It’s Alberta Budget Day tomorrow.
Finance Minister Travis Toews will table a budget at an afternoon pop-up meeting of the Legislature. Then United Conservative Party MLAs will run like hell for their ridings and hunker down until the Legislature’s business resumes on March 8.
Whatever Mr. Toews has to say, there’s not much danger he or Premier Jason Kenney will pay any heed to what those crazy Marxists at the Business Council of Alberta were telling us a week ago.
The high-profile group of 90 some well-heeled CEOs, presidents and corporate directors called on Alberta to implement a harmonized sales tax as well as its own carbon tax, plus some other rather progressive sounding ideas.
This was something of a surprise, since advocating higher taxes is not the sort of thing we’ve come to associate with influential business groups in recent years.
Still, the views expressed in the report, Towards a Fiscally Sustainable Alberta, shouldn’t really come as a shocker unless, say, you’ve been toiling for a national business newspaper for a decade and a half. It’s been pretty obvious for a while to almost anyone who’s been paying attention that there’s nothing fiscally sustainable about the fiscal trajectory Alberta’s been on.
You can argue, as many do, that Alberta’s problem is mainly on the revenue side. Or you can argue as many others do that it’s on the spending side. You can try for a saw off, as the Business Council did. But one way or another, it’s obvious that something’s gotta give.
What’s changed recently is that thanks to global climate change, the pandemic and new technology, we seem to have gone from a boom-and-bust economy to one without many prospects for any more booms.
This presents a serious political challenge for Premier Kenney and his finance minister. They seem never to have had any idea but to make fossil fuels great again. They have no Plan B now that we’ve been blown off course by the pandemic, renewable energy, and the change of government in the United States.
The UCP desperately wants to present a hard-line austerity budget. That’s because these are guys who in their hearts believe there’s no role for government beyond keeping order and cutting “red tape.” As their hero Grover Norquist famously put it, they just want to shrink it down to a size they can drown it in a bathtub.
The UCP also desperately needs a good news budget to keep the wheels from falling off its campaign bus, thanks to its glaring recent record of incompetence and nincompoopery reminding voters an election will soon be in sight over the horizon.
What will they do? My guess is they’ll present an austerity budget tomorrow and call it a good news budget. Plus, of course, they’ll try to blame the NDP and the Liberals in Ottawa for the province’s current fiscal predicament, which is not an argument likely to persuade anyone but a blinkered UCP partisan.
Anyway, Mr. Kenney has made it clear there will be no new taxes.
“Kenney says no new taxes as Alberta preps for another tough times pandemic budget,” read the headline on recent editions of Postmedia’s local newspapers.
The CBC, apparently striving to be different, put it this way: “Premier says no new taxes as Alberta prepares for another tough times pandemic budget.”
Sure, they were both using the same Canadian Press story, but still.
Meanwhile, thanks to half a century of mostly Conservative mismanagement and the new factors noted above, Alberta is caught between an economic rock (a single-product export economy) and a hard place (not much of a market for the single product we export). Well, OK, there’s cattle too, but face it, beef on the hoof is never going to bring back the glory days of black gold, oil that is.
Which brings us back to the Business Council’s thoughts on how to create a fiscally sustainable Alberta. The report isn’t perfect, but it contains a certain amount of good sense stripped of the ideological claptrap we’ve come to associate with the sorts of business types who advise Conservative governments in Alberta.
Remember who these guys are – and aren’t. They aren’t a bunch of college Marxists from the Seventies, previous sarcasm aside. They also apparently aren’t nuts like the ones at the Canadian Federation of Independent Business, the Canadian Association of Oilwell Drilling Operators, or Restaurants Canada, who must keep a well-thumbed copy of Atlas Shrugged on their bedside tables.
The Business Council report’s serious tone somewhat belies the serious criticism of the UCP Government’s approach it contains. But the fact it doesn’t exactly excoriate the UCP like the party’s loony separatist fringe is doing these days doesn’t mean its criticism lacks punch. On the contrary, it packs a bigger wallop because of whom it’s coming from.
The Business Council report’s core thesis is that “Alberta under-taxes and overspends.” (Emphasis added by me.)
“We cannot … sustainably run a high-spend, low-tax government in the province,” the report says. “This option was available for a period of time when resource revenues were high, but it would be inadvisable – to say nothing of fiscally imprudent – to count on such an approach succeeding in the future.”
The thing is, the report also acknowledges, the times, they are a’changin’, and you can’t count on energy revenues to sustain Alberta into the future, no matter what Mr. Kenney promised. (It’s also pretty blunt about how much Alberta is coming to depend on transfer payments from the federal government, something the UCP doesn’t like to acknowledge.)
