered — Ed.)

Accordingly, quoth the finance minister, “We’re not out of the woods yet. Far from it.”

However, he added, rather poetically: “The evidence shows that the storm clouds are starting to recede with a little more sunshine peeking through.”

Leading all the mid-day newscasts yesterday, these being deficit-obsessed times, was the fact the NDP Government continues to forecast a deficit of $10.8 billion for the fiscal year, unchanged from the previous quarter’s estimate but up from $10.4 billion predicted in the last budget.

That was enough of an increase to induce faux apoplexy and horror among Opposition spokesthingies.

All Opposition parties, naturally enough given the Kabuki Theatre of politics, didn’t see things as calmly as did Mr. Ceci. Not only are we deep in the woods, according to the conservative Progressive Conservative Party, the even more conservative Wildrose Party, and the nowadays still more conservative Alberta Party, but the woods are on fire!

Heck, most of the Opposition spokespeople’s hair was on fire, too, metaphorically speaking – all except Alberta Party Leader and sole MLA Greg Clark’s, since he doesn’t appear to have enough. (Mr. Clark said the forecast left him “speechless.” Unlikely, though voters may do that for him in the next general election if he can’t find a conservative party to take him on as a candidate.)

Naturally, they all saw the same solution to the province’s deficit: “Faster Pussycat! Cut! Cut!” they all screamed at the finance minister – or words to that effect, anyway.

Mr. Ceci will run a deficit instead. This is because, in defiance of economic common sense, all Alberta political parties have decided that modest tax increases are not on – a triumph, I guess, of 40 years of fantasy-based neoliberal propaganda.

The Wildrose Party’s jobs and labour critic, Glenn van Dijken, called for the NDP to cut the size of government – which, of course, means cutting the services government provides or handing them off to the profit-motivated private sector. (That’s considered a good thing from the Wildrose perspective.)

PC interim leader Ric McIver complained that “this government would have you believe they have no choice but to spend, spend, spend” – you know, pretty much like the last three PC premiers did in similar circumstances.

Oh well, as University of Ottawa economist Marc Lavoie reminded us last year, “somehow, when right-wing parties run deficits, nobody in the banking industry or in the mainstream media seems to care, whereas it is anathema when a left-leaning party does such a thing.” As we’ll see as the mainstream media weighs in over the next few days, some things never change.

We’re also bound to hear a lot of Opposition politicians claiming the “Alberta Advantage” proclaimed in the 1990s by PC premier Ralph Klein has been lost. If you hear someone saying that, you should ask them to define what they mean by the phrase. Mr. Klein’s government defined it as “Alberta’s existing advantage of low taxes.”

So it is worth noting that “with no provincial sales tax, no payroll tax and no health care premiums, Albertans across all income ranges generally pay the lowest overall taxes and carbon charges compared to other provinces. When the full impact of new tax measures and carbon charges announced in Budget 2016 are considered, Alberta’s tax advantage will be at least $7.5 billion.” That’s now, under the NDP.

Is Alberta better off because of the way Mr. Klein slashed government services, fired front-line health care workers and allowed infrastructure to languish to keep the books in the black? Or were we just digging out way out of the hole he dug when oil prices turned south?

If nothing else, as yesterday’s fiscal update illustrates, Albertans will actually have a rare meaningful choice in approaches to budgeting when the next general election rolls around.

This post also appears on Rabble.ca.

28 Comments to: Two views of Alberta third-quarter financial update: Steady as Joe goes, versus Faster, Pussycat! Cut! Cut!

  1. Farmer B

    February 24th, 2017

    Ok, so we have an 10.8 billion dollar deficit, plus I believe a 5.1 billion dollar deficit in the capital spending budget for a total of 15.9 billion. Now as you pointed out we are so lucky in Alberta because we pay 7.5 billion less in taxes than other provinces. What you missed is if we raise our taxes to the same level increasing our revenue by 7.5 billion we will still have a 8.4 billion dollar deficit. Enough said!!!

