Alberta's Revenue Problem

Alberta's first quarter fiscal update was released this week and the news wasn't good. Alberta's deep reliance on resource revenues has forced the government into a harsh $6.9B deficit. With Ed Stelmach's backtracking on royalty rates and refusal to look at different tax structures, Alberta is left staring down the barrel at service cuts.

Given the economic boom that Alberta has experienced recently, there is no need for cuts to health care and education. First off, if we had a sustainable progressive taxation system, then we wouldn't have to worry about dropping energy prices effecting our public services. Secondly, if we had more lucrative royalty rates, we would have a much larger sustainability fund to draw from. Sure the boom wouldn't have been as dramatic, but then the bust wouldn't have hurt so much, either.

All in all, I consider this to be a revenue problem. The problem being, we rely on volatile revenue to deliver essential services - and that's no way to run a government.

Scott Hennig, leader of the most misrepresentatively named lobby group in Alberta (The Canadian Taxpayers Federation), argued with me recently on Twitter about my assertion that we have a revenue problem. He says we have a spending problem and pointed to dramatic increases in government spending since 2005 (near 11% per year, on average).

I decided to crunch some numbers to get a handle on the information. This graph shows the Alberta government's expenses and revenues on a per capita basis, adjusted for inflation (2002 dollars).

Government spending was slashed significantly in the mid 1990s under Premier Ralph Klein. It has only risen recently and it is still not at the level of service Albertans were experiencing before 1993. It is also noticable that the spending is reactive to fluctuations in revenue (driven by resource prices). The cuts in 2002 are only because revenues dipped in 2001.

Sure, spending increased since 2005, but much of that spending was on infrastructure that was neglected throughout the 90s and the early part of this century. The levels of delivered service is still well below what it was in the 80s - wait lists in health care are long and class sizes are large!

Here's another interesting look at government spending. This graph shows Alberta government and expenditures as a percentage of Gross Domestic Product.

In the early 90s government spending was in the 22% range, then under Ralph's reign it plummeted to near 13-14%. It stayed around there until 2002, where it took another hit and dropped to the 11.5% range. It has remained between 11 and 11.5% since 2004. What I find particularly interesting, is that government will reduce expenses whenever the economic climate justifies it, but does little to improve service when we are in a position to do so.

By comparing spending to GDP, we have a real sense of how much we are living up to our potential. As Alberta becomes more prosperous, should we not be allocating more resources to social services?

Ultimately, it comes down to this: We have great potential in Alberta to be one of the best places in the world to live - to ensure that everyone is looked after and prosperous. Instead, we don't plan and we squander our resources.

Why don't we get to see the debate?

I've said it here before. I really enjoy a good debate. And frankly, I've been wrong (many times) and a good healthy debate has convinced me to change the way I see many issues. I also think that open, honest debate is healthy for democracy and healthy for our society.

I wish the Alberta PC caucus saw it that way.

In recent memory there were two occasions where the PC caucus has pointed to the rigorous debate that has gone on behind their closed doors to justify their stance. First, it was Bill 44, where apparently the PC caucus debated the issue for months. Now, it is used to justify the ousting of Guy Boutilier. Ed Stelmach is being very clear with his MLAs and Albertans - the public arena is no place for debate on issues that matter to Albertans.

If politicians could just swallow their pride a little bit and accept the risk of being wrong once in a while - and if voters and media could accept that being on the losing end of a public debate does not make a bad politician - then we would have some really healthy public debate about what's in the best interest of Albertans. It seems to me that that is what democracy should be about.

At this point, I suspect you may be calling me naive or idealistic. And you may be right. Sure, I understand that the party leader needs to ensure that the members of his party are behind him, especially in our parliamentary system. It is incredibly important in minority parliaments and thus we have this long established traditions of party whips and caucus solidarity. My thesis however, is that this practice does not allow for the best policy to emerge and it shouldn't governance be about developing the best policy possible.

Think of it this way. If the honest debate over which building projects had to be delayed was held in a public place (a house or an assembly, if you will) intended for debates over the issues of the day, then Boutilier would be able to go back to his constituents and say "I tried, but some tough decisions had to be made." They would be witness to his attempts and he wouldn't have to call out the premier in the media. Perhaps the Fort McMurray seniors complex wouldn't be built, but at least we could point to the discussion as evidence that the issue was appropriately considered.

Of course, people would also feel less cynical or alienated about politics and maybe they would feel more empowered to vote and become involved in the process.

But then, if people saw the real reasons why our legislature makes the decisions it does they might actually turn out to vote. And if people actually turned out to vote, the Conservatives might not win the next election.

I guess Stelmach has it figured out after all.

Why we have Bill 44 - the WHOLE story.

While my post a few days ago was my emotional reaction to Bill 44 and the no-longer progressive Conservatives, I have had some time to reflect more on this issue from a logistical and political point of view. I have also benefited from some crucial background information from Paula Simons and Ken Chapman. As I started collecting great bits of information, the pieces all started to fit together and the big picture became much more clearer. Today, I hope to portray the whole ugly story as it looks from my point-of-view.

This story starts in the spring of 2006. Then premier Ralph Klein, subject of a regular leadership review from the PC party, receives a 55% approval rating and subsequently announces his retirement. In the race to replace him, Ed Stelmach won by being the second choice of most party members in the deeply divisive race between frontrunners Jim Dinning and Ted Morton. Since then, Ted Morton has not declared the amount of money raised or spent on his leadership campaign nor has he disbanded his campaign team.

Ted Morton believes that there exists an agenda "represented primarily by the gender feminists and gay rights movement--that target the natural family as public enemy number one." Furthermore, he believes that "according to the feminist-gay gospel, the great evils of this world are sexism and homophobia, and their breeding ground is the traditional family." In order to combat this conspiracy, he feels that "we must make enlightened family policy a cornerstone of the democratic state." And, we do this by "persuad(ing) our governments to require a 'family impact' statement for every new policy or law that is being considered." He says:

Before legislation is voted on, there should be an investigation and
written report that assesses its impact--positive, negative or neutral--on the
following aspects of family life:

• Family income
• Family stability
• Family safety
• Parental rights and responsibilities--especially the right to educate their
  children in the moral and spiritual traditions of their choice.
  

I don't want to paint the picture that this is all Ted Morton's doing, because he is not alone. There are many social conservatives in the party, who worry about the gay-feminist agenda. Their biggest fear stems from the case of Chamberlain v. Surrey School District which was decided on by the Supreme Court of Canada in June of 2002. In this decision the Supreme Court ruled that Surrey SