Only in Alberta are huge deficits and low taxes completely irreconcilable

“When the global price of oil collapsed and the recession hit, we had a choice: Cut or build. We chose to build. In making that choice, we focused on the priorities of regular people and families – creating badly needed jobs, building our province for the future, making life more affordable for people and protecting the schools, hospitals and public services all Albertans rely on.”

It was with this familiar refrain that Finance Minister Joe Ceci began his speech on the floor of the Legislatve Assembly as he introduced the Alberta Government’s 2018/2019 budget. This was Ceci’s fourth budget since the NDP were swept into office in the 2015 provincial election and this is likely the last governing budget from this government before next year’s provincial election is called.

This year’s budget appears to have avoided the “compassionate belt tightening” that Premier Rachel Notley warned about in her 2017 year-end interviews. The NDP has avoided making significant cuts to public services over the past three years, instead opting for stable increases to operations funding and major investment in capital spending.

Titled “A Recovery Built to Last,” the themes of this budget – a path to a balance budget, jobs and diversification, protecting public services – are key to the narrative the NDP hopes to shape between now and next spring’s election.

This budget’s narrative also provides a contrast between the NDP and what many expect would be a much different budget implemented under a government led by United Conservative Party leader Jason Kenney, which might be expected to impose deep cuts to funding for public services, education and health care.

Welcome to pre-election season.

Overall, it was a generally acceptable budget, but it is difficult to get too excited about it.

With government prone to make major changes to budgets over the course of a year, it is hard not to see the Budget Day pomp and ceremony as just an overrated exercise in expectations management.

Ceci said in his speech that the NDP are projected to balance the provincial budget by the 2023/2024 fiscal year, which would coincide with the end of a second NDP term in government.

The current deficit is forecast to be $8.8 billion, which is $1.5 billion less than was initially forecast. The government will be lambasted for taking on more debt, even though significant debt accumulation was already forecast in the media coverage of last year’s budget. Economists will be quick to point out that the Alberta government is still in a fairly strong position when it comes to the net debt to GDP ratio, but that message might be hard to sell to newspaper opinion writers and voters at the doorsteps.

But what is not clear in this budget is how the government plans to deal with its revenue problem.

Only in Alberta could a finance minister calmly deliver a speech about an $8.8 billion budget deficit while also bragging about the lowest taxes in the country. “…Albertans and Alberta businesses pay at least $11.2 billion less in taxes than they would in any other province,” Ceci stated. Maybe if we paid a little bit more taxes, we could have a balanced budget, or at least a lower deficit?

Economists and political staffers might tell me it’s not that easy, and maybe it’s not, but only in Alberta could huge deficits and low taxes be totally reconcilable in reality but completely irreconcilable in politics.


What’s in a budget name?

The titles of Alberta’s budget documents typically present a general theme. Budget names can sometimes be quite silly, but they do provide a snapshot of the political and economic agenda of the government of the day. Here is a look back at titles of Alberta budgets from 1997 to 2018:

  • A Recovery Built to Last (March 22, 2018)
  • Working to Make Life Better (March 16, 2017)
  • Alberta Jobs Plan (April 14, 2016)
  • Supporting Jobs, Supporting Families (October 27, 2015)
  • Budget 2015 (March 26, 2015)
  • The Building Alberta Plan (March 6, 2014)
  • Responsible Change (March 7, 2013)
  • Investing in People (February 9, 2012)
  • Building a Better Alberta (February 24, 2011)
  • Striking the Right Balance (February 9, 2010)
  • Building On Our Strength (April 7, 2009)
  • The Right Plan for Today and Tomorrow (April 22, 2008)
  • Managing Our Growth (April 19, 2007)
  • Strengthening Today, Securing Tomorrow (March 22, 2006)
  • Investing in the Next Alberta (April 13, 2005)
  • On Route, On Course – Heading Toward Alberta’s Second Century (March 24, 2004)
  • Making Alberta Even Better (April 8, 2003)
  • The Right Decisions for Challenging Times (March 19, 2002)
  • The Future … Meeting Priorities, Sharing Benefits (April 24, 2001)
  • New Century. Bold Plans. (February 24, 2000)
  • The Right Balance (March 11, 1999)
  • Agenda for Opportunity (February 12, 1998)
  • Building Alberta Together (February 11, 1997)

13 thoughts on “Only in Alberta are huge deficits and low taxes completely irreconcilable

  1. Brian

    The one part of this equation that this extreme left wing blog ignores is our out of control spending: 35% increase since the NDP took power three short years ago. It’s time for deep cuts – we need these cuts and we need them now in order to stop future generations from having to pay for today’s runaway spending.

    Reply
    1. Bob Raynard

      Brian, right wing commentators love to go on about how much spending has increased under the NDP, but they never give specific examples of wasteful spending. I would argue that the reason for that is because the spending increases are benefiting ordinary Albertans. Do you have any examples of wasteful spending?

