OPINION | It’s impossible to table a popular budget in today’s Alberta

This column is an opinion from David Yager, a Calgary oil service executive, writer and author.

There can’t be a political jurisdiction in the western world that gets more unsolicited advice on how to manage its economy than Alberta.

It comes from all across the province and all over the world. It encompasses the past, present and future. The only common thread is that Alberta’s governments are wrong. 

We should have stashed more in the Heritage Fund, like Norway did.

We should have a provincial sales tax.

Diversify the economy by manufacturing something. Anything.

Retrain unemployed oil workers to develop renewable energy because fossil fuels are a sunset industry.

And why not dispense advice? What a gong show! 

In only 14 years, Alberta has gone from tens of billions of dollars of spare cash slopping around in the Heritage and Sustainability Funds to a gigantic financial black hole. 

In the annual report for the fiscal year ended March 31, 2008 – the last time the province recorded a big surplus – the province had $35 billion in “net financial assets,” mostly cash or cash equivalent.

Today, the Sustainability Fund is long gone. The “net financial assets” are negative $82 billion, a $117 billion decline, which works out to an average loss of $8.4 billion per year.

When the latest budget was released on February 25, it was widely criticized. 

Tough crowd

As Alberta grapples with its largest deficits in history, not a day goes by without somebody in this province complaining about spending cuts to some program or higher taxes or levies on another.

Tough crowd, us Albertans.  

So what is the secret to political popularity in Alberta? How do you table a budget that doesn’t get trashed?

Going back 50 years to the election of the first Progressive Conservative government in 1971, there have only been two very popular premiers – Peter Lougheed and Ralph Klein.

There can’t be two more different politicians holding the same title. The photogenic, charismatic and cerebral lawyer Lougheed, and the beer loving, shoot-from-the-hip former broadcaster Klein.  

But the common thread for their success, popularity and electability was the strong performance of Alberta’s economy. Simply put, Alberta premiers are most popular when the government is rolling in dough, jobs are plentiful, and incomes are rising. 

Lougheed was premier from 1971 to 1985. He caught the OPEC oil price boom of 1973 and spent the next eight years figuring how to spend all the money. He failed, which is how the Heritage Fund came into existence. From 1974 to 1981 non-renewable resource (oil and gas) income averaged 58 per cent of total provincial revenue. The peak year was 77 per cent in 1980. 

Incredible. What a ride.

Alberta’s minister of finance, Travis Toews, delivers the 2021 budget in February. Tabling an Alberta budget that pleases anyone might be impossible right now, says David Yager. (Jason Franson/The Canadian Press)

Klein enjoyed similar good fortune in his tenure from 1992 to 2006. While the initial focus was spending restraint, the economy was already recovering from the recession of the 1980s and improved steadily after he assumed office. By 2000 natural gas prices had exploded. For the last six years of Klein’s term, non-renewable resource income averaged 34 per cent of spending. This was $9.3 billion annually, totaling up to $56 billion.

No wonder Alberta was debt free again by 2004!

Similar figures for Kenney’s 2021/22 budget forecast are $2.8 billion in non-renewable resource revenue, providing only 6.5 per cent of total funds for operations. Ouch! How the mighty have fallen.

Rising oil and gas prices will likely improve these numbers, but the point is clear.

Using the direct linkage between resource wealth and political popularity, history should be kinder to Don Getty, Ed Stelmach, Alison Redford, Jim Prentice and Rachel Notley. Different leaders facing different challenges at different times. Their major common link was deficit spending. 

Now that you know the secret to true political success in Alberta, things don’t look good for Jason Kenney. Or anybody else.

As for all the advice, reality is much more challenging. 

No easy solutions

Alberta would love to be more like Norway. But Norway is a country with tidewater access for its oil, no senior level of government setting prices, rules or taxes, and has no other jurisdictions blocking market access.

A sales tax may indeed be required, but first Edmonton should demonstrate why it costs way more to run our province than B.C. or Ontario, on a per capita basis. Their citizens don’t appear to suffer from substandard public services.

Governments cannot diversify a resource-based economy to a non-resource-based one. People keep expecting the politicians to do so and governments will not admit it is impossible.

Critics claim cuts to higher education will make Alberta less attractive to young people. The real issue is an 11 per cent unemployment rate. Alberta never had a problem attracting anyone when the economy was strong and the job market growing. 

Because of climate change, a large number of people across Canada and around the world are working hard to extinguish Alberta’s number one industry. No other province faces this challenge. 

Oil and gas is big business because Alberta exports most of its production to consumers across North America. Renewables may be the future of energy, but Alberta will never be a major electricity exporter. Retraining workers from hydrocarbons to renewable energy is a nice thought, but not a practical alternative. 

Maybe a budget that pleases anyone is impossible under these circumstances.

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