Alberta’s budget woes

The provincial government has announced the 2014 budget, and predictably, there has been a wide variety of reaction

The provincial government has announced the 2014 budget, and predictably, there has been a wide variety of reaction from all kinds of quarters.

Politicians, trade unions, teachers’ organizations, educational associations, healthcare workers and healthcare institutions, municipalities and you name it, everybody has had something to say and more people from various backgrounds will continue to have things to say in the days ahead.

Leaving all the dances with figures and statistics aside, one might do a very simple analysis out of what has been announced:

Is this budget bigger than the last year’s? Yes.

Is spending increasing on almost all fronts? Yes.

Have the taxes been raised? No.

Have new taxes been announced? No.

The simple math is that the government of Alison Redford will be spending more money in 2014 than in 2013.

If there is no new tax revenue, how is this increased spending going to be financed?

Through borrowing or is the government putting all its eggs in one basket, the basket of increased royalty revenues from heightened bitumen production?

Or is there any other source of revenue that we don’t know or are not supposed to know?

Given that the government has preferred to conceal the important details behind the popularity of the figures it has decided to promote, one has to conclude that, in broad strokes, the government is apparently planning to derive most of its funds from the increased bitumen royalties (which is just an estimate) and the continued price stability of oil in the international markets (which is another estimate).

Ms. Redford has a big team of advisers and ministers and support staff, who, supposedly, should have told her that placing so much reliance on oil revenues is a big and dangerous gamble.

With Iran negotiating with the US and other western governments on the possibility of lifting sanctions against Tehran, potentially opening the way for a glut in the oil market this spring and the possibility of another slowdown in global economic growth (just take a look at the figures that came out from China and Japan on Monday), Ms Redford might be in a situation where she could only dream of generating those royalties in 2014.

Then who pays for all that spending and how?

Government spending is not necessarily a bad thing. On the contrary, properly targeted government spending helps economic growth, strengthens infrastructure, supports creation of employment and empowers communities to take bolder initiatives to improve their living standards.

Yet, in Alberta, for many years, public spending has been poorly planned, poorly targeted, poorly managed and has produced less than desired results.

One example that might merit mention is the home care and some domestic support services being outsourced to companies that are based out of the province at the expense of local community organizations which can produce tons and tons of better value for the same amount of bucks that come out of taxpayers’ pockets than those organizations could do.

It seems the conservative ideology of the provincial and federal governments (the disaster in Ottawa deserves an entirely separate discussion) simply makes the leaders lose their senses just to be able to stick to their political philosophy in the name of opening up all sectors of the economy to competition etc. etc.

Conservatives (progressive or not) should just aim to do better than making corporations richer than they already are and try instead to render better services to the people who put them in their seats.