Tag Archives: Alberta Budget 2015

Finance Minister Joe Ceci presents the Alberta NDP's first budget.

Sky does not fall as Alberta NDP presents its first budget

When Finance Minister Joe Ceci stood in the Legislature on Oct. 27 to deliver the Alberta NDP’s first budget, it marked the first time since 1972 that the budget was not tabled by a Progressive Conservative finance minister.

Rachel Notley Alberta NDP leader

Rachel Notley

The first budget of Premier Rachel Notley‘s NDP government includes a 15 percent increase in capital spending over the next five years, with a goal to create jobs and tackle the province’s aging and neglected hospitals, schools, roads and other public infrastructure.

The NDP budget includes modest increases and projected stable funding for health care, education, advanced education and human services – core services that Albertans depend on. This was a key component of the election platform that helped propel the NDP into government on May 5. The job creation and economic stimulus elements of the budget followed last week’s creation of an Economic Development and Trade portfolio, led by Edmonton MLA Deron Bilous.

Deron Bilous Edmonton Alberta MLA Minister

Deron Bilous Edmonton Alberta MLA Minister

A projected $6.1 billion deficit in the NDP budget is larger than the $5 billion deficit presented in the Tory spring budget, which was tabled but never passed. But the Alberta government’s eighth consecutive deficit budget is “…hardly sky is falling territory,” wrote University of Calgary economist Trevor Tombe in Maclean’s Magazine this week.

While not trivial, obviously, it is completely manageable. Alberta is fully able to handle it and no one need panic. It represents 1.8 per cent of the province’s GDP, which is fairly small, as far as some deficits go,” Dr. Tombe wrote.

The NDP government will borrow to pay for parts of its operations budget starting next year, which will hopefully be a short-term move. Decades of bad financial management and poor long-term planning by the previous conservative government has exacerbated the provincial government’s current fiscal situation. The PCs simply became too comfortable and dependent on unreliable revenue from natural resource royalties to fund the province’s operations budget.

Jim Prentice Alberta Premier

Jim Prentice

Mr. Ceci also announced that the government would legislate a debt ceiling of 15 percent debt-to-GDP in order to hold off a risk of credit downgrades and higher debt service costs.

Former premier Jim Prentice was correct last year when he warned about getting “off the royalty roller coaster.” The Alberta government faces serious revenue problems and moving Alberta away from its over dependence on resource revenue will be a significant test of Ms. Notley’s first term in government.

Any plan to deal with the revenue problem will likely come after the government receives a much anticipated report from the royalty review panel chaired by ATB President and CEO Dave Mowat. The panel is expected to finalize its recommendations by the end of the year. But it will not be enough to simply wait for the international price of oil to rise again. Albertans need to have a serious conversation about revenue and taxation, including the potential introduction of a provincial sales tax.

Derek Fildebrandt Alberta Taxpayers

Derek Fildebrandt

To no ones surprise, Wildrose Party leader Brian Jean and finance critic Derek Fildebrandt responded to the NDP budget with outrage and a message filled with apocalyptic rhetoric.

Mr. Jean’s post-budget press conference was somewhat overshadowed by Mr. Fildebrandt’s bizarre decision to refuse to answer a question from Globe & Mail reporter Carrie Tait (see the ~8:50 mark in this video). Mr. Fildebrandt is sour from a recent interview Ms. Tait published in which she quotes him as claiming the NDP duped Alberta voters by actually implementing promises made during the election (and he later referred to Ms. Tait as a b-list reporter and accused her of auditioning for a job in the Premier’s Office – a comment he later retracted).

Brian Jean Wildrose

Brian Jean

A joint opinion-editorial written by Wildrose MLAs Rick Strankman (Drumheller-Stettler), Grant Hunter (Cardston-Taber-Warner), and Don MacIntyre (Innisfail-Sylvan Lake) and Dave Schneider (Little Bow) and circulated to rural weekly newspapers in September 2015 provides some sense of how that party would approach provincial budgeting if elected to government:

“When governments borrow and spend, there’s no marketable asset. There’s only debt. It’s like using a credit card to buy pizza. Even when governments borrow to spend on bridges and highways rather than programs, the debt is still not connected to a marketable asset. It’s a liability. Mortgages can be liquidated. Houses can be sold. Who buys used government bridges and worn-out highways?”

