The Alberta Apocalypto: The world as you know it is about to end! Again…

Alberta Finance Minister Doug Horner gets ready to make a sacrifice to placate the mighty and angry Deficit God. Alberta politicians, not to mention the Legislative complex, may not be exactly as illustrated. Below: The real Mr. Horner.

Oh my God! The world is coming to an end!

I’m not talking about the Mayan calendar, either, which says the jig is up tomorrow, which is going to be a big disappointment to those of us who were looking forward to a nice weekend followed by a little time off for the holiday.

But this time, it’s way worse than that. This is the Alberta Tory Calendar, after all, in which the End Times just keep coming around again and again with the regularity of a metronome. Tick-tock!

I’m telling you, it’s so bad that by the end of this post I’m going to have entirely used up my quota of italics for the rest of the year!

Right on schedule – Tick! – Alberta Finance Minister Doug Horner was up on his hind legs in Edmonton yesterday – Tock! – to grimly inform us all that this time he really means it – Tick!really, the world as we know it is coming to an end, we’re all going to have to wear sackcloth and ashes – Tock! – and get a haircut too, because, oh golly, the world’s most volatile commodity seems to have shown some volatility again.

Oil prices. Fluctuating! Who’d’ve thought?

But yes, the sands of time are finally running out – and, this being Alberta, we thought for sure it would take longer than this because the sand in question was all clumped together with oily goo. But, nope, this is it, people. We’re screwed. It’s all over. Finished. Done. Finis. …

You get the picture. And if you don’t, you will when you watch the evening news.

Here are the key parts of the Edmonton Journal’s story about Mr. Horner’s dire warning yesterday. I’ve left out nothing important: “Tough choices … plunging price … big bite out of provincial revenue … warned his colleagues … facing financial constraints … not the greatest Christmas news … we have to adjust … everything is on the table … taken off the table … facing a deficit … oil has fallen to a record low … different than in the past … might not be able to count on any increases … live within their means … reining in and restraining our spending … meet our targets … tough stuff … tough decisions … spending freeze …” yadda-yadda.

Yes, everything is in there except the bit about tightening our belts, and, count on it, they’ll have added that by lunchtime today.

Alberta Energy Minister Ken Hughes warned us the same warning the day before yesterday, by the way, and Premier Alison Redford added a dire warning or two in the afternoon. Prime Minister Harper and Finance Minister Jim Flaherty are known to be fretting about this too, so count on them to weigh in on the need for more austerity momentarily.

And they just found out!

So, seriously, how stupid is this?

Of course we’ve got a freaking revenue problem! We don’t collect enough taxes.

We don’t collect enough taxes on purpose, because it keeps the oil companies who own our government’s soul happy and behaving themselves, politically speaking.

Last time they got exercised about this particular issue, they cooked up the Wildrose Party, which stands for exactly the same thing as the Mr. Horner’s PCs – only even more of it!

We also don’t collect enough taxes – and those that we do we take from the people who can least afford them through our thoroughly regressive and unproductive tax system – because it keeps voters disengaged.

Disengaged voters behave themselves too – by not voting.

That is, disengaged voters are good from the “conservative” perspective because they don’t feel like they have a stake in the province or anything it does, and so you get to stay in power for 41 years and counting.

Alberta politicians like Mr. Harper – the prime minister of Calgary – took this idea to Ottawa and would like to put it to work nation-wide. It was disengaged Alberta voters, you might say, combined with a useful split on the centre left, that got Joan Crockatt elected in the recent Calgary Centre federal by-election. Joan Crockatt!

Of course we have a cash shortage. We insist on paying cash for everything, including the house, the car and the new washing machine.

If I didn’t know better, I’d think we were run by economic imbeciles who hadn’t figured out that commodity prices go up and down like one of those pump jacks out on the Prairie. But we know for a fact these folks aren’t imbeciles – in fact, some of them, like Mr. Horner and Ms. Redford, for example, are quite smart. So something else must be going on.

Maybe they’ve actually bought the political calculus pushed by the right for three decades that you can’t do the sensible and prudent thing no matter what because … that’s just not the way we do things in North America. (“No taxes!” Ms. Redford barked this afternoon. She meant, presumably, no new taxes.)

Or maybe it’s because they have a plan to completely destroy our public institutions and they need the cash flow-through from a ’round the clock out-of-control boom non-renewable resources boom to keep us all distracted while they privatize everything.

