PHOTOS: Alberta Finance Minister Joe Ceci, basking in the fiscal sunshine. Below Joe: Alberta Premier Rachel Notley, like Mr. Ceci, a New Democrat; Opposition UCP Leader Jason Kenney; and Alberta Party Leader Stephen Mandel.
In one regard, Alberta’s NDP Government and its principal Opposition parties are in agreement about how a Canadian province should deal with a recession.
As the discussion surrounding yesterday’s third quarter fiscal update illustrates, they all think you should do something. That something, however, is quite different.
Since its election in May 2015, the NDP has taken the position the government should maintain public services, take modest measures to stimulate the economy (too modest, some might say) including investing in infrastructure, create circumstances in which the province’s legacy industry can thrive despite low international commodity prices, and try to diversify the province’s single-note economy.
Inherent in that strategy is not worrying too much about the deficit, while trying to whittle it down.
Since its election loss in may 2015, Alberta’s conservative Opposition – which in that short period has done business under at least four separate labels, at times simultaneously – has demanded the only policy conservatives have in their tickle trunk when conservatives are not in power: austerity.
Austerity, that is, in the guise of lower taxes, reduced public services, public sector job insecurity, and the panoply of predictable policies that set the stage for privatization.
Of course, the principal Opposition party, the United Conservative Party led by Jason Kenney, would argue maintaining public services is just maintaining union jobs. Not terribly factual, but a nice hunk of red meat for the UCP base.
On balance, Alberta’s Third Quarter financial results released yesterday by Finance Minister Joe Ceci, suggest the NDP strategy has worked – or, at least, is working.
We are coming out of a recessionary period with the economy intact, essential public services operating properly and all signs pointing to steady, even dramatic, recovery – including the fastest forecast economic growth rate in Canada and the biggest GDP increase in Alberta since 2014.
Jobs are back up – driven mostly by private-sector growth. (Indeed, public sector employment in all levels of government shrank by roughly 6,500 jobs in the quarter.) Unemployment is down. Consumer spending and confidence are up. Oil and gas investments are much higher than expected.
The provincial deficit is down significantly – important, although as we can see in the United States nowadays, deficits only actually matter to conservatives when conservatives are not in power.
So, on the facts, Mr. Ceci’s statement yesterday makes sense: “Alberta’s economic growth and broad-based recovery show that we made the right choice in the face of the worst recession in a generation,” he said. “Our choice to invest in Albertans, build infrastructure and carefully find savings – without firing thousands of teachers and nurses – is paying off.”
Of course, the claim of the Opposition, now doing business as the UCP and the Alberta Party, is that everything would be brighter, bigger and better if we’d only done things their way – the austerian way. In other words, that we’re where we’re at in spite of the NDP, not because of it.
You can quote a bunch of boring old economists, but there’s really no way to prove them wrong, in particular to the satisfaction of the conservative base, because they live in an alternative faith-based reality.
Well, give the Alberta party their due. They’re small, they’ve only had former Edmonton mayor Stephen Mandel as leader for a single day, and they’re trying to reinvent themselves as the new Progressive Conservative Party, but at least they’re willing to promise an alternative budget to give voters a hint of what they’d do in power.
Mr. Kenney’s UCP? Not a chance. They’re not telling, one suspects, because the effect of announcing their real plans before an election would be potentially toxic. Instead, they can have Mr. Kenney’s still-disgraced pal Derek Fildebrandt, the Sundre Shooter, set up some targets to see what attracts fire.
It’s been said in this space before (and hotly denied by conservative readers) that a lot of Albertans are secretly relieved to have gone through this recession with the NDP at the helm, because they know in their hearts it would have far been more painful without them.
But it is quite possible to believe contradictory things at once – we all do, on some topics – so the same people may turn around and vote for austerity, as long as it seems to be theoretical and far in the future, because they believe we “need” it.
In that regard, it’s quite likely Mr. Kenney’s angry rhetoric in response to the NDP’s seemingly modest success is working just fine with many voters, as recent polling has suggested.
Still, if voters are paying attention, yesterday’s financial results were certainly not bad news for Premier Rachel Notley’s New Democrats.
Things could be better, of course. But neither the NDP nor the UCP is likely do what Alberta really needs to eliminate its deficits and smooth out the peaks and valleys that have made Alberta’s economy so vulnerable to booms and busts. To wit: impose a sales tax.
But that’s where we are at the start of March 2018.
A Heritage Moment …
On this day in 1976, Peter Lougheed’s Alberta Government established the Heritage Savings Trust Fund. If subsequent Conservative governments had managed it as well as Mr. Lougheed envisaged, today we’d be as rich as Norway. Where did the money go?
Paul Krugman (2015) : The case for cuts was a lie. Why does Britain still believe it? [or Alberta RW politicians/media]
The austerity delusion:
https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion
EXCERPT: ‘…all of the economic research that allegedly supported the austerity push has been discredited. Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.
