Alberta Politics
Finance Minister Travis Toews at Tuesday’s first-quarter update news conference (Photo: Screenshot of Government of Alberta Video).

Never mind sparse facts in Alberta’s first-quarter financial update, its subtext is deep cuts are coming soon

Posted on August 28, 2019, 1:31 pm
7 mins

The United Conservative Party Government led by Jason Kenney wants deep cuts, and, by God, it’s going to have them.

That includes tax cuts, which will drive the province’s books deeper into the red, and cuts to services to help pay for the tax breaks.

Alberta Premier Jason Kenney (Photo: David J. Climenhaga).

If the facts, such as they are known, suggest this program of austerity and pain is neither needed nor economically helpful, then let the facts be damned.

This was the message underlying yesterday’s peculiar First Quarter Fiscal Update by Finance Minister Travis Toews.

However, in the UCP’s defence, the party did campaign on this and won the support of a clear majority of Albertans. So no one can accuse the UCP of having a hidden agenda, exactly, although the unpleasant details of that agenda will have to remain under cover until after the Oct. 21 federal election. That way, they won’t spook Canadian voters in parts of the country less instinctively Conservative than Alberta enough to damage Mr. Kenney’s prime ministerial ambitions, which depend on federal Conservative Leader Andrew Scheer losing, but not too badly.

Still, it’s troubling that the UCP Government is basing its claims that things are so tough brutal measures are required to set them right on a report University of Calgary economist Trevor Tombe yesterday called “the lightest quarterly update I’ve ever seen.”

Leastways, it would be troubling were Premier Kenney’s relationship to the truth not generally understood to be a casual one.

“Nothing new presented at all, just repeating what we already know about the path of Alberta’s debt levels under current policy,” Dr. Tombe said in another of a series of Tweets he posted on the topic.

Former Alberta premier Rachel Notley (Photo: David J. Climenhaga).

Indeed, on the face of it, the government’s two-page report — which looks a bit as its first draft was scratched out on a couple of napkins in a Grande Prairie bar — suggests things are going almost exactly as the NDP government of Rachel Notley said they were supposed to go in its promised path to balance.

So much for Mr. Kenney’s notorious claim in July that “the NDP massively overstated revenues.” The premier went on in his interview with a Postmedia stenographer to say the NDP “were dishonest with Albertans and they fudged the numbers. They lied to Albertans about the economy and the revenues.”

The few facts included in Mr. Toews’s update suggest, unsurprisingly, that Mr. Kenney’s bombastic rhetoric was nothing but unadulterated Mundare kielbasa.

Total revenues? “Virtually identical,” in the words of the government’s own news release. Total expenses? Lower. Total capital expenses? Lower. Resource revenue? Up a little. Income tax revenue? Also up. Readers will get the idea. If they want the actual numbers, they’re neatly summarized in a chart in the update.

University of Calgary economist Trevor Tombe (Screenshot of Calgary Chamber of Commerce video).

The point is, they’re pretty much exactly where the NDP said they’d be. I’ll leave it to readers to conclude who is actually doing the fudging.

Accordingly, having nothing in what he was required to report to justify his government’s austerity and tax-cutting plans, Mr. Toews emphasized the size of the provincial debt — never mind that the province also has by far the lowest debt-to-GDP rate in Canada, less than half that of the next lowest jurisdiction, British Columbia.

Mr. Toews also took pains yesterday to note than the government still believes its promised economic voodoo will work, and the tax cut snake oil will deliver bigger revenues.

Never mind this strategy fails everywhere it’s tried. It failed in Kansas, in Oklahoma, in Arizona, and Kentucky. It failed in Saskatchewan, and in British Columbia too. It failed nationwide, throughout the United States.

As economist Paul Krugman pointed out in a New York Times column last January about the claims made by the U.S. Republican Party about the supposed benefits of big tax cuts for corporations and the wealthy (which are the same as Mr. Kenney’s ideas, presumably because that’s where he gets them), they rest “on research by … well, nobody. There isn’t any body of serious work supporting GOP tax ideas, because the evidence is overwhelmingly against those ideas.”

Nevertheless, Mr. Toews told the media yesterday: “We’re committed to delivering this corporate tax reduction in the timeframe we’ve proposed. We’ll be interested to monitor the results but we will implement this plan regardless.” (Emphasis added.)

Now, why would they do that?