While you think about those possibilities, here’s a home truth. Commodity prices are cyclical. They go up and down and they’re never going to stop going up and down. So plan for it! Put a little money in the bank. Don’t always pay cash. Have another revenue stream – you know, like a reasonable level of taxation.

Indeed, we could add a nice round figure like $10 billion to the taxes we collect here in Alberta and they’d still be the lowest in the country!

In the mean time, though, the world is ending, and the fact that the fixes are pretty obvious, easy to implement and relatively painless for everyone involved doesn’t mean for one second that they’ve got a snowball’s chance in hell of being implemented.

So have a wonderful holiday and a great 2013 … and if the world doesn’t really end tomorrow, tighten your belt.

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8 Comments on "The Alberta Apocalypto: The world as you know it is about to end! Again…"

  1. ABobserver says:

    As Alberta has the second highest per capita spending of tax dollars (only NFLD is higher), don’t you think that maybe, just maybe, a reduction in public spending is called for?

    There is no way it can be argued that all existing programs are required (lots are nice to have,, we can agree on that). It also is logical that not all programs are delivered in the most efficient manner.

  2. Watson Smith says:

    @ABobserver: Alberta has higher spending for sure. Part of that is probably unnecessary but a very large chunk of it is because we have higher inflation, higher prices in general and because we have a very quickly growing population which necessitates infrastructure spending on a per capita level that is far beyond any other province.

    Alberta should have a tax regime that completely covers operational expenses at all times. That might mean progressive income tax, slightly higher CIT or a sales tax. Or it might mean a combination of the three. Why should Alberta continue to have the lowest taxes? It hasn’t resulted in any investment that wouldn’t have happened anyways. We are still a petro-state with next to no diversification. I’m not saying raise them to ridiculous levels but raise them enough that there is no dependence on oil royalties for everyday expenses. Why do we feel the need to race to the bottom?

    Blowing our royalties on operational expenses is pretty much a guarantee that at some point the quality of life in Alberta will necessarily decline. Non-renewable resource royalties should be invested in capital only. Some of that can be physical capital but most should be financial or into human capital via improvements to education (not operational expenses of education) In that way we are investing in the future and better able to maintain quality of life into the future.

  3. anonymous says:

    “Of course we’ve got a freaking revenue problem!”

    Isn’t it really a ‘fracking’ revenue problem? And that problem is not going away anytime soon.

    Alberta now has to choose which economic road it wants to go down: the Milton Friedman road or the Paul Krugman road.

  4. Alex P says:

    How much of our high expenses come from being a decade behind all the time? Our cabinet ministers should always use past tense.

    If only you could run a province of 3.4 million on services for 2 million.

  5. Dave_B says:

    There should be a sliding scale in this province… when revenues are down, royalties should go up to compensate. The big oil boys could handle a bit more when it comes to royalties. Should they balk, we could start up our own National Oil Company (like CNOOC maybe, or even better Statoil) and send the multinational friends of the cons packing.

  6. Kim says:

    Alberta is great!! Things will probably slow a bit with the current world economic situation, the fiscal cliff, Canadians rising debt concerns–but we will buck the trend and still be strong. Currently Calgary real estate is flying, am seeing prices almost at 2007 highs in certain communities.

    Montgomery is awesome

    Montgomery triangle is awesome!

  7. jerrymacgp says:

    We need a stable, predictable revenue stream from a progressive tax system to pay for public operations, and a reasonable level of economic rents on our non-renewable resources that can be invested in the long term to pay for capital infrastructure like roads, schools and hospitals. Our royalty rates should be set at a percentage of the value of the resource, so when the price goes down, the royalty revenue goes down (reducing the hit on the sector and its jobs), but when prices soar, so do our royalty revenues. We need budgeting to be based on a 7-year rolling average (in constant dollars) of resource prices. When resource prices are below that average, we can draw from savings and invest in infrastructure, usually at a lower cost due to a slower economy; when prices are above that average, we invest the windfall in savings and limit spending on infrastructure so as not to prime an already-overheated pump, which has been the pattern in past booms.

    A certain amount of borrowing is also acceptable, but only at the lowest financing rates we can get and only for long-term infrastructure (and secured against our savings); but again, rather than trying to compete for tradespersons and construction labourers during a labour shortage, we should only be building things during downturns when we can both put un/under-employed people to work and get more for our dollar. We need to engage in forward-thinking planning to ensure we proactively start projects when things are slow, rather than reacting when things are crazy-busy and running the bills up as a result.

  8. drew peacock says:

    Alberta is a rockstar!! Best place to live in canada. Real estate is terrific here


    Montgomery triangle is.awesome!


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