It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it.
Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.’
(Insert AB RW media pundits/newspapers and RW/conservative parties for Britain’s. e.g. Kenney/Gunter/Bell/Corbella/Nelson/FraserInstitute)
https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion
Even the IMF says austerity doesn’t work. It’s the zombie idea that will not die
EXCERPT: ‘The IMF – historically the world’s foremost cheerleader of austerity – admitted that it was based on a false prospectus: these policies do more harm than good.’
https://www.theguardian.com/commentisfree/2017/jul/07/imf-austerity-doesnt-work-immigrants-working-class
(Zombie’s proposing austerity in AB: Kenney/UCP/Gunter/Bell/CalgaryHerald/Sun/etc.)
EXCERPT: ‘Paul Krugman wrote that in the post-crisis economy “the government does everyone a service by running deficits and giving frustrated savers a chance to put their money to work … deficit spending that expands the economy is, if anything, likely to lead to higher private investment than would otherwise materialise”. All this has led Joseph Stiglitz to remark that it’s “remarkable there are still governments, including here in the UK, that still believe in austerity”.’
Krugman’s and Stiglitz’s critique get’s no coverage in Calgary Herald or Sun papers. Unlike Fraser Institute’s zombie austerian market-fundamentalists that own the op-ed pages.
30+ years of RW anti-government/anti-debt propaganda has generated cult-like thinking in AB around cutting deficits. e.g. Manning Centre, Frontier Centre, Morton and buddies at U of C Public Policy School. They are as evidence-based as anti-vaxxers.
The VERY last thing that Kenney wants is a smooth economic recovery, increasing oil prices, and an increase in capital spending in the oil patch.
Things could be better, of course. But neither the NDP nor the UCP is likely do what Alberta really needs to eliminate its deficits and smooth out the peaks and valleys that have made Alberta’s economy so vulnerable to booms and busts.
To wit: use the surplus from 40+ years of mature and prudent nurturing of Alberta’s sovereign wealth fund the Conservatives are always bragging about.
Or introduce a sales tax like most every other jurisdiction on the continent….
Poorly written
But brilliantly reasoned, despite the obvious deficiencies of my prose. To put that another way … DJC
It is not. You just don’t agree.
Again, the congenital inability to give credit where credit is due, which indicates you are a conservative.
Don’t well written things have periods at the end of sentences?
I appreciate how clearly you have shown the infuriating irrationality of conservatives, and even better, how you openly suggest the wellspring for that, one I also attribute it to– the alternative reality of their “faith” base. (Also, when was the last time you heard about “red meat for the base” when discussing the left? Conservatives have brought new meaning to the word “base.”) Nothing else better explains the surprisingly missionary zeal of these people, the rampant tribalism.
It also explains the unwavering level of financial support; it’s like the collection plate at church. I keep seeing similes, for conservative candidates like, they could be a straw bale or a turd on a stick, it wouldn’t matter, he would still be elected. There will always be more male candidates among conservatives because it’s a mirror for traditionalism and for the patriarchy, as is religion.
for all that is traditional in society, including the patriarchy of religion.
After this positive NDP financial update, you can bet dollars to donuts that Jason Kenney and his cadre of UCP MLAs will be gaslighting Albertans before the week is over.
Kenney said he would balance the budget in three years, likely on the backs of the middle class, the poor, the marginalized and the disenfranchised. Ralph Klein cut 20% of the Alberta’s budget in the 90s to slay the proverbial deficit dragon conservatives seem to loathe (recession be damned), creating the unflattering moniker “Wreck-It-Ralph.” Now Kenney has proposed the same fiscal approach (see CBC article below) to deal with debt/deficits.
Albertans old enough to remember the onslaught of Klein’s economic wrath likely remember virtually no one escaped his financial punishment or were not severely impacted by his callous cuts to public services. Let’s hope Albertans are wise to Kenney’s persistent demagoguery and gaslighting.
http://www.cbc.ca/news/canada/edmonton/jason-kenney-notley-heartless-budget-1.4278134
Whatever happen to that much vaunted Heritage Fund?
Oh, those wonderful fiscally Consevative folks blew it all trying to buy our votes through five or six elections.
Sounds like good fiscal management to me…well for at least those hangers on at the trough who wanted to cling to power at the expense os Albertans. Peter Lougheed would be turning in his grave if he knew.
I suppose a big part of the job of the opposition is to be critics, if things are going poorly they blame the government, if things are going better, they say they would do even better. The UCP certainly appeals to those Albertans who are reflexively conservative and against things like deficits, minimum wage increases and carbon taxes. However, that group while large is not everyone or probably even a majority. Many Albertans wonder what alternatives the UCP would propose and if they could actually do any better, especially as an election draws closer.
