Premier Jim Prentice and Finance Minister Robin Campbell steer Alberta through 'tough economic times.' [Note: Individuals portrayed in the image are not actually Jim Prentice and Robin Campbell.]

Sometimes living in Alberta is like living in Bill Murray’s Groundhog Day

Sometimes living in Alberta is like living in the classic film Groundhog Day, in which actor Bill Murray finds himself in a time loop, repeating the same day again and again.

In Alberta, relying on the cyclical nature of oil prices while not planning for the future, we appear doomed to repeat the same mistakes over and over again. Despite our enormous natural wealth, the declining price of oil and a lack of long-term planning has left our government with a significant short-term gap in revenue.

While other oil-rich jurisdictions, like Norway, set aside large financial reserves in order to weather this sort of slowdown, Alberta’s Progressive Conservative leaders have historically not shared that vision.

Looking for other sources of revenue, Finance Minister Robin Campbell floated the idea this week of reintroducing Health Care Premiums. Albertans paid monthly health care premiums until the PC Government cancelled them in 2009, forfeiting an estimated $1 billion in annual revenue at the time.

Despite the name, the previous version of the health care premiums were not dedicated health care funding but were instead funnelled into the provincial government’s general revenue.

The health care premiums trial balloon is another distraction from the real revenue problems that Alberta’s politicians are reluctant to address, such as the reintroduction of a progressive taxation system, like the one Alberta had before the short-sighted flat tax was introduced in 2000.

While Mr. Campbell has travelled the province to meet with business groups and rooms filled with friendly supporters, there has been no real attempt by the government to start a meaningful conversation or consultation with Albertans about how their public services are funded. And while the PCs have signalled an intent to increase revenue by some manner, which is a positive step, Premier Jim Prentice has already ruled out some sensible changes.

Mr. Prentice has nixed any plans to make increases to corporate taxes and natural resource royalties, and likely the introduction of a provincial sales tax. The decision to avoid more corporate taxes and royalty increases is not surprising, as it serves to protect the large corporations and wealthy individuals who continue to make large donations to the PC Party.

What Albertans collect as a share of natural resource royalties from oil (image from the AUPE document "Factcheck 2015 Budget")

What Albertans collect as a share of natural resource royalties from the oil sands (image from the AUPE document “Factcheck 2015 Budget”)

According to comments made my Mr. Prentice, it would seem that the Alberta Government’s projected $7 billion in royalties from the oil sands have completely evaporated. Documents from Alberta’s Department of Energy show that when the price of oil was sitting at $120.00 a barrel, Albertans were only collecting $10.80 per barrel in royalties (9%) on gross revenue from the oil sands. Now, with oil at less than $55.00 a barrel, we are estimated to be collecting around $0.55 per barrel (1%) in royalties. Even when the price of oil was at its highest, Albertans might have only been collecting 40% from the net revenue of the oil sands.

As the owners of the natural resources, Albertans are within their right to ask for and expect to receive their fair share from the resources in our province.

Ed Stelmach was the last Premier who attempted to change the royalty structure and he faced a severe backlash from the oil and gas industry. With close ties to corporate Calgary, it is unlikely that Mr. Prentice will want to touch the issue of royalties.

Corporate and personal taxes in Alberta are estimated to be $11 billion lower than any other province in Canada. It is believed that a 5% increase for personal incomes above $150k could bring in an estimated $1.13 billion in revenue for the government. It is also estimated that each 1% increase in corporate taxes would bring $500 million in revenue.

Unfortunately, as is usually the case in politics, the loudest voices get the most attention. And Mr. Prentice’s hint of a 9% funding cut for public services has been followed by a barrage of opinion-editorials from market fundamentalists and the tax outrage industry calling on the province to slash health care and education funding.

Other opinion-makers, like the City of Edmonton’s Chief Economist, John Rose, warn that provincial budget cuts to combat the falling price of oil will have a negative impact on the economy. Mr. Rose also suggested the province have a serious discussion about a provincial sales tax.

Alberta is the one jurisdiction in Canada that has the capacity to weather this kind of economic downturn. Rather than relying on short-sighted budget cuts that are sure to only cost more money in the long-term, Alberta’s political leaders have an opportunity to redefine how our province prepares for its future.

In Groundhog Day, Bill Murray’s character finally ends the time-loop after doing a great job on his reporting assignment and finding true love. Maybe Alberta’s version of Groundhog Day will end with meaningful revenue reform. It is not a motion picture ending, but it would be good of the future of our province.


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8 thoughts on “Sometimes living in Alberta is like living in Bill Murray’s Groundhog Day

  1. William Munsey

    Dave, factor in the loss of the tax rebate on $19 billion for the cost of diluent (which would be much reduced with partial upgrading here) and revenue losses are even greater. Or the loss of taxation on workers who should have been doing part of the upgrading here.

    Reply
  2. David

    The PC’s remind me of the long ruling kings of France about whom it it was said, “they learned nothing and forgot nothing”.