    Reply
    • Expat Albertan

      February 24th, 2017

      No, not enough said. Alberta’s government services have been quite costly, relative to other provinces. Chalk this up to a wealthy oil economy that raised the cost of everything. Of course, we all need periodic reminding that this would not have been a problem had Ralph not done-away with the Heritage Trust Fund and other savings vehicles for Alberta’s oil wealth. In short, the mismanagement of the economy has been a long time in the making and has ‘Progressive Conservative’ written all over it.

      Reply
      • Farmer B

        February 25th, 2017

        When I looked the heritage trust fund was still close to 18 billion dollars late last year. Ralph retired in 2006. Also when he retired there was a 17 billion dollar sustainability fund. It was Stelmach, Redford, Prentice and Notley who spent all of the sustainability fund. Notley I believe spent the last 3 billion in her first budget. I will agree that we have had a decade of poor money managing governments. The NDP continues this record.

        Reply
        • Expat Albertan

          February 25th, 2017

          Yes, but who changed the rules about the funds?

          Reply
    • Maryinga

      February 25th, 2017

      Not really enough said. Only a repetition of one sided economic views that have been so accepted in Alberta that few people can talk sense about them now. For most of my life, I’ve been puzzled by how economists can think ripping and shipping a non-renewable resource to foreign markets can be a money making proposition, but building schools, hospitals, safe streets and roads, and good housing is an expense that creates debt.

      Sure. We can tinker with the books so it looks that way. We can hide all those orphan and uncapped wells littering our environment….shove it up mother nature’s tail pipe and pretend it won’t cost us anything, but that’s just like only paying the interest on our ballooning credit card debt. The cost of our bad habits is being deferred, not deleted.

      And we can chintz and cheat our children, our sick and our old and call that a money saving proposition. But once again, that’s just deferring the expenses of our Scrooge like neglect. What’s worse, its a stupid way to save money….by starving people. The mean spirits of such ‘economists’ help them to forget that teachers, nurses, doctors, social workers…and all the support staff of those front line workers, earn money doing good. It’s their JOB…capitalized here since jobs seem to trump sense in this cash strapped idiot-ology.

      And those jobs pay taxes….if we’re far sighted enough to still have taxes….those salaries consume the products that other members of the society produce. Cutting government spending, instead of supporting progressive taxes, might work for the big oil companies…who’s interest is in making investors rich. It doesn’t work for the society in which those big companies get to do very profitable businesses.

      So while I’m not a proponent of unnecessary debt, I[‘m sick to death of one sided arguments…which seems to be all that’s left of ‘the Alberta Advantage”. Wanting something for nothing…no taxes; Being willing to Starve the most vulnerable when our Petro Masters are suffering Austerity.

      That is not an economic plan. And it certainly won’t bring back the high prices we used to get for our (mostly gone now) oil. Tar is all we have left; and endless Fracking. Klein saved nothing. He just gave it away, while deferring the infrastructure upkeep that all prudent governments should invest in.

      Trying to spin that into an Advantage for anyone but the Koch Brother’s class is going to prove impossible.

      So God bless the NDP for refusing to go any further down that unsustainable path. Polluter Pay. Grandma deserves good care.

      Reply
      • Val

        February 25th, 2017

        Maryinga this sentence quite interesting:
        “And those jobs pay taxes…”
        i’m not against front line services. i think that, conscious care for weak youngest and oldest members of the tribe is exactly what have distinguished at some point of evolution, humans from rest of the mammals and brought them into nowadays organized societies.
        but i cannot figure out what is good in the taxes, which been paid from paychecks, funded by other taxpayers.
        i could understand if government goes into debt by borrowing the money to create real and in demand goods manufacturing facilities, profit making enterprises for public necessary services (insurance, banking, telco, etc.) and from generated revenue + taxes, does financing unprofitable services. but go in debt with only purpose to finance already inflated salaries and perks of public line employees at time when private sector’s job market and salaries stagnant… seems like doesn’t make any sense from view of prosperity of society. eventually this will end up in devastation of country and establishing governing regime similar to those, was established in past as communist block countries with full government control over production and redistribution of food and goods just to barely sustain a life of habitants.

