Parkland Institute
Op-eds | March 21, 2013

Alberta’s ‘Back to the Future’ Budget

Parkland Institute

In budget 2013, Alison Redford’s Progressive Conservatives promised once-in-
a-generation change. People across Alberta and Canada watched with interest,
anticipating that this might at last be the moment when an Alberta premier finally
moved to right the serious problem with the province’s fiscal situation. Over-
reliance on volatile and unsustainable natural resource revenues have long left
Albertans vulnerable to fluctuations in international markets, with the province’s
programs and infrastructure suffering in times of low prices for Alberta oil, gas, and
bitumen. The optimistic among us thought that, with depressed prices for Alberta
bitumen currently throwing the matter into stark relief and with public and expert
opinion lining up strongly in favour of meaningful revenue reform, surely this was
the time to set Alberta on a path toward long-term financial stability.

Another opportunity lost. Budget 2013 amounts to an austerity budget cobbled
together out of cuts to the programs and services that Albertans need. With a
passing gesture to the memory of Peter Lougheed, Redford’s government took us
back to the days of Ralph Klein. Straight-up cuts (in advanced education, human
services, and environment) as well as increases inadequate to match the rate
of inflation and population growth (in health and education) are justified in the
language of fiscal necessity.

But make no mistake: this is not necessity – this is ideology. The matter is made
clear through attention to the reality behind the scare-tactic of the bitumen bubble
and the oft-made claim that Alberta is a big-spending province. The price differential
affecting Alberta petroleum exports is long-standing, and fluctuations are normal
operating procedure. Relative to the spending of other provinces, Alberta per capita
program expenditures have ranked in the middle of the pack for over a decade – and
that’s without adjusting the figures to reflect how things cost more in this province.

Beyond the government’s failure to solve the basic problem underlying Alberta’s
finances, Albertans will find other reasons to be disappointed with budget 2013.
Redford’s government has identified health as a priority and increased spending by
three percent. However, this falls far short of the increase necessary to make up for
inflation, population growth, and population aging, and so amounts to a cut. Further,
health care costs are largely driven by social determinants such as poverty and
inequality. Cutting human services by $9 million is a recipe for skyrocketing health
care costs not very far down the road.

Budget 2013 includes some capital spending, with commitments to expand the
provincial highway network and to build new education and healthcare facilities.
But in the absence of increases to operational funding, Albertans are left wondering
who will staff these new facilities. Ultimately, it is not new hospitals but the expert
and caring people who work within them that safeguard the health of Albertans.

Alison Redford’s Progressive Conservatives have put forward an austerity budget
just as the world is waking up to the reality that austerity does not work. In fact,
the lost jobs and wages that result from drastic cuts in government budgets serve
to impede economic growth. Albertans might have hoped that such lessons would
be particularly clear here, given that we are still in the process of digging ourselves
out from the social and infrastructure deficits created by the Klein cuts. We might
have anticipated that the provincial government would address the problem of
pronounced income inequality in Alberta, which hinders our economic and social
wellbeing. We might have expected that Redford would take seriously the expressed
desire of a substantial majority of Albertans for meaningful revenue reform through
mechanisms such as progressive taxation and increased corporate tax rates that
also serve to rein in harmful inequality.

Alberta’s so-called “hold the line” budget amounts to a “hold the phone” budget,
as once again Albertans are being made to put real progress on hold until natural
resources prices recover. This is an approach ill-befitting a province justifiably
proud of its independent spirit. Albertans want to pay their own way, to establish
a fair tax system that will correct the problem of funding efficient core services out
of volatile, unsustainable natural resources revenues. Budget 2013 makes clear
that Premier Redford, while apparently keen to align herself with the Conservative
premiers of the past, is out of touch with the pressing needs and expressed desires
of present-day Albertans. The government is correct in signaling the need for
transformative change. But that is not enough. Alberta needs real leadership that
will look to the future and not take us back to the past.

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