“The simplest benchmark for returning Alberta to fiscal sustainability is to bring provincial revenues and expenditures more into line with other provinces,” it says, hence the recommendation for a harmonized sales tax and a return to the province collecting its own carbon tax, an option the UCP tossed over the side in foolish haste to undo everything done by the NDP.
And while the report calls for keeping taxes competitively low, it also suggests investing in education, diversifying the economy, developing a robust climate action plan, and “maximizing labour force efficiency by expanding access to affordable child care.”
Sound familiar? Well, considering the obvious, these Big Business guys never quite come out and advise the UCP to run Alberta like Rachel Notley’s NDP did. But that’s what they’re doing.
Albertans were given stern warnings about how bad the UCP were going to be, but they didn’t listen to anyone who gave these warnings. There is a deep contrast to how Peter Lougheed looked after Alberta’s finances, and how the conservatives looked after Alberta’s finances afterwards. I just wouldn’t expect to see oil prices coming back to $100 bbl, or more. When the Alberta PCs started getting abysmal oil royalty rates for the oil we have, that made $575 billion dollars vanish. There was also the cleanup costs that the Alberta PCs left Albertans to deal with, which totals another $260 billion, and likely more. Ralph Klein also never had good tax policies, and this lost Alberta $150 billion in much needed revenue. Scandal after scandal happened with the conservatives in Alberta for far too long, throwing billions of dollars away, and the majority of Albertans ignored it. Here we go again, under the UCP. Albertans have a hard time learning. Like the dismal failure that was Ralph Klein, the UCP only supports their rich corporate friends, and point fingers at others, and make the claim that cuts have to be made. The UCP have already lost around $10 billion from corporate tax cuts. The carbon tax is still in Alberta, that is the provincial one. The UCP acted like they got rid of it, but they did no such thing. This next provincial budget will be a tough one. It is going to be hard on many people, and the UCP have to be held responsible for this.
A harmonized sales tax was tried in BC for awhile – the duplicitous BC Liberals said ‘not on our radar’ before the election, then enacted it shorty after they won – it was raising about double what they claimed it would, and mostly from those who could least afford it… So I see why the Business Council of Alberta supports it. HST reduces business taxes and downloads that cost onto consumers – it is the taxation side of ‘trickle down’ economic majykl fairae dust.
Yes, the LibCons slashed corporate taxes to make the HST “revenue neutral”–for the government. No worries, Jason won’t add to our taxes. He’ll find some OTHER way to make us dumb schmucks pay for government services (the ones he doesn’t cut, anyway.)
I wonder if Travis Toews ( T Squared) is going to thumb his nose at tradition ( UCP Hubris ) and refuse to buy new shoes on budget day like last year. Who has time for tradition when you’re running a once great Province into the ground.
It took me hours, but I managed to get an appointment for me and several others to be vaccinated. Reminding me of how poorly we Albertans are being served. Everything is expensive and we need intelligence and not bluster and rhetoric. We need real competence, not fauxtrage at every roll of the dice! We need taxation that’s scalable and income sensitive, to stabilize a base line income. Every day of any week, that will be a consumption tax and yes a tax on all income, so kiss the dividend break good-bye. In fact, a responsible government controlling a jurisdiction like Alberta, would put a foreign dividend tax on Alberta based companies and threaten them with nationalization. I mean if Suncor can buy Petrocan, why couldn’t we just take it back in house? Hey Jason! It’s the bottom of the market you missed. You could have nationalized the whole thing at negative dollars per barrel! And gotten away with it, but you and your gang are too stupid Aren’t your folks smart enough to run a one customer rub and tug by now? No? Just want some alone time? Yeesh. What a mess!
Thanks for another great article, David.
The carbon tax issue is a real pickle for our beloved premier. The business council’s suggestion is a good one, but to implement it Mr. Kenney would have to undo the primary plank of his campaign platform from less than 2 years ago, something I don’t think his pride, or his base, would accept.
At the same time, if he doesn’t reimplement the carbon tax promptly, doing so later will come with even more political fallout. At this point, people claim their carbon tax rebate as part of completing their income tax return – in other words they have to look to see one number among many, especially if someone else prepares their taxes.
The federal carbon tax is set to increase, however, and I have heard the prime minister mention the possibility of mailing out quarterly rebate cheques once the carbon tax gets higher. If that does come to pass, I think it will be too late for Alberta to resume collecting the carbon tax; the premier who implemented it would be seen as the guy who took away those rebate cheques.
Incompetence and nincompoopery like the vaccine appointment system crashing right out of the box? These guys were so busy getting up on their hind legs to bark about delayed vaccines that they failed to make a solid plan for managing the vaccination rollout once it did arrive. More of the same on its way tomorrow, no doubt.
Is is possible it occurred to no one in the government that there would actually be demand for this vaccine because so many of our leaders assume the whole COVID-19 thing is a fake plandemic cooked up in the PMO with George Soros on the line? I suppose the most likely explanation is the simplest one, that they’re just incompetent nincompoops.
