So the government of Alberta has its first deficit in 15 years and expects at least two more. Estimates of the budget deficit vary with the latest at about $4 billion.
The deficit is a shock for two reasons: Albertans believed Ralph Klein when he promised that deficits were dead; and the province is awash in cash.
Government spending and deficits are a big deal in Alberta, much more so than in any other province and certainly a bigger deal than with those flagrant spenders in Ottawa. Deficit-fighting rejuvenated the moribund Conservative Party in 1993, helped define Ralph Klein’s only legacy, became the focus of the 1993 election, and was the essence of a political agenda for almost a decade.
Like most Albertans, I thought the Conservative government was long past deficit problems. Klein and Jim Dinning repeated endlessly that deficits had been the outcome of high spending rather than lower revenues. Through prudent fiscal management and controlled spending, they promised deficits would be history.
Premier Ed Stelmach’s people weren’t listening. Now they’re blaming the people they wouldn’t listen to.
Treasury Board President Lloyd Snelgrove insists that the current deficit is the result of a decade of over-spending and public demand for higher spending.
Politicians being politicians, they gave the people what they wanted.
It must be noted that Stelmach has been in the Conservative caucus since the beginning of the Klein regime in 1993 and Lloyd Snelgrove since 2001 and I don’t recall either going public with complaints of excessive spending.
In his blog, Education Minister David Hancock took a different approach: “I am tempted to ask what we should have not invested in.” The short answer to Hancock is that the government should not have invested in anything it could not afford.
That’s what the politicians say. What does the budget say? It says the government of Alberta has had a fiscal management problem for over a decade that has led to chronic over-spending.
Budget documents tell the story. They say that the elastic came off the wallet when those self-proclaimed fiscal conservatives Stockwell Day and Steve West were provincial treasurers from 1997 to 2001.
Spending under their watch rose almost 50 per cent in four budgets. By the time Ralph Klein retired five years later in 2006, spending had increased another 50 per cent. Stelmach is continuing the trend, increasing spending almost 30 per cent in three years.
What happened? First, politics is all about re-election. It re-election means reckless spending, so be it. Try to imagine a Conservative MLA trying to explain to a voter why he couldn’t get money or a local project when the government has tons of money. Second, year after year the Conservatives were unable to stick to a fiscal plan, whether an annual plan or a multi-year plan. They’d bring in a reasonable budget plan, pass it through the Legislative Assembly – and then go on a spending spree far in excess of what the budget stipulated. After 1997, when Provincial Treasurer Jim Dinning retired, the Conservative Government under Ralph Klein exceeded its annual spending targets in nine of 10 budgets. The numbers are not trivial. Spending beyond budget targets totalled over $10 billion in 10 years.
The Stelmach government is more straightforward.
It simply increased spending by more than $8 billion over three budgets, or up almost 30 per cent.
Incredibly, deficit spending is back. If energy prices don’t recover, deficits may last longer than anyone expects. Who would have believed it?
Rich Vivone covered Alberta politics for 19 years. His book – Ralph Could Have Been a Superstar: Tales of the Klein Era – is currently an Alberta bestseller.