(This op-ed was published in the Edmonton Journal on September 6, 2016.)
Alberta’s NDP government is missing the forest for the weeds.
In the lead up to the recent whopper of a first quarter fiscal update, the finance minister should have been focusing on the budget quickly snowballing out of control. Instead, Minister Ceci spent his time flitting about from brewery to brewery, promoting his enormous tax hike on all craft beers and subsequent corporate welfare to the local breweries the government deems worthy.
On Tuesday, he was back in Edmonton to field questions on the province’s budgetary woes – clearly in dire straits – but failed to take a pint of responsibility for the role his government’s policy choices have played.
The province is now in a net debt position for the first time in 18 years. Our operational deficit has ballooned to $10.9 billion.
Albertans will now officially be lighting $1 billion on fire every year to pay the interest on the debt. And the government still has no real plan to balance the budget.
There’s a vague promise of budget balance by 2024 – a date that’s been revised time and again. Recall, it was only months ago that Alberta Finance Minister Joe Ceci said deciding on any budget date at all was “wishful thinking.”
The government has put 100 per cent of the budgetary blame on unexpected wildfires and the price of oil. Of course those are major factors – but government policies played a major role, too.
Choices matter when you’re the big boss of a province. That’s why we elect governments: to make choices and to take responsibility for the outcomes.
Minister Ceci said his government doesn’t want to make “knee-jerk cuts” and put families “in a worse position.”
Knee-jerk cuts? The NDP government was elected nearly a year and a half ago. They must be aware that we have a system wherein governments are elected for four or five years. Their mandate is one-quarter eaten up. We’ve blown past the ‘benefit of the doubt’ period. This government has had time to plan – and to act. At this point, ‘knee-jerk’ is nothing more than a talking point.
Inaction is just as much a choice as action. Instead of making tough calls, the government has chosen to sit on its hands. What’s required is a serious plan to reduce spending and tighten government’s belt. Alberta’s per-capita spending is among the highest in Canada, and when it comes to healthcare – Alberta’s largest ministry – we’re the biggest per-capita spenders.
The government has increased a whole host of taxes, including an incoming multi-billion dollar carbon tax that will raise the price of almost everything (despite the government’s claim that it doesn’t want to make things worse for families).
But notwithstanding carefully worded promises from every tax-and-spend government in history, raising taxes doesn’t always mean an automatic increase in revenues. The main cause for the spike in Alberta’s deficit is declining business tax revenues, which are down by $877 million.
Meanwhile, the gravy train chugs forward. Total expenses increased by $1.2 billion, up to $52.3 billion. Part of that new spending is the $12 million subsidy to small brewers (which Ceci says could grow to $20 million annually).
“We’re doing this to incentivize production in Alberta, to diversify our economy,” Ceci said in July after he raised beer taxes for the second time since being elected.
Set aside the downer that this policy will increase beer prices for cash-strapped Albertan consumers. This is the government’s grand “economic diversification” plan?
Everyone loves a good craft beer. In fact, we all need a beer now more than ever. But big picture: corporate profits are expected to drop by 27 per cent. Investment is draining out of the province. Alberta’s unemployment rate is now higher than Nova Scotia’s.
The government assured us that its tax hikes were wonderful, coupled with economic diversification that, like our valiant steed, would gallop in and save the day. They had a plan: like governments’ (failed) efforts before this, “economic diversification” would save the day.
Well, the taxes are rising, and the revenues are declining. The debt is ballooning.
And the finance minister is pub-crawling.
(Paige MacPherson is Alberta Director of the Canadian Taxpayers Federation.)