        Reply
        • Maryinga

          February 26th, 2017

          Inflated salaries of pubic employees? Where do you see those? There has been a carefully orchestrated distortion of what government is for over the last 30-40 years…and its been a distortion paid for by the ones with inflated salaries.

          We pay taxes to have our society run well. We educate our children for the same reason. The radical right has attacked taxes, and kissed the ass of unaccountable private money for years….because it imagines voting conservative guarantees wealth will go to the deserving: ie: Them.

          But one way streets are always dead ends…in the end. I’m very well educated, because I was born in Saskatchewan after the second world war….nothing that I did in my work life polluted a watershed, killed an arable land or clear cut a forest. I taught school.

          It was hard work…paid well, but I didn’t get rich, and there were few perks, apart from the occasional donut at professional development days. I paid my taxes willingly, used public daycare gratefully, and raised two children in a small bungalow. It all worked.

          The society we have now doesn’t. And your view, that private capital needs public tax dollars to create value………..but that public tax dollars should chintz front line workers who’s expertise we all depend on, because ‘that’s just an unsustainable expense’, may bring us back to the 19th C.

          The conditions under which working people struggled then should be researched. We need all our social services. We do not need the 1%. But it is ultimately them, who spend billions telling us to cheat the poor, hate the unions, and bow ubsequiously to the likes of the Donald, who have authored your views on what creates prosperity.

          It’s also them who have created the necessity of government debt. We used to pay for our services with taxes; but governments had to cut those, yes? But if they’d began by staring the workers, would they have been re-elected? No.

          So unsustainable debt…deferring the tax write offs onto our grandchildren, was the only alternative. And a lot of us penny wise, pound foolish skin flints fell for it. NO MORE. It hasn’t made us all rich…and continuing down that road will only bring the wolf to more doors.

          Reply
          • Val

            February 26th, 2017

            seems like you’re adamant fan of NDP. well, i’m not.
            neither PC, LP, WR or any others. my only concern is about – how ideological party of any colour, handles the power, entrusted to them by voters.
            from my humble experience (only seen PC and NDP localy), both are doing same bad.
            very conservative estimate for 2016 shows 70 000 full time jobs have been lost in AB.
            the latest rapport pointed to 18 000 new jobs in Alberta created in past year.
            12 000 in Oil & Gas, 6 000 elsewhere (no specification).
            NDP government went into $10.8 billion debt in 2016 alone. can you enlight me, how many value-added jobs in province been created by present government from this money?
            and yes, public sector employees, if you sum up pays, pension, sick days, paid vacation, health and dental, etc. of which majority of private sector employees don’t have, you will end up with quite bigger salaries. and keep in mind, those salaries and perks funded from taxation of private sector employees.

    • Kang the barbarian

      February 25th, 2017

      What is a “deficit in capital spending?” Unless you pay cash, in full and up front, for a new capital expenditure like a combine or tractor, you have a “deficit” in your capital spending side of the ledger. But almost nobody pays for capital expenditures like that – they are financed over time. If they were not every farmer would either be broke or running 30 year old equipment.

      On the operating side, sometimes you have to run on your savings and/or borrow money to keep the farm alive for another year.

      Unless you want a revolution, government has to do the same thing, or you end up with the mess left behind by the trash Klein blew in with.

      Speaking of trash, I understand the Cons will be holding a bake sale to raise money for the creeps who have had their salaries cut back by the NDP at the Boards and Commissions dedicated to screwing workers, landowners, the environment, and others.

      Reply
      • Farmer B

        February 25th, 2017

        Kang our family farm has existed in Alberta for 111 years by carefully managing our costs, saving and investing when times were good and doing with less when they weren’t. As far as debt I try to only finance appreciable assets. When the NDP government faces re-election in 2019 if their debt projections are correct they will in 4 years have amassed the largest debt in Alberta’s history. I guess you are happy with that, I am not!!