Well, that’s the trick folks. As Dr. Krugman explained: Why do conservatives “adhere to a tax theory that has no support from nonpartisan economists and is refuted by all available data?” His answer: “Well, ask who benefits from low taxes on the rich, and it’s obvious.”

In other words, it’s a con. It’s always a disaster. But brace yourselves, fellow Albertans. You voted for it, and now you’re going to get it.

You just won’t know the details till October.

18 Comments to: Never mind sparse facts in Alberta’s first-quarter financial update, its subtext is deep cuts are coming soon

  1. Sam Gunsch

    August 28th, 2019

    re: ‘But brace yourselves, fellow Albertans. You voted for it, and now you’re going to get it.’

    UCP got the votes of 55% of the Albertans who voted. Which represents ~ 35% of AB voters ( 64% turnout).

    Those voters are accountable for UCP’s ideological austerity for ordinary Albertans and the #TrumpKenney tax cuts for corporations.

    Yeah, pedantic, fussy… perhaps.

    But it’s a bit of a sick taste like drinking milk gone bad to be associated, even indirectly, with the UCP election win.

    Reply
    • Simon Renouf

      August 29th, 2019

      “You voted for it . . .”. Certainly Kenney’s ideological drift was there for everyone to see, but during the election I spoke with a surprising number of people who felt that since the merger of Wild Rose and the PCs, the UCP would now behave like a “big tent party”. We can say they were poor deluded fools, but how many of them formed part of Kenney’s 55%?

      Reply
    • Jerrymacgp

      August 31st, 2019

      “You voted for it, and now you’re going to get it”. Let’s not dismiss the strength of the UCP’s mandate. Voter turnout was the highest in recent memory, and their share of the popular vote was far higher than that 55% figure outside the two big metro areas. I haven’t taken the time to plug every constituency’s results into a spreadsheet, but I did do that for the six constituencies of the Peace Country & northwestern Alberta — where I live — and the figures are revealing. Voter turnout overall was 72.8%, and the UCP’s share of the popular vote was 68.3% — i.e. more than a ⅔ majority — and in Grande Prairie-Wapiti, 80.4% of the electorate cast a ballot, giving our new Finance Minister — this is his seat — 74.2% of the votes cast.

      To put those turnout numbers in perspective, in the previous three elections — 2008, 2012, & 2015 — turnout in the region was 31.9%, 45.0%, & 48.9% respectively. Again, in GP-Wapiti (under different boundaries), it was 26.6%, 42.4%, & 46.9%. So, an 80+% turnout in GP-Wapiti is unheard of.

      The vote was also highly polarized, with 20.9% of the vote in this region going to the NDP, and only 8% to the Alberta Party. The Liberals were not a factor, not even having candidates in the majority of these seats.

      So, the voters clearly fell for the UCP’s message of rage. I wonder whether that rage will be focused on them after four years of slash & burn …

      Reply
  2. Jim

    August 28th, 2019

    Will be interesting to know how the education cuts will work when the school year has already started. Haven’t seen an increase in school fees over last year.

    You have to stop quoting Krugman though not only does he write for the New York Times but has a pretty bad track record. The day he comes out and says the US should cut military spending and foreign wars is the day he will get some credibility. Likely also the day he no longer writes for the New York Times.

    Putting that aside have you seen a so called conservative run economy that hasn’t been ruined? Remind me again how much debt Harper ran up? Oh the missed opportunity for not giving Rachel a second term…

    Reply
    • David Climenhaga

      August 28th, 2019

      The advantage of Krugman compared with many other economists is that he writes in a fashion that is comprehensible to lay readers. He is not unique in that regard, of course, but as a columnist for a major newspaper, plenty of material is readily at hand. DJC

