It’s difficult to pin down what many Albertans might have been expecting from Premier Alison Redford’s televised address to the province last week. Those with their fingers more detached from the political and economic pulse of the province were probably satisfied with Redford’s matter-of-fact approach to laying down the fiscal woes of Alberta and highlighting the so-called “bitumen bubble” that is apparently eroding away the province’s revenues at the rate of some $75 million per day.
For those citizens more aware of the prevailing fiscal situation in Alberta, Redford’s address might have been a disappointment. Many have already pointed out that her one-on-one with the public really didn’t tell Albertans much they didn’t already know, despite some anticipation of the opposite.
While that may be true, Redford might have felt a need to soften up the public trenches with a little small arms fire before unleashing the heavy artillery barrage that is sure to follow when the government hands down a budget in March. Promises to bring the province’s fiscal house back to order are quickly slipping away as anticipated resource revenues have been evaporating, and with Alberta now facing a deficit that could be anywhere from $3 to $6 billion.
That’s no small chunk of change. But then, Albertans seem to be more insulated from the real financial consequences of deficit than most other provinces, stemming from the boom-bust nature of the province’s single most important revenue stream — oil and gas. In good times, it almost seems the province has money to burn — literally. In bad, well — more good times are always around the corner, so what if we sustain a deficit? That attitude might have elements of truth, but it breeds a culture of irresponsible fiscal planning that contributes to the structural problems that appear to plague the current government.
One of the Wildrose Alliance Party’s favourite slogans is that Alberta doesn’t have a revenue problem, it has a spending problem. It’s one of their more biting criticisms that the Redford PCs must find hard to refute. That being said, it can’t be easy to govern a province like Alberta. In any given year, a record surplus could be followed up by a record deficit — depending, or course, upon revenue derived from oil and gas. But attempting to pin too much of Alberta’s financial woes on an oil price differential has been construed by critics to be a deliberately misleading way to describe provincial finances, and ignores annual spending increases by successive governments.
What has seemed to be the approach of the current government, convincing themselves that all years are good years despite evidence to the contrary, hasn’t been doing us any favours. The “next year” approach only works for so long — there are only so many billions in the Sustainability Fund to cover deficits, and making only token changes, refusing tax increases or meaningful spending cuts, and promising the moon in elections, are signals that government is beginning to lose touch with reality — as the opposition parties have long argued.
While Redford gave a convincing account of the problems being faced by Alberta, she failed to deliver much in the way of concrete solutions or outline a tangible course of action on the part of her government in dealing with the situation — which is what many Albertans had expected to hear from the premier during her televised address.
Just how the PCs handle the upcoming provincial budget should make for some interesting decision-making, as the party is approaching their own “fiscal cliff”. Past deficits and spending have been supplemented by the Sustainability Fund, but with this kind of fiscal shortfall on the horizon, that solution is quickly disintegrating, and excusing the obvious pun, not “sustainable” over the long term.
Redford has already pledged in the past core services would not be on the chopping block, such as delivery in health care and education, and municipalities would not be getting broadsided by a round of austerity cuts. While all that is well and nice, to employ a cliche — money doesn’t grow on trees. Despite promises to not raise taxes or make sweeping spending cuts, the PCs will need to find dollars somewhere. Whether or not they choose to ramp up deficit spending to extraordinary new levels or let the axes fall across the board, remains to be seen.