Kenney is a clever career politician, so he not likely to make the mistake of revealing much of his austerity plan. He is not likely, as for instance a former Ontario PC leader did, promise to cut 100,000 public service jobs. Of course, that leader did not fare well in the next election, the pain was too real and the promise was implausible – there were not actually even100,000 public service jobs to cut. Kenney will talk about deficits, but not much about what he will cut.
Yes, we can all hold contradictory ideas in our heads, so the biggest proponents of cutting spending do not want to hear about a new hospital not being built in their community, or their school being closed, or their relatives AISH benefit being reduced. They hope all the cuts will magically occur elsewhere and not effect them, however that is seldom the case. As seen next door in Saskatchewan, smaller communities often bear the brunt of the cuts. It is easier to close a small hospital or school that serves a few thousand people than a big city one.
The Finance Minister was mocked by some last year in talking about the green shoots of economic recovery in 2017. The fiscal update shows he was right. Just as the decline of unemployment is a lagging indicator (it only starts to come down well after the economy is recovering), so too are peoples perceptions. 2017 was a year of economic recovery, but people did not initially feel it. It will become more real in 2018 and this will really blunt the UPC argument that the government is not managing the economy well. I suppose the opposition will have to find something else to criticize, perhaps they will, but it will be harder to sell their generally gloomy “the sky is falling” message as the economy continues to recover and that may lead those that are not hard core conservatives to become more critical of the UCP message.
We can hope that. What I am struck by, seeing him interviewed on the Lethbridge news last night, is his bored, aloof air and his casual smugness, like this will be the same cakewalk that got him in as leader. It’s like he wasn’t even trying and didn’t need to really, he’s right, because the interview with him was chosen over one with Joe Ceci!
I think that’s it, he doesn’t even have to try because he’s the go-to religious guy in this very religious province. And he’s not even from here, usually a requirement in this parochial place, but what surpasses that criteria? I told you I appreciated your comments on the role of religion because no one else seems to want to even touch that. But what else explains that degree of sanguinity and arrogance? Everyone mulls the political strategy, as if it was a football game, giving Kenney credit for being adroit and seasoned, but what if it’s primarily the power of indifference based on the certainty of religion’s alternate reality? Wouldn’t that explain much, him knowing he has it in the bag with his legions of fellow believers behind him? Did you read the Walrus article on him, “True Blue?” It’s revealing and alarming, and we’re all going to be stuck with the little prick, who simply wants enough power to hew toward a theocracy.
Badly need to get their budgeting in line with every other jurisdiction in the country. No consumer revenue and a 9 billion dollar Deficit. Does not make sense.
Many who suggest sales taxes as some sort of budgetary panacea seem to discount the tax’s macro-economic effect.
Many of the “progressive” people supporting sales taxes also supported increases in the minimum wage by rationalizing those extra dollars will be spent by the economically marginal to increase effective demand in the economy.
So how can a sales tax, which disproportionately punishes the same economically marginal people, NOT reduce effective demand in the economy? I thought we were done with such internally contradictory “forwards-backwards” thinking in Alberta, but apparently not.
It also takes a certain lack of empathy to fail to understand how useless a quarterly rebate is to a low income wage earner with cash flow problems made worse by a sales tax.
simple; don’t charge the sales tax on food, public transit, rent or other needs.
I understand your point/s, however I’m one of those who support the min wage hike (Not necessarily in it’s current form). I also don’t support a sales tax in it’s most simplistic form, however I do support a consumption tax; I don’t see how a consumption tax would disproportionately punish low income earners, and certainly a net benefit from increased income would be realized by them. Therefore I’m going to suggest your empathy comment is obfuscation.
Bedoich: Your distinction between a “sales tax” and a “consumption tax” is hair splitting – whatever you call it, the tax has the same effects on lower income earners.
Lower income earners are hurt more because they spend a greater share of their disposable income on things like clothing and transportation for their work and for their children, cultural enrichment, and other necessities of a good family life. Chris: please note that this is after rent, food, etc. which may be excluded from sales taxes just as they are now from the GST.
Yes, we could provide lower income people with a higher net income through something like a negative income tax, but that lowers the net revenue stream from the sales tax. However that is not what is being suggested.
What is being suggested is a rebate program which has several problems. Would it be sufficient to provide an offset to families receiving it? When you look at the Federal GST rebate program there is not much evidence for optimism about that.
Another problem with a rebate system is cash flow. The cost of the sales tax comes rolling into people on a daily basis. Lower income people have to find some way to finance that extra cost until the rebate is received which is usually on a quarterly basis.
Most other jurisdictions have sales taxes which are too often an excuse for lower corporate income taxes. Yet most of those other jurisdictions also have deficits and decaying social and economic conditions. Saskatchewan is a mild example with many more extreme examples to be found south of the border.
Lastly Biodec, my comment was intended as an honest contribution, not as obfuscation.