      Reply
      • Anonymous

        August 30th, 2019

        Do you wonder why Alberta has no money? The answer is simple. The Alberta PCs, after Peter Lougheed left office, are TOTALLY responsible for virtually depleting Alberta’s finances, from multitudes of very costly scandals and neglect.
        Since 1986, the Alberta PCs allowed rip off royalty rates for our oil, depriving Alberta of $200 billion. Since 1986, the Alberta PCs virtually depleted the Heritage Savings Trust Fund, leaving hardly anything in it. Ralph Klein used it for very costly scandals, like Alpac/Mitsubishi, to help finance his provincial election campaigns, and to help pay off the provincial debt/deficit.
        Since 1986, the Alberta PCs did the most costliest scandals in Canada’s history.
        The $67 million Gainers scandal, the Principle Trust scandal, blew $110 million on a metal smelting plant screwup, did the $600 million NovaTel scandal, did the now $5 billion, (and growing) Swan Hills waste treatment plant blunder, did the $180 million Miller West Pulp Mill debacle, did the $240 million MagCan scandal, blew almost $500 million, trying to bail out West Edmonton Mall, did the $125 million ambulance amalgamation screwup, did the $100 million A.I.S.H scandal, (which was complete with Ralph Klein and his colleagues, laughing at and mocking the handicapped on T.V), made us pay for the Stockwell Day defamation lawsuit costs, did the $400 million B.S.E bailout failure, did the $34.5 billion electricity deregulation disaster, did the $7 billion PPA debacle, that went with it, wasted $2 billion on carbon capture and storage, wasted money on luxury penthouse suites, wasted money on expensive plane flights, that had no extra passengers, did the $26 billion Northwest Upgrader fiasco, that had $9 billion in added costs, lost $10 billion on Alison Redford’s tobaccogate lawsuit scheme, which she did, and got away with, has expensive lawsuit costs against the Alberta government, in relation to the numerous deaths of foster children in Alberta, left Albertans with a $260 billion bill, to cleanup abandoned oil wells in Alberta, and so much more.
        The Alberta PCs flat tax fiasco drained Alberta of billions of dollars in revenue from its coffers.
        As of 2014, corporations in Alberta owed $1.1 billion in unpaid taxes. For many years prior, corporations in Alberta owed very large amounts of money in unpaid taxes, that the Alberta PCs failed to collect.
        Ralph Klein laid off scores of nurses and teachers.
        The Alberta PCs, after Peter Lougheed left office, badly neglected infrastructure in Alberta, leaving Alberta with a $26 billion infrastructure debt.
        Jason Kenney had a hand in the CPC’s big mistakes.
        The $35 billion income trust scandal, the robocalls scandal, (that Jason Kenney orchestrated), prorouged Parliament, failed to properly deal with Senate scandals and corruption, sold the Canadian Wheat Board to the Saudis, the CPC did not help get a pipeline built, that went to tidewater, when the CPC had a majority government, and had far superior oil prices, blew billions of dollars, trying to bail out the auto sector, increased the number of TFWs in Canada, (Jason Kenney was also behind that), and the CPC increased Canada’s debt to nearly $150 billion – $170 billion, all by themselves.
        Oil prices sank in 2014, thanks to Saudi Arabia and America. Oil booms are finished. Jason Kenney’s corporate tax cuts have lost Alberta $4.5 billion. The UCP has already made over $13 billion in very costly mistakes.
        How are these things not worse than the Federal Liberals giving $12 million to Loblaw’s for fridges/freezers? No wonder why Jason Kenney wants to do (foolish) cutbacks. Also, please share this to others.

        Reply
  3. Dave

    August 29th, 2019

    I think when Albertans voted, many believed they would be geting modest cuts in spending. I have a feeling there are going to be a lot of surprised and upset people after the UCP’s fall financial masacre, like the IT contractor who in today’s news mentioned he supported them and is now finding out his contract is unexpectedly not being renewed.

    I suppose the UCP hopes to make big cuts early and perhaps like a previous Premier hope oil and gas prices recover and they can try paper over the damage later with a spending spree just before the next election and hope voters forget about the cuts by then. For those hoping we would finally get off the PC boom/bust financial roller coaster, bad news – its back with a vengance, same old ride, just under a new UCP name.

    Like many governments the UCP is trying to blame its pedecessor for a bad state of finances and as a justification for bigger cuts. Sometimes, this arguement is true, but unfortunately for the UCP in this case, they are having great difficult in getting the facts to support their story. It’s almost embarassing. The previous government did not leave a more bare cupboard than expected, but finances that were actually in a bit better shape than expected. However, that will not cause the UCP to rethink its plans. They long ago decided there would be big cuts and by george there will be, regardless of the facts. Too bad they weren’t very clear about all that before and during the provincial election.

    Reply
    • Expat Albertan

      August 30th, 2019

      As someone who has watched Kenney’s performance in Ottawa for years, I’ve always said he’s like a mean old junkyard dog that does a fine job of guarding the property from outside, but will bite the kids and wreck the china if you let him in the house. In short, Kenney was ‘safe’ for Albertans as long as he was far away. Bring him to Edmonton and he turns his venom onto his fellow Albertans in a way that denizens of the province are not used to from their Premier.