        Reply
        • Kang the barbarian

          February 26th, 2017

          Dear F_B: You have ignored the distinction between a capital investment, like a farm tractor or a hospital, and an operating cost like fuel or staff time. You imply that you pay for your tractors and combines out of savings? Seriously, why would you do that when interest rates are effectively less than zero?

          You are also making the error of composition. Running a farm is much more difficult than running a government. Government is there to maintain social stability. It has no requirement to generate a financial return on investment. The real cost of the wages it pays are very much reduced by income taxes paid on that cash flow through society. It can strongly influence what it generates in income from corporate taxes and royalties (if it has the balls). Pity the Cons did not take a page from Norway and simply take, without compensation, an 80% equity position in any oil and gas plays.

          PS: it is always nice to hear from new-comers like yourself. Welcome to Alberta.

          Reply
          • Farmer B

            February 26th, 2017

            Kang I have financed many pieces of equipment, the reason I no longer do this is very simple. Farming income is highly variable and in years of lower income, payments on loans still have to be made. If I buy the machinery when I can afford it when years occur of low income I don’t have those payments and it is much easier to survive. The same applies to government.

          • Kang the barbarian

            February 27th, 2017

            Well F_B: self-financing is all very well, but try telling that to a young farmer.

            You did not address the error of comparing apples and oranges between government and private sector. If you want government run like a business, just look what happened in Europe and elsewhere – 40% or more youth unemployment and the rise of fascism.

            As that happens it is exactly people like us who are the first rural victims. Got any orphan oil/gas wells on your land? If you do, Kiss Your A** Goodbye under true free enterprise where might makes right.

    • Kang the barbarian

      February 25th, 2017

      make that last paragraph: “Should we hold a bake sale to make up the salaries cut by the NDP for the managers of the Boards and Commissions dedicated to sabotaging the public interest?”

      Reply
  2. Farmer B

    February 24th, 2017

    Excellent article on the CBC website on how Alberta spends 2700 dollars more per person and collects 1300 dollars less per person in taxes than British Columbia. We do indeed have a mess in Alberta.

    Reply
    • Maryinga

      February 25th, 2017

      Double our taxes and the mess is cleaned up. The carbon tax should help…as it doesn’t really touch the poor. It’s well off folks like you and me that are being asked to step up. And as for our family, we can afford to do so. We just have to wake up and accept the fact that Petro dollars aren’t gong to be any substitute for fair taxes.

      And there’s lots of good examples we can draw on. Norway and the Scandinavian countries being among them.

      Reply
      • Farmer B

        February 25th, 2017

        Actually Maryinga, none of the money from the carbon tax goes into general revenue. One third goes to rebates to 60% of Albertan’s, the rest goes for energy efficiency rebates and good portion will go to subsidizing solar panel installations. I understand these subsidies will be announced next week. After doing the math my guess is the government will have to pay about one third of the cost to make it work. What I am curious about is not every house has a roof that faces the right way for solar panels. Is it fair to create a subsidy program that cannot benefit everyone? What about renters? Irregardless the carbon tax does not help reduce the size of the deficit.

        Reply
        • Maryinga

          February 26th, 2017

          IS IT FAIR TO CREATE A SUBSIDY THAT DOES NOT BENEFIT EVERYONE??? Good question, and I’d direct it at Oil and Gas. The International Monetary Fund, or perhaps it was the World Bank, said a few years ago that Canada gives those folks roughly 34 billion a year in subsidies.
          That rots my socks as we used to say in Saskatchewan…down on the farm.

          But subsidizing solar on micro generating roof tops will benefit everyone. That’s the thing. When coal fired power plants are gone, air quality will be better: FOR EVERYONE. When Klein privatized electricity utilities face folks like me and my partner going off grid, some of those BS administrative charges will disappear (in Oct we owed them 1 buck for electricity; they charged us 39 bucks), and when electric cars come on line in the next few years, there is going to be a need for all that extra clean, sustainable energy.

