One week, three budgets — and a lesson in how hard it is to be the grown-up in the room.
No government in Canada is enjoying an easy time of things these days, especially in the area of fiscal management. Budget decisions are never easy, but in a time when people expect top-level government services (at least for themselves) and when revenue resources seem to be near exhaustion, keeping civil society functioning and voters relatively happy gets near impossible.
That’s why we expect leadership from the people we elect to government.
In Ottawa, leadership came in the form of extreme caution hidden beneath a lot of distracting words in last week’s budget. Infrastructure spending was announced (again) but the actual money for those projects has been deferred — to a time closer to the next election, when they can be announced yet again.
But overall, the budget’s tone was about holding the line amid concern about how the decisions of an irrational U.S. government will affect our economy. And, yes, there will be more deficits.
Alberta’s NDP government worked very hard to please almost no one in their recent budget speech. Yes, there will be continued deficits — like just about every other jurisdiction in the land.
But the hard decisions were avoided. Incredibly, given the rhetoric of the NDP while they were in opposition, instead of attempting to wean the province off of near-total reliance on variable oil prices, they doubled down on them.
Like the Tory governments before them, the NDP employed wishful thinking that oil prices will soon magically rise and save the province from having to act like an adult. That’s not going to happen, no matter how many new pipelines get built in the next decade or so. As soon as oil price benchmarks reach a certain point (most recently barely over $50 a barrel), shale producers in the U.S. open the taps and drive the price down.
Oh, but we are reminded that Alberta has the lowest tax rates in the country.
Fiscally conservative Saskatchewan took its time, but finally learned to read that writing on the wall. Their recent budget did the things Alberta should have looked at.
In their budget, the province raised its sales tax rate from five to six per cent, and hiked the usual sin taxes on booze. Not only that, but items that have been exempt from the sales tax are to be included. Some pundits suggest that will raise the effective sales tax rate by an extra two points.
Where Alberta protected jobs and wages in the civil service, Saskatchewan will cut service costs (by various unannounced means) by 3.5 per cent. Trouble with the province’s teachers union was already on the horizon, so expect school boards, teachers and students to suffer the consequences.
And yes, in conservative Saskatchewan, this is the fifth deficit budget in a row, with no relief coming soon. But at some point you hit a wall of fiscal reality.
The point to be made here is that if you can’t tax your way to prosperity again, neither can you get there without paying for what you demand from government.
Difficult times demand hard decisions. If Albertans can’t accept taxing income like every other government in the developed world, you need to find substitute revenue to fill the gap. Or, you either get eternally mounting debt or severe cuts to services. Probably, you get both.
Oil revenues will not fill that gap. To believe so in the new higher-supply, lower-use global condition is just magical thinking.
Saskatchewan has realized that. Late, but they’ve arrived. Alberta is still dreaming.
It takes a grown-up to say so, but Alberta needs a sales tax. Or we’ll be closing schools and hospitals, and leaving our lower income generations in a much colder province.
Follow Greg Neiman is a former Advocate editor. Find his blog at Readersadvocate.blogspot.ca