How to reprogram the vaccination booking system so that it will work for you, if anyone’s interested.
https://mobile.twitter.com/korymath/status/1364644087912103940
Everything is fine. Just do it!
P.S. If you can successfully code your way into a vaccination appointment, you will probably be expected to give yourself the vaccine, because who needs red grapes? I mean, red tape. I mean, what were they drinking? I mean, thinking?
So here’s a thought. Alberta has had competitively low taxes on business for a really, really long time. Has it led to more businesses moving here? No. We are still a one product economy. So why are we bothering to keep those taxes low? Why not increase taxes to be the same as the next lowest taxed province?
And we don’t have excessive public spending.
Janna is onto something here.
This tomfoolery about not having enough revenue or spending too much is only applicable when the cash that’s rolling in has nothing to do with honest effort.
Such as has been for the last 40 years in Alberta where the petroleum resource just oozes out of the ground and all that’s required is to bend down and scoop some up.
The Klien Konservatives and their despicable progeny have only been able to spend whatever available cash on immediate gratifications and other shiny objects.
Every business manager, even stupid and mendacious ones, knows that it costs money to start up an enterprise. The good ones have a plan to get past the deficits and the really good and competent ones work, work, work their plan.
These goombas at the UCP don’t have a plan. If ever there is a plan these nutters don’t even believe in following plans.
We only have “excessive public spending” if you ignore the effects of Ralph Klein’s construction boom during the mid-2000’s (“the Crazy Years”). Remember when construction costs were rising at 30% per year? 2004 to 2006 saw house prices double, due to people immigrating and to speculation–mostly speculation. Wages rose at the same dizzying rate, with fast-food joints having to offer $15–or was it $20?–per hour for burger-flippers in 2007. For anyone lucky enough to be union, or at least in a non-precarious job, wages stayed high–sparking jealousy in anyone who got laid off when oil prices crashed.
Alberta is still among the highest-wage provinces in Confederation–for anyone in a decent job to begin with. Since 2014, oil companies have been protecting their profit margins by laying off staff and replacing them with computer-controlled machines. Maybe Lord Jason should put a “layoff surtax” on oil companies to collect the income taxes that USED to go to laid off employees…..
Since the Crying & Angry Midget is so good at picking winners, he will pull another winner out and the budget will be thus…
Oil revenues will be based on $1199.00/bbl.
Government spending will be zero…forever.
Taxes are theft.
Alberta will reap the positive effects of Climate Change as it diversifies and creates a citrus fruit industry.
And EVs and the Alberta Business Council are commies and all commies suck.
P.S. Blame Trudeau.
Reading about a sales tax I am reminded of the cliche “You get what you pay for”
In Alberta the absence of a sales tax equals greater debt.
I am willing get what I pay for if a sales tax reduces our deficit and points us toward a balanced budget.
I suppose I am not surprised at all by the UCP plan here – table the budget and get away quickly like a get away driver at a bank robbery, with as little debate or discussion as possible. There is really no good news here and any discussion or debate would provide an opportunity for the opposition to show how the UCP’s key promises on the economy, jobs and pipelines have not been kept. I suppose the only good news is the deficit may be closer to $14 billion rather than $21 billion, or something similar the Premier hurriedly mumbled while trying to get away. Of course, $14 billion would still be a record deficit.
I have long believed the fundamental problem is the UCP’s living in fantasyland that cuts alone can solve our budget problems. I suspect Kenney hoped that he would get lucky, like Klein did, and have a major rebound in oil prices so the reckoning on the revenue side could be put off, at least until after the next election. Unfortunately, Kenney did not anticipate COVID and the resulting collapse in oil prices in 2020.
Now, oil prices are recovering and it is possible they will continue to do so. However, the COVID related collapse has put Kenney’s fiscal plans a year off track or perhaps more. So, even if oil prices do continue to hold and even increase some, it is doubtful the Alberta government can get back to surplus by the next election. Dealing with COVID has also meant Kenney has had to slow down or stop some of his cuts, particularly to health care, so some cuts may have to come closer to the next election, which is not very good timing politically.
I have always thought that one of the fatal flaws in Kenney’s plan was to rely on a quick recovery in oil prices. The oil price cycle does not neatly match with the electoral cycle. It often tends to be a bit longer. In the past, the PC’s compensated for this by calling early elections as soon as they sensed a downturn coming. Prentice tried this too, but didn’t seem to get he needed to be reassuring rather than telling people to look in the mirror and talk about big cuts.