          Albert Einstein said we should not try to use the mind that got us into a mess, to get us out of it….that we need new thinking for new problems.
          CO2 rise and climate change is a new problem…and not one that corporate spin can eradicate.

          But rapid transition to a renewable economy??? If it can be done so that everyone becomes a producer instead of just a consumer of corporate profiteering, then the new mind will begin to evolve, CO2 start to fall, and perhaps, a new kind of prosperity arise to make my grandchildren’s future something other than a race to the bottom.

          I won’t be alive most likely to see it……..but my roof has been dedicated to that possibility for the last 7 years. Hopefully, government incentives will get a few more advantaged Albertan’s off their fossil fuel based couches (NYLON, EH?)…and up onto their own roofs to participate in building a new economy.

          Cheers.

          Reply
          • Farmer B

            February 26th, 2017

            I am afraid I don’t share you utopian view. There are 3 things happening at once with electricity. First the government is payed electricity corps to shut down their coal plants costing tens of millions per year. Second, they will be heavily subsidizing the installation of solar panels on people’s roofs. Third they will be paying electricity corps to generate power with natural gas all the hours of the day that the sun doesn’t shine. We will have double the generation capacity necessary because of this. As for going off the grid, you will need battery back up to do that. If you have a grid tie system they pay you for excess power generated but you still pay your transmission and administrative charges. So you will save the 1 dollar not the 39. As you said, cheers.

  3. J.E. Molnar

    February 24th, 2017

    If you’re a cup half-full kind of person there is a lot to look forward to in the coming months — naysayers be damned.

    Among the financial highlights are capital investment in a potato plant in Lethbridge, a new cutting-edge refinery opening this year outside of Edmonton (generating $1.9 billion in revenue – excluding royalties), $5 billion in oil sands investment announcement last year, improvement in Alberta exports, growing employment and a host of trade deals aimed at bolstering a flagging economy.

    If you take the time to examine what’s going on next door in Saskatchewan, Brad Wall is set to break the law by rolling back public sector union wages and positioning the government for drastic cuts in public services to alleviate a $1.2 billion deficit. It’s so bad in Saskatchewan these days that the right has now resorted to comparing B.C’s economy with that of Alberta. Wall, once held up as the high priest of economic efficiency, has been abandoned by his long-time conservative sycophants. Now that’s a story David Climenhaga!

    This is worth a read ICYMI: http://www.theepochtimes.com/n3/2220114-new-cutting-edge-refinery-could-be-boon-for-alberta-oilsands/

    Reply
    • Val

      February 24th, 2017

      sure, opening new modern oil processing facility in northern Alberta sounds like a good news. issue only, how this wonderful project managed to be built.
      first, it took 10 years just for phase one.
      second, initial cost went from $4 billion to $8.5 billion, which translates, more than 100% previously calculated investment have been exceeded.
      third, given above, at present status this project catches province on the $26 billion hook of processing payment, to recoup investment.

      Reply
      • J.E. Molnar

        February 25th, 2017

        I don’t disagree with your premise that the Tories turned this into an expensive proposition, but the point I’m trying to make is once it finally comes on board later this year, the benefits will start to accrue. You are obviously one of those cup half-empty kind of people. Sad.

        Reply
    • Maryinga

      February 25th, 2017

      Have to agree about Wall. Find it interesting how little the mainstream media talks about Saskatchewans’ looming crisis. Does the fact Brad will visit ‘austerity’ upon the poor, before he acknowledges he’s in the same one industry oil town trap Alberta is in…….and the superficial pundits of superficial neo-liberal dogma will give him lost of room to do it.

      People are the Problem, yes??? Not an Economic system based on rip and ship and the accumulation of fortunes for the few. Low taxes and deteriorating infrastuctures for the many.