      Reply
  4. Athabascan

    August 29th, 2019

    “… brace yourselves, fellow Albertans. You voted for it, and now you’re going to get it.”

    My thoughts exactly. Wiser words were never written. I would add, ” Therefore, when the whining begins, I’ll have no sympathy. You did it to yourself just like the last hangover you had.”

    Reply
  5. pogo

    August 29th, 2019

    I know I am a vagabond of suspect intent and morality! I admit and proclaim that many of my detractors may have been less than perfect and more right when they are wrong! I give you the very best that any wing anywhere can mount for a musical counter to all we have done! This is a guy that didn’t have his tongue catch on fire when he said “rhythm and blues”. Welcome our new over lords! https://youtu.be/ZNyiEnKBocs Yah. I’m fucked! How ’bout you?

    Reply
  6. Bill Malcolm

    August 29th, 2019

    The austerity story caused by cutting taxes for the rich and the trickle-down theory has been mainstream Conservative horseshit since Maggie Thatcher berated her fellow citizens for being lazy sods, privatized the national wealth and ordered Ronnie Raygun in his advanced senilic debility to do the same thing. Thatcher had listened to economists who had astrology for a hobby, and thought that was a plan for the economy.

    And the mantra gets repeated as if it were an inalterable fact by the dumbdroids of the right, including Kenney. harper had a go, the previous Saskatchewan dunce of a premier went to the Wall for it, and Schmoe stands firm on it along with the brain-dead Pallister next door, as did Cameron and May in Blighty and His Royal Borishness is betting to go at it even deeper. Trump did/does it.

    Does anyone recognize an intellectual in that roll-call? You must be kidding. All were /are looking for a comfy well-fed retirement bankrolled by their rich “friends”. Doing anything to advance the fortunes of their broad citizenry never crossed their minds. All me me me and to hell with the plebs. Luckily for them, the plebs are so ill-informed and uninterested or caught up in slogans that these sleazebags get away with their rhetoric and subsequent actions. Even better for themselves as “community leaders”, they stand up and call the poorer lazy, inflating the opinions of the middle and upper classes of themselves and making them anti-union. Just to gild the lily for the better-off, temporary foreign workers are brought in to keep wage demands of the lower classes low. And a cutback of the minimum wage is another old dessicated prune of Conservative thought that is about as doctrinaire as cutting taxes for the rich. Who the hell wants their fellow citizens to make a living wage and contribute to the community, say Conservatives? After all god will provide.

    Anybody who votes for Cons needs to get their head examined for signs of latent idiocy and addiction to reading tea leaves to foretell the future. If the hat fits, wear it.

    Reply
  7. Anonymous

    August 30th, 2019

    Here is what is missing from many people. The facts. The Alberta PCs, after Peter Lougheed left office, are TOTALLY responsible for virtually depleting Alberta’s finances, from multitudes of very costly scandals and neglect.
    Since 1986, the Alberta PCs allowed rip off royalty rates for our oil, depriving Alberta of $200 billion. Since 1986, the Alberta PCs virtually depleted the Heritage Savings Trust Fund, leaving hardly anything in it. Ralph Klein used it for very costly scandals, like Alpac/Mitsubishi, to help finance his provincial election campaigns, and to help pay off the provincial debt/deficit.
    Since 1986, the Alberta PCs did the most costliest scandals in Canadian history.
    The $67 million Gainers scandal, the Principle Trust scandal, wasted $110 million on a metal smelting plant screwup, did the $600 million NovaTel scandal, did the now $5 billion, (and growing) Swan Hills waste treatment plant debacle, did the $180 million Miller West Pulp Mill scandal, did the $240 million MagCan scandal, blew almost $500 million, bailing out West Edmonton Mall, did the $125 million ambulance amalgamation screwup, did the $100 million A.I.S.H scandal, (which was complete with Ralph Klein and his colleagues laughing at and mocking the handicapped on T.V), made us pay for the Stockwell Day defamation lawsuit costs, did the $400 million B.S.E bailout failure, did the $34.5 billion electricity deregulation disaster, did the $7 billion PPA debacle, that went with it, wasted $2 billion on carbon capture and storage, wasted money on luxury penthouse suites, blew money on expensive plane flights, that had no extra passengers, did the $26 billion Northwest Upgrader fiasco, that had $9 billion in added costs, lost $10 billion on Alison Redford’s tobaccogate lawsuit scheme, which she did, and got away with, has expensive lawsuit costs against the Alberta government, relating to the numerous deaths of foster children in Alberta, left Albertans with a $260 billion bill to clean up abandoned oil wells in Alberta, and so much more.
    As of 2014, corporations in Alberta owed $1.1 billion in unpaid taxes. For many years prior, corporations in Alberta owed very large amounts of money in unpaid taxes, that the Alberta PCs failed to collect.
    The Alberta PCs flat tax disaster drained billions of dollars from Alberta’s coffers.
    The Alberta PCs, after Peter Lougheed left office, badly neglected infrastructure in Alberta, leaving Alberta with a $26 billion infrastructure debt.
    Ralph Klein laid off so many nurses and teachers.
    Jason Kenney had a hand in the big mistakes of the CPC.
    The CPC did the $35 billion income trust scandal, the robocalls scandal, (that Jason Kenney orchestrated), prorouged Parliament, did not properly deal with Senate scandals and corruption, sold the Canadian Wheat Board to the Saudis, the CPC did not help get a pipeline built that went to tidewater, when the CPC had a majority government, and had far superior oil prices, blew billions of dollars, trying to bail out the auto sector, increased the number of TFWs in Canada, (Jason Kenney was also behind that), and the CPC increased Canada’s debt to nearly $150 billion – $170 billion, all by themselves.
    Oil prices tanked in 2014, thanks to Saudi Arabia and America. Oil booms are gone. Jason Kenney’s corporate tax cuts have cost Alberta $4.5 billion. The UCP has already made over $13 billion in very costly mistakes.
    Yet, what’s on Alberta’s minds? The Federal Liberals gave $12 million to Loblaw’s for fridges/freezers.
    Please share this with as many people as you can. People need to know the facts.