Even if oil prices hold up in dealing with a transition to greener energy sources over the next few years, Kenney will need a lot of luck, much like what Klein had, for the Alberta economy to get back to a good place, especially due to the delay in everything due to COVID. I suppose it is possible, but not necessarily likely. He will also need everyone to forget about a growing number of recent self inflicted wounds, like ending the coal policy, government money lost on Keystone XL and all the UCP travel during a time of COVID restrictions. I suppose there are many other reasons, in addition to those related to the budget, he would want his time in the Legislature to be as short as possible.
Lemme tell y’all a story ‘bout a premier named Gordo, a cur profiteer barely kept his own head.
Now, Gordo was a liar, told a lot of lies. Like the time he campaigned on privatizing BC Rail and lost, then, next time, promised NOT to privatize it and won. Then he went ahead and privatized it anyway. See, that was a lie, his first one of many as premier.
His party kept on winning elections despite a spate of scandals, all of which seemed to harmlessly slide off him and his cabinet ministers, time and time again. Gordo seemed clad in teflon —nothing would stick, not blatant cronyism, corruption, drunk-driving conviction, and numerous other scandals. Nothing.
Until one day when Gordo was again on the campaign trail to winning his third term he told voters he wouldn’t negotiate with pm Stephen Harper to harmonize BC’s PST (that’s ‘provincial sales tax,’ for you Albertans who might not know) with the federal GST. “It’s not even on the radar,” he stumped. But that, too, was a lie: when he won that election, he did impose the HST after all. And things quickly went downhill for the premier who’d only just started dreaming of a fourth term, of being a modern-day Wacky Bennett (BC Premier through the 50s, 60s and early 70s).
BC citizens howled even more outrage when it was revealed Gordo had really been negotiating the HST with Harper in secret before the election—when he said it wasn’t “on the radar.” Gallup polled Gordo’s popularity at parity with Richard Nixon’s—about 9%, tied for the lowest popularity in that pollster’s history. Soon a peeved Gordo held a presser to announce, his voice hoarse from his last cabinet meeting, that he was resigning forthwith. In fact, his ministers had forced him out. Even as the disorganized Opposition NDP dithered about whether it was sportsman-like to attack Gordo when he was down, his popularity was sinking so fast cabinet was worried nonetheless. He had to go.
The HST scandal was also the first time BC’s Citizens’ Initiative law was successful (previously it had failed dozens of times to recall MLAs): former Socred Premier Bill Vander Zalm and NDP pundit Bill Tielemann (the tax was so hated even polar opposites cooperated) jointly sponsored an Anti-HST petition which met the threshold in each of the then-85 ridings. Meanwhile Gordo sacked the 25-year veteran Chief Electoral Officer and his second-in-command to install an “Acting ChEO” by fiat (instead of by an all-party consensus, as per usual) in preparation for the HST Referendum that followed the Petition. The court first had to order this Acting Chief to release the Petition results but, before the Referendum was on, Gordo had resigned in disgrace and the prancing majorette Christy Clark had returned from several years political sabbatical to win the subsequent leadership race. As Christy busied herself getting a seat in the Assembly, pollsters consistently predicted rejection of the HST by a large margin—meaning antipathy towards the tax transcended the usual partisan polarity. But when the results were counted—by that same Acting Chief—they were conspicuously closer to BC’s usual polarized partisanship than all polls had predicted hitherto. Go figure—mail-in and the whole bit. But the hated tax was rejected, the first time in 800 years of Westminster parliamentary history that a legislated tax was repealed by popular measure.
Weird thing is, the tax wouldn’t have been all that different from the PST, not for ordinary consumers. And it would have saved businesses a bit of administrative cost. But it was that HST lie that did in the previously teflon Gordo—did him in good. Down he went in disgrace.
Mind you, Gordo’s many previous sins might have worked against the HST as much as they did him, the straw that broke the camel’s back, as ‘t were.
Admittedly, Alberta’s different: it doesn’t have any provincial sales tax at all; imposing one would be a lot bigger leap than the rather moot little hop BC would have to have done if it had adopted the HST. I guess the BC lesson would be: if you’re gonna impose an Alberta PST—or even an HST—it’d prob’ly be a good idea not to lie about it like Gordo did. Voters—voters of every stripe—really hate that.
But, for politicians who can’t help it, or who’ve accumulated a ton of political baggage, or both, there could be a plum patronage job at some exotic foreign consulate if caught being dishonest about sales taxes with voters. I mean, as long’s a CPC prime minister is in power.
Alberta’s problem in my opinion isn’t a lack of a diversified economy, it’s problem is an over dependence on financing government programs with energy royalties that fluctuate wildly with the price of oil. Value added taxes like a sales tax are a proven method of financing government programs, until Albertan’s are willing to accept a sales tax, government finances will remain in a mess. No political party in Alberta has ever seriously ran on a platform that included a sales tax believing that it would guarantee electoral defeat, Albertan’s have alway’s got the government they voted for.