      That many, unfortunately, brainwashed into believing that lower taxes would guarantee good jobs and early retirement!!! No one told them that when the going got tough, the rich would foreclose on them and call it good economics.

      Austerity is not good economics. It stresses the society so that it’s less able to innovate, transition or build alternatives. Which likely works for Fossil Fuel investors…faced as they are with an increasingly toxic product, in an increasingly hot world. For the rest of us……….its just a sad race to the bottom.

      Reply
  4. Eoin Kenny

    February 24th, 2017

    Brad Wall has cut teachers, nurses, seniors care and all manner of government services and still has a $1 billion deficit this year on top of $800,000 the year before. In fact, most of the Wall years have been deficit years. That’s despite all the revenues from socialized industries including car insurance and potash PLUS recovering oil & gas royalties PLUS a 5% sales tax! It will be interesting to see who comes out of the oil price slump better prepared to reap the rewards of the recovery!! I’m betting on Notley’s Alberta!

    Reply
  5. A Person

    February 25th, 2017

    Today I received an email from a political party that shall be unnamed.

    The comments are rather rich (especially the last paragraph) given what is written above.

    Here it is unedited, in its entirety, with the exception of the recipient name:

    Hi,
    The NDP just released their third quarter fiscal update and it is yet another example of their mismanagement of your tax dollars.
    Despite increased revenues, the NDP increased their spending by over $2.6 billion from Budget 2016.
    At the same time, capital plan spending which is used to build important infrastructure like schools and hospitals, is down by almost $1.2 billion. In fact, 36 school projects are currently facing delays.
    Simply put, the NDP aren’t building for our province’s future, they’re just borrowing against it.
    Donate $25 Now!
    Ric McIver
    Interim Leader and Finance Critic
    PC Alberta
     
    MOVE FORWARD WITH US!

    Reply
    • Brett

      February 26th, 2017

      Why would someone donate one dime to the Alberta Conservatives when the party is on track to be dissolved/relegated to the history books within months after the election of Jason Kenney as leader.

      At best wait until next month. If Kenney wins put your cheque book away. Why throw good money after bad?

      At the very least this request has some entertainment value. Just shows you that McIvor thinks the party members are a bunch of sheep.

      Reply
  6. Brett

    February 25th, 2017

    Alberta’s high cost of services per person is nothing new. It has been this way for ten plus years. It was caused by poor fiscal management and featherbeding by successive Conservative Governments.

    Hopefully the Notley Government will make some real progress on reversing this. But it won’t happen overnight. It will take some time to reduce or eliminate some of those crown corps and commissions, let alone get some efficiency into the public services. Just look at how much money has been swished down the drain on successive health board changes, reorgs and Management payouts. No wonder Heath care delivery in Alberta has been in crisis for so long.

    Reply
  7. jerrymacgp

    February 26th, 2017

    Firstly, you can’t eat a balanced budget. Cutting public service spending as a response to falling government revenues during an economic downturn is just using gasoline to put out a house on fire: it is counterproductive.

    Secondly, taxes are the cost of living together in a civilized society. They are used to pay for the things we need to do together as a community instead of each individual doing them alone. Without taxes, you wouldn’t have roads, bridges & tunnels … schools, hospitals and community rec centres … police, ambulance and fire services (to put out your house when it catches fire) … or laws, courts and lawyers to protect our rights and property from those who would take advantage of us. Without taxes, and the services they pay for, we would all be helpless victims of an anarchic dictatorship by the strongest and most ruthless among us. Taxes also pay for the people to build, operate, and maintain these services and structures, as well as the people to hire, train and supervise them, to pay them and administer their benefits, and also to collect and administer the taxes I mentioned that we need to pay for all of this.

    If we want to pay less taxes than we do, we need to decide which of these services we want less of. If we want more services from government, which is Us, than we get now, we have to be honest with ourselves about how much we are willing to pay for
    them. As Robert A Heinlein wrote in his seminal novel, The Moon Is a Harsh Mistress, “tanstaafl”.

    Reply

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