It would take at least a 12% PST to close a $9B budget deficit. The $9B figure is likely understated as it excludes capital and doesn’t factor in rising interest rates or pension fund shortfalls.
Couple of quick thoughts, busy day. First off I for one am not celebrating the fact that Alberta will still have a 9.1 billion dollar deficit which doesn’t include deficit spending on capital projects. Government debt is just a deferred tax increase for future generations. Second revenue increases were from oil royalties and higher returns on investments(heritage fund I assume) so no revenue diversification yet. Third, income tax receipts came in $388 million below projections, funny how all the tax increases didn’t help revenues. Finally investment in oil and gas in Canada decreased from 2016 to 2017 by 19%, while in the U.S. Investment increased by 38%, a very telling statistic. Enjoy your day
The impact of the new Canadian Energy Rejection agency, which replaces the NEB, will further skew those numbers. Anyone counting on a rebound in nonrenewable resource revenues is delusional.
It’s funny that about how environmental deregulation in the US led to an increase in oil and gas investment.
Hey buddy. Explain to me again how a country with the same population as our province can pay for a real military, education, healthcare and a humane social system? https://www.marketwatch.com/story/norways-sovereign-wealth-fund-tops-1-trillion-2017-08-22 Or maybe explain to me how being the lowest debt in Canada and one of the lowest in the world even after being beggared by every wanna be Elmer Gantry of the astro-turf gardens to the south makes your “concern” so Preston Mannish to those of us who actually have family farm history? Is your’s a farm of delicate flowers that only bloom from the transplanted orchids of that hot house to the east that’s fragrant with sweet neo liberal conservatism? Are you busy because the temporary foreign workshop of the king needs leadership? Good enough to work here? Good enough to live here. That’s where your Jason and I separate. He’s an opportunist that chews humans. I’m a humanist that chooses to be humane! What in heavens name are you?
OMEGA: you drew a pretty heavy inference that I somehow support environmental deregulation, Jason Kenney and/or the UCP. None of which are true. It’s merely an observation, if not a provable fact. You response was difficult to decipher but, to be clear, I do not support environmental deregulation as an economic stimulus. To wit: “The environment is the economy, stupid.” And, no, I am not calling you stupid either. Scott Pruitt? Maybe! 😀
I don’t think Omega was typing at you “HeyBuddy”. It would seem that like many of us, Omega is on a short fuse where “FarmerB” is concerned.
Given that austerity is persistently the chosen policy of the neoliberals and especially the more socially reactionary strains of them, despite the evidence that it never achieves its stated policy objectives, you have to wonder if maybe the real objectives are ideological and — let us say — recreational. If taking joy in the calculated infliction of pain and death makes it recreation. All this talk of “market discipline” smacks too much of the riding crop, leather hoods, and chains. And yes, I think it really is that creepy and sexually perverted.
The thing is, you can’t eat a balanced budget, and the average voter doesn’t really give a rodent’s rear end about deficits, unless they are contributing to the kind of usurious interest rates and rampant inflation we lived thru in the 70s. This is most decidedly not the current state, nor is it likely in the foreseeable future.
I disagree with the sales tax idea, as they tend to be regressive: those occupying the lower tail of the income curve tend to pay a higher proportion of their income in consumption taxes than those higher up. A luxury tax, perhaps, if you could come up with a sharp-lawyer-proof definition of “luxury”. Higher marginal tax rates for the wealthy, maybe an estate tax on the richest, and elimination of some tax breaks that mostly benefit the rich, would also be a better approach. Some spending restraint on stimulative programmes could also be cautiously introduced once the recovery is more secure.
Jerry: I don’t entirely agree that the average voter doesn’t really give a rodent’s rear end, as you colourfully put it, about deficits. The average voter, in my view, has been persuaded (mostly wrongly) by 30+ years of neoliberal propaganda that they’re a very big problem that urgently needs to be fixed – but they want someone else’s ox to be gored when the fixing is done. I don’t think sales taxes are perfect, either, but I tend to think the progressive objection to them is a powerful example of our tendency to make the perfect the enemy of the good. DJC
Jerry, Rachel Notley raised both corporate taxes and personal tax rates on higher income earners yet as I pointed out above revenue from income taxes came in $388 million below projections. Every province in Canada has a sales tax except Alberta, this doesn’t prove that it is the answer but Alberta seems to be the only province that experiences wide fluctuations in revenue. One thought about deficits. The federal deficit is in the neighbourhood of 700 billion dollars. At 3% interest that translates to $21 billion in interest payments. The federal government collects roughly $25 billion in revenue from the GST(from memory could be higher). That means that over 80% of GST revenue goes to service the debt, what a waste. If the interest rates climbed to 4% interest costs would be higher than GST revenue! What gives us the right to borrow from our children so that we can live a little better today?