    Albertan’s are starting to get very tired of having government services ride the roller coaster of fluctuating oil and natural gas prices. While people are still willing to give Premier Prentice a chance to fix things, they will be very cranky with him if he does not come up with a real sustainable solution this time. If he does not, he will ultimately end up going the way of Bitumen Bubble Alison in a few years or so.

    The PC’s have a choice to make now, whether to govern for the benefit of all Albertans or for the benefit of a few wealth elite. They can either learn from the past or repeat the same mistakes yet again. If they again refuse to learn, this will eventually lead to their demise.

    Reply
  3. revenue and savings problem

    A modest 1% flat tax increase on those corporations over 250k, so it does not affect small to medium size businesses and families. Will 1% break the bank? Will 1% hurt our richest albertan companies? Since Alberta is the easiest place to make money on the earth, will any corporate multi millionaire please explain why he can’t eat up 1% increase in taxes for a while, but they expect austerity on the poor and middle class, who are not the primary benefactors and participators in capitalism, can any one of you justify why you wont eat up 1%, but expect other people to have less access to education, healthcare and puvlic services? This assumption of trickle down economics does not work and bars ordinary folks from participating more fully in capitalism. Mr. Prentice revoked 5% from the mla’s who do very little to support thoughtful policies and at the same time $500million earmarked for the auditor general, which serves as a check and balance of democracy was revoked. Ordinary Albertans will have to take more than a 5% cut. Can any sitting MLA or any genius complaint polotical scientist tell us how this is remotely even fair? We are blessed with excellent resources and people and companies in Alberta, but we have to fundamentally equitize the manner in which we manage the partipation of the poor and middle class. Baring them from capitalism and opportunities and burdening families with austerity is an economic drag for the economy. During the tough times, the the Tories are ignoring how to equally share the pain and blessings during the tough and great times. We must address inequity in the financial policies thus far. During tough times, we need more public infrastructure projects and relieve taxes for the poor. If the poor can feed themselves, they will cease being a burden on the middle class and decrease our reliance on oil revenues. Under the current system, these guys have not built ANY stability or value in our system nor diversification in our economy, thus keeping our livelihood linked to OPEC. We have a revenue and savings problem despite having the 2nd largest energy supply in the world. Why do we keep repeating the same effing mistakes over and over again?

    Reply
  4. Sam Gunsch

    Petro-/corporate-elites…Lucky to have Prentice+WRP coalition

    vs

    Alberta ‘lucky’ to have Lougheed

    http://www.torontosun.com/2012/09/13/alberta-lucky-to-have-lougheed
    By Bill Kaufmann, Calgary Sun

    ============
    excerpt: ‘A year after taking office, Lougheed set his sights on the taxpayers’ share of Alberta’s energy revenues, picking a fight with the industry many insiders now consider unthinkable today.

    Public hearings were held, where industry officials railed at the notion of granting owners of the resource — Albertans — higher energy royalties.

    “I think of all the flak and abuse from all of the corporate suits — they were as totally wrong as they could possibly be,” says Warrack, adding Albertans soon received far more of the corporate profits than they’d been accustomed.

    “We essentially doubled it from 17% — when you achieve economic justice for the owners, they you have the capacity to do other things that cry out like the medical and mental health fields,” said Warrack.’

    Reply
  5. Sam Gunsch

    http://parklandinstitute.ca/img/reportimages/Misplaced2012-fig1.png

    At the link, tarsands profits to corp’s vs citizens of AB illustrates the story of petro-corporate takeover of AB PC’s, public policy and Albertan’s assets since the Klein years launched.

    Rather than Lougheed’s ‘act like an owner’, the PC’s are managers representing the petro-industry interests rather than representing the interests of the citizenry.

    AB governance has been corporatist, not democratic, since Klein’s crew took over.

    This assertion, as per Mark Lisac’s historical analysis in his 1995 book The Klein Revolution. See Chapter 9, The Corporate Province for specifics on how PC’s (and now PC+WRP) govern in
    ‘joint-venture’ with vested (corporate) interests. Joint-venture is Lisac’s coinage.

    Reply
  6. Alvin Finkel

    Kevin Taft published a book two years ago that demonstrated that the provincial government’s portion of GDP had fallen from 22 percent in 1989 to 12 percent in 2008. Almost all of the decreased revenue had gone to profits, with virtually none of it going to wages. So ordinary folks lose twice: their government services are cut, and their pocketbooks are, relative to those with the big bucks, getting smaller all the time. So why do they continue to vote for the Tories? They are exercising their democratic right to be stupid. But that stupidity is not innate. It is carefully cultivated by the huge energy company contributions to Tory coffers and to the coffers of so-called “institutes” that are simply handmaidens of big corporations, by the bankruptcy of debate in the corporate-controlled media, and by the constant (and empty) threats of all of the above that they will kill off the “goose that laid the golden egg” if regular Albertans use their vote to dissent from Big Oil’s demands. The jingle in the hands of a large group of Albertans when oil prices are high also seems to cause recurring amnesia about the inevitable periods when oil prices are low.

    Reply

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