    Reply
  8. Farmer Brian

    September 1st, 2019

    I have a couple thoughts. In 1986 Don Getty had just came to power and Alberta’s oil industry had been gutted by the federal Liberal’s National Energy Program. He did lower royalty rates to make Alberta an attractive place for oil companies to invest and to bring jobs back to Alberta.

    It is well documented that Alberta has sent $200 billion more to Ottawa in tax revenues than we have recieved back in federal transfers since 2000, you should mention that as well.

    As far as Gainer’s goes the province eventually lost $209 million from its 1986 decision to offer a guaranteed loan to Peter Pocklington. The Swan Hills treatment facility has cost the province $440 million so far with a projected $165 million in projected future mediation costs. I could go through each of your examples and I am sure we would agree and disagree on numbers, the aforementioned did catch my eye though.

    What your post does effectively point out is that government should stay out of investing in business, regardless of ideology, as just like private business not every investment decision is successful. Use hard earn tax payers money to provide services and not waste it in failed investments. Enjoy your day.

    Reply
    • Anonymous

      September 2nd, 2019

      Farmer Brian: No. The Gainer’s scandal was $67 million. The rip off royalty rates for our oil since 1986, are what lost Alberta $200 billion. Oil companies were investing in Alberta, when Peter Lougheed accepted the proper oil royalty rates, without backing down. The Swan Hills waste treatment plant blunder has had annual bailouts since the very early 2000s, increasing the cost of it 10 times, to $5 billion. The incompetent UCP is the most capable of repeating the very bad things that the Alberta PCs did, after Peter Lougheed left office. Albertans who supported this, are the foolish ones. They forget how the PCs bankrupted Saskatchewan, and how Brian Mulroney governed so badly, on the federal level. Alberta’s financial problems can’t be blamed on Ottawa, even though Jason Kenney was in the CPC, when the current equalization structure was made, (that he constantly bellyaches about, to distract Albertans from the RCMP investigation against him), but with longstanding Conservative incompetence and mismanagement of our finances, which still exists today. The UCP has already cost Alberta over $13 billion. It’s a big shame.

      Reply
    • Farmer Dave

      September 3rd, 2019

      Farmer Brian, amazing you don’t go back a little further during the early days when the oil sands were being developed and mention how the Federal Government, Alberta Government (Lougheed) and the Ontario Government invested heavily in the development of this resource which paid great royalty dividends to all investing Governments only to have Ralph Klein come along and giveaway these royalties away to the oil giants. Remeber Petro Canada, then owned by the Fed’s played a big role in the development of the oil sands only to sell it off for pennies per share.

      It’s funny how many Albertans don’t recall that the Federal Government and it’s investments into our resources has helped Alberta over the years and only blame them for taking billions back in taxes.

      Reply

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