This is a crude ideological approach to public governance. Using capital financing to pay for the construction and maintenance of public infrastructure like hospitals, schools, bridges and roads is nothing like using a credit card to buy a pizza.

The Alberta NDP’s first provincial budget is sensible and reflects the thoughtful approach that has defined the first six months of Ms. Notley’s tenure as Alberta’s Premier. Rather than follow a disastrous road taken by some of her predecessors, and slash funding to government services while the price of oil is low, the NDP government is taking an opportunity to invest in much needed public infrastructure when the economy is slow and the price is right. It’s not a brand new approach in Alberta politics, but it is refreshing to see a government focus on building rather than tearing down.

NDP leader Rachel Notley speaks to a crowd of more than 2,000 Albertans at a May 4 election rally in Edmonton.

List: What’s happened since Alberta’s historic election and what lies ahead

It has been an incredible 15 days since Alberta’s historic 2015 election. Here is a quick look back at what has happened in the past two weeks and what will happen in the months ahead.

Brian Jean Wildrose

Brian Jean

May 5: Rachel Notley‘s New Democratic Party won Alberta’s provincial election and formed a majority government with 53 MLAs. The Wildrose Party formed Official Opposition with 21 MLAs and the Progressive Conservative Party, which had formed government since 1971, was reduced to 10 MLAs. Alberta Party leader Greg Clark was elected in Calgary-Elbow and Liberal David Swann is re-elected in Calgary-Mountain View. One race, in Calgary-Glenmore, was tied. Premier Jim Prentice announced his resignation as PC Party leader and as MLA for Calgary-Foothills.

May 6: In her first press conference since the election, Premier-designate Notley reassures business and energy industry leaders of her intentions to work collaboratively with them as Premier of Alberta.

Greg Clark Alberta Party MLA Calgary ElbowGreg Clark Alberta Party MLA Calgary Elbow

Greg Clark

May 7: Ms. Notley meets with Lieutenant Governor Donald Ethell and asks for permission to form a government. The process of transitioning a new party into government in Alberta begins for the first time since 1971.

May 8: Mr. Clark announced he would submit a series of requests under Alberta’s Freedom of Information and Protection of Privacy Act to ensure sensitive documents are not destroyed before the transition to a new government. Mr. Jean also calls on the outgoing government to stop all shredding of documents during the transition. The University of Alberta Board of Governors voted to keep Doug Goss as chairman in spite of his participation in a disasterous press conference in the last week of the election where he and three other CEOs urged Edmontonians to vote PC and described the NDP as amateurs.

Ric McIver

Ric McIver

May 9: The NDP Government caucus meets for the first time at Government House in Edmonton. “Albertans voted for change and they asked our team of new MLAs to do important work, the work of restoring honesty and integrity and trust to government,” Ms. Notley told reporters at a morning press conference.

May 11: Wildrose leader Brian Jean announced six senior Official Opposition critic roles and caucus officers. Calgary-Hays MLA Ric McIver is appointed interim leader of the PC opposition caucus.

May 12: Ms. Notley met with outgoing Premier Prentice and asked that the outgoing Government of Alberta extend the school budget deadline to the end of June. She also announced she had hired Brian Topp as her Chief of Staff and Adrienne King as Deputy Chief of Staff. Richard Dicerni remains Deputy Minister for Executive Council.

Brian Topp Alberta Premier Chief of Staff

Brian Topp

May 13: The Information and Privacy Commissioner and the Public Interest Commissioner opened a joint investigation into the alleged improper destruction of records by the Ministry of Environment and Sustainable Resource Development. Ms. Notley ordered all government departments to halt document destruction.

May 14: At the PC Party Calgary leader’s dinner, Mr. Prentice made his first public statement since the party’s electoral defeat and his surprise resignation on election night.

May 15: A recount of a tied election in Calgary-Glenmore resulted in a 6-vote win for NDP candidate Anam Kazim over PC candidate Linda Johnson. Ms. Johnson has until May 25 to request a judicial recount. The PC Party laid off 11 of its staff and announces plans to close its offices in Calgary and Edmonton.