      Examples of wasteful spending would be using a government plane to travel between Edmonton and Calgary so the premier could smoke, or holding senator in waiting elections when the liberal government in Ottawa had no intention of honouring.

      The NDP is leaving us with a financial debt; if elected Jason Kenney will leave us with an infrastructure deficit like Ralph Klein did, which will force a subsequent government to ramp up spending again. Either way we will be short changing future generations.

      David is right; we have a revenue shortfall because of low oil prices, and that shortfall has to be made up with a level of taxation similar to the other provinces.

      Reply
  2. Babs Babcock

    The NDP won’t do what needs to be done and neither will the UCP. Any government that truly wants to get spending under control needs to shut down the glut of half-full rural hospitals that are dragging down the health care budget. Bill 6 scared the NDP from doing anything in rural Alberta and Jason Kenney’s U-C-P will owe rural voters their election win. Shutting down these old rural hospitals is what needs to be done. But it won’t happen. And future generations will pay for it.

    http://www.edmontonjournal.com/Nine+rural+hospitals+Alberta+government+should+close/10440812/story.html

    Reply
  3. David

    Wow! Whoever wrote all those budget names was pretty good in PR, but perhaps not reality.

    I have a great cost savings idea they can get rid of that PR person, here is my suggestion to the Government for free, for all of them:

    “We hope oil prices will __________ “:

    (Depending on situation, fill in blank with “stay hig” or “go up”).

    Yes, Alberta doesn’t have a revenue problem although it relies on volatile non renewable revenue to fund essential services and insists on not having a sales tax and keeping income taxes lower than other provinces. Very funny. Whoever argues this should have a career in comedy not politics, except Albertans are not getting the joke.

    Reply
  4. Don T

    The biggest joke is the amount of money this NDP government is spending. Just like any household, look at what’s going out the door first. It’s ridiculous.

    Reply
  5. Kurtis

    It makes no sense for the NDP to present a budget where they cut services.

    Allow the Conservatives to campaign on a promise of gutting the services 90% of its people rely on. Although we might not see any such thing from an Official Opposition that doesn’t have the gumption to release a shadow budget… and that’s with the Westminster scholar Kenney at the helm!

    If I remember correctly Prentice tried to sell this as looking in the mirror. Let the UCP tell us once more to look in the mirror, or maybe they’ll take a book from BJ and just tell us that taxes aren’t going up and unicorns will pay our debts. Either way it’s bad news for everyone but Joe Lift Truck and the Bankers Hall lunch crowd.

    If the NDP balanced the budget through cuts (20% cut across the board makes Klein look like a sober, wife loving, vegetarian) their base would be incensed, while the ruralites and corporatists would still vote for the childless and wifeless Kenney their ironic champion of social conservative values.

    The NDP can’t raise taxes and can’t cut services. So screw it! Run a big ol deficit until the banks say enough is enough, and then hack and slash like the Federal Liberals for the 1990’s.

    Let the UCP promise to cut 20 cents on every dollar, or let them run a massive deficit. Either way five years from now they’re going to have a hard time making friends on either side of the spectrum.

    Reply
  6. Don T

    Why does it matter if Kenney has no wife or kids? If anything that makes me more inclined to vote for him as he can devote his entire time to fixing the ills that the current band of socialists will leave him with.

    Reply
  7. wlh

    The people who are so concerned about deficits and the “terrible burden they will impose on future generations” are mostly the same people who are not at all concerned about doing anything to combat the effects of man made climate change and the effect this will have on future generations. These people are only worried about themselves.

    Reply
  8. Jerrymacgp

    People bitch about rural crime and long police response times, crowded court dockets and long delays for trials, crumbling & crowded schools, and long wait lists for health care, and in the same breath whinge about the deficit and debt. You can’t have it both ways. Which new schools do they want to cancel in Canada’s demographically youngest province? Which rural RCMP detachment would they deny additional members to? Which busy highways won’t they build or expand?

    And don’t believe anyone who tells you that drastic wage cuts are the answer. We tried that in the 90s, and surprise surprise, highly skilled professionals voted with their feet and left the province, leading to a shortage of skilled workers that drove compensation costs way up within a few short years.

    We can’t cut our way to balance, not with a young and growing population. We need to tax appropriately to pay for what we need and want as a province.

    Reply
  9. Samantha

    The only way to balance is to cut and at least 25%. Klein’s cuts were successful and paved the way to unbridled prosperity until the PC party lost its way and started trying to appeal to the left. No government has ever taxed its way into prosperity. Jerry.

    Reply
  10. Ernie

    We pay more than $2,000.00 more per person for government “services” than BC. What are we getting for that amount more? Nothing? That’s what I thought.

    We can’t tax our way to balance, not with a young and growing population. We need to cut appropriately to pay for what we need and want as a province.

    Reply

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