We learn from history that we do not learn from history, and Alberta is arguably no exception to this old adage.
Despite decades of wild economic roller-coaster rides that saw us soaring during the good times and reeling in shock during the bad, this province remains far too dependent on the volatile commodity resource market that leaves us extremely vulnerable when prices suddenly collapse.
If all of the crashes of the past were not a sufficient lesson, surely 2015-16 should have served as a wake-up call.
Compounding the problem, conservative politicians have over the better part of the past half-century successfully convinced no shortage of Albertans that this province is irresponsibly hemorrhaging money wastefully; that we are plagued by wanton, reckless, pig-in-trough overspending as we throw money into the sky.
But in reality, the problem has far more to do with the extent to which the prosperous years of the oil and gas industry veiled this province’s substantial revenue problem.
“When the bottom fell out of prices and that particular goose stopped laying those bitumen-filled golden eggs, it became impossible to ignore the gap,” wrote Ricardo Acuna in a Jan. 18, 2018 article for Vue Weekly.
And as our numbers continue to grow — the Calgary region’s population alone is expected to swell substantially to about 2.4 million, nearly double what it is today, within 20-30 years — so too will an increasing demand for services ranging from education and health care to infrastructure.
That means our government must sooner rather than later establish more stable, reliable sources of revenue to ensure Albertans’ demands can be reasonably met; even exceeded, ideally.
However, expecting billions of dollars that might or might not materialize is nothing less than an extremely risky gamble; one that we have largely been lucky enough to get away with until now.
But no longer.
Economist Todd Hirsch recently said that while Alberta’s energy sector remains a crucial part of the provincial economy, the industry is no longer the engine single-handedly driving growth in the wake of the 2015-16 crash.
“We want to make sure it’s in good shape, we want to take care of it. We have to recognize the importance of it,” he said about the oil and gas industry.
“But we can no longer rely on it — not this year, not in the near future, anyway — to produce a lot of the growth that we’ve become very used to in this province.”
The resulting shortfall in provincial revenues following the collapse in the price of oil — which has somewhat stabilized but is not expected to fully recover to pre-crash levels any time soon — created a cataclysmic abyss in provincial coffers.
The NDP, who inherited a dire situation created directly by decades of conservative rule, is not just running around on a happy-go-lucky drunken spending spree; rather the government is desperately attempting to maintain a basic level of services that Albertans expect.
“Most of the current $10-billion deficit can be accounted for by the fact that last year we brought in about $6.5 billion less in non-renewable resource revenue than we had in 2013-2014, and this year, despite some improvement, we’re still falling about $6 billion shy of where we were just four years ago,” Acuna writes.
The next time a politician attempts to convince you we have a spending problem, ask him or her where they would slash services — education, health care, law enforcement and emergency services, social assistance, environmental protection?
Praying for prices in the oilpatch to suddenly jump back up to restore us to a prosperous path is simply not advisable fiscal planning. It’s about as wise as buying lottery tickets in the hopes of securing a comfortable retirement.
And chances are very few Albertans are prepared to sacrifice services for the sake of balancing the budget — in fact it’s a safe bet that generally speaking we want more school, hospitals, police stations, fire departments, and quality infrastructure. Any cuts to these pillars of our society would only result in even worse growing pains and financial woes.
So if Alberta has any hope of preparing for a future that is slowly but surely shifting away from burning fossil fuels, we just might have to consider following suit with every other province in this country.
“There is now consensus, at least among economists, that it will be impossible to keep Alberta’s government finances viable and healthy going forward without addressing the revenue side of the equation. Most now agree that a sales tax is inevitable, and desireable, while a few still support the idea of adjusting the income tax system to achieve the needed revenue growth,” writes Acuna.
Unfortunately, neither the NDP nor the UCP are willing to so much as whisper PST.
No one — myself included — is particularly enthusiastic about revising our tax structure and giving serious thought to introducing a sales tax that would generate a stable stream of income that does not fluctuate as wildly as resource revenue.
Yet this approach might nevertheless be the only way to ensure stable, sustainable and reliable revenues as Alberta continues to recover from the shock created by the crash of the price of oil.
Sounds more sensible than rolling the dice at the craps table and crossing our fingers for a higher price of oil.
— Ducatel is the editor of the Sundre Round Up, a Great West newspaper