Sarah Hoffman NDP MLA Edmonton-Glenora

Sarah Hoffman

May 16: Speaking to a meeting of the Alberta Teachers’ Association, Edmonton-Glenora NDP MLA-elect Sarah Hoffman reached out to educators by telling them that the new government will be a better partner.

May 20: Ms. Notley held a press conference where she announces the dates of the cabinet swearing-in ceremony, the size of the new cabinet and timelines for a new provincial budget. Prime Minister Stephen Harper announces that Calgary businessperson Lois Mitchell will replace Mr. Ethell as Lieutenant Governor of Alberta.

May 24: Ms. Notley and 11 NDP cabinet ministers will be sworn-in to office at 2:00 p.m. on the north steps of the Alberta Legislature Building.

David Swann Liberal MLA Calgary-Mountain View

David Swann

May 27 and 28: The new NDP cabinet will hold its first meetings in Calgary.

May 30: The Alberta Liberal Party annual general meeting will be held at the Chateau Nova Hotel in Edmonton.

June 1: Candidates elected on May 5 will officially be sworn-in as MLAs.

June 11: MLAs will meet to elect a new Speaker of the Legislative Assembly. Current Speaker Gene Zwozdesky continues this role until a new Speaker is chosen.

June 15: A Speech from the Throne will be delivered. The NDP Government will ask the Legislature to approve an Interim Supply Bill to finance the operations of government until the fall.

July 15-17: Newfoundland and Labrador Premier Paul Davis will host Canada’s Premiers and their delegations for the 2015 Council of the Federation. The meeting will take place in St. John’s.

Fall 2015: A new provincial budget will be tabled in the Legislative Assembly.

October 19: The scheduled date of Canada’s 42nd federal election.

November 5: The latest date according to the PC Party constitution at which a new leader must be selected.

November 13: The Wildrose Party will hold its annual general meeting at the Sheraton Cavalier Calgary Hotel in Calgary.

November 15: The six month deadline for a by-election to be held in Calgary-Foothills (assuming that Mr. Prentice’s resignation as MLA was accepted when the official count was released on May 15, 2015).

PC Party leader Jim Prentice called the election a year earlier than scheduled to seek a mandate for the provincial budget. Now he is changing the budget on the campaign trail.

Prentice amending the budget on the fly as polls suggest PC Party in trouble

This was supposed to be an election campaign about the provincial budget, or at least that is what Progressive Conservative leader Jim Prentice told Albertans when he called the election one year earlier than the legislated fixed election day.

Despite ignoring the results of own government’s online budget survey, Mr. Prentice and his party plotted forward with their own pre-election budget and “10-year plan,” which was designed to also serve as the PC Party’s re-election platform. Mr. Prentice claimed he needed to call the early election to seek a mandate for a budget that would usher in “generational change” but that same budget is now being amended on the campaign trail.

Mr. Prentice announced today that, despite weeks of defending the decision, he will reverse the unpopular decision to slash the Charitable Donations Tax Credit included the budget. Cutting tax credit for charitable donations from 21% to 12.75% was expected to have dramatically impacted the abilities of not-for-profit organizations and charities to raise funds.

[Note: The generous tax credit for donations made to political parties was not touched.]

While reversing the cut to the charity tax credit is positive, it is disappointing that his party’s plummeting support in the polls was the apparent impetus for Mr. Prentice’s reversal. Cutting the charity tax credit was a bad decision from the beginning. If the polls continue to show the PC Party in a tough electoral position, it now might not be unexpected for Mr. Prentice to reverse more decisions that only a few weeks ago were set in stone in the provincial budget.

The charity tax credit flip flop is eerily reminiscent of what Albertans witnessed under the PC Party recently led by Alison Redford from 2011 to 2014. Numerous times during her premiership, Ms. Redford would make an unpopular decision and spend weeks defending her position only to change her position after it had already damaged her politically (see: the $45,000 flight to South Africa).

Now that Mr. Prentice has reopened the provincial budget for discussion, here are a few other items that the PC Party should consider changing:


Edmonton-Castle Downs PC candidate Thomas Lukaszuk is calling for increases to the Corporate Tax Rate, breaking from his party’s spin that each 1% increase in corporate taxes would lead to 8,900 job layoffs. Mr. Prentice has called NDP leader Rachel Notley an “extremist” for wanting modest increases to corporate taxes in Alberta. It is unclear whether Mr. Prentice will now label Mr. Lukaszuk as an extremist.

 

Premier Jim Prentice Alberta PC leadership race

Prentice re-election budget tough on sinners, easy on corporations

OTTAWA, ONTARIO 

If Alberta can deliver a budget, why can this minister of finance not,” Liberal MP Scott Brison asked of Finance Minister Joe Oliver, who was absent from the House of Commons today. Opposition Members of Parliament have been chastizing the Conservatives for refusing to set a date for when this year’s federal budget will be released even after Alberta and Saskatchewan have released their provincial budgets.

Robin Campbell Alberta Finance Yellowhead

Robin Campbell

In the Conservative-heartland of Alberta, despite months of doom and gloom warnings triggered by low oil prices, Progressive Conservative Premier Jim Prentice and Finance Minister Robin Campbell did not present the budget filled with the massive across the board cuts many Albertans were expecting.

The PCs are once again running a deficit budget, as Alberta has in every budget since 2008, even during times when oil prices were high. Despite the Ralph Klein-era mythology of Alberta as a deficit adverse province, it has become the norm in provincial financing.

Funding cuts to health care and education will not have a positive impact on Albertans. Politicians claim the cuts will not impact front-line services but it is unclear how cuts like this can not impact the front-line services that Albertans depend on. Although the price of oil has declined, our provincial population is still growing and demand for health and education services has not decreased.

“We’re going to see more students arriving at the school doorsteps with no new money provided to educate them,” Edmonton Public School Board chairperson Michael Janz told Metro Edmonton. “I don’t think this is a good news budget for Edmonton public schools.”

The budget introduces a new health care levy, which appears to be similar to a health care premium that existes until the PCs cancelled the tax in 2009. Despite its name, the previously incarnation of health care premiums were directed into the province’s general revenue pool, not directly towards the health care budget.

The single-rate 10 percent flat-tax, a strange and short-sighted policy championed by former Finance Ministers Steve West and Stockwell Day in the early 2000s, appears to have been died. Minor tax rate increases are being introduced for Albertans earning more than $100,000 and $250,000 annually. According to the Parkland Institute, the flat-tax reduced government revenue by $5 billion annually from pre-2001 rates.

Sin taxes, gas taxes and user fees increased in the budget mean life will become a little more expensive for drinkers, smokers and drivers in Alberta. A previously existing alcohol tax was implemented then almost immediately reversed in the 2009 budget, which reduced government revenues by $180 million per year.

Personal taxes and fees are increasing but Alberta’s low corporate taxes will not be increased. Despite having the lowest corporate taxes in the country by far, for Conservatives there appears to never be a good time to raise taxes for corporations.

When the economy is slower, Conservatice politicians argue tax increases would cause corporations to layoff workers. When the economy is booming, politicians argue tax increases would cause corporations to stop investing.

The truth is that Alberta could raise tax rates by $11 billion annually and would still have the lowest tax rate in Canada.

This budget was a missed opportunity to introduce a provincial sales tax, which exists in every other province in Canada and nearly every expert has endorsed. At a 2013 provincial fiscal summit in Edmonton, economist Bob Ascah suggested that a 1 per cent sales tax could raise $750 million in annual revenue for the provincial government.

In Alberta, we hear a lot from our political leaders about tough economic times, even when times are prosperous. In advance of an expected spring election, our politicians are managing voters’ expectations and positioning themselves to take credit as ‘prudent fiscal managers’ when the world-wide price of oil inevitably increases.

Without the massive cuts that were expected, it could be tough for the opposition parties to campaign against this budget in the upcoming election. After four decades in power, it is difficult to envision the PC Party actually fixing Alberta’s long-standing revenue problems, but this budget will not stand in the way of Mr. Prentice easily extending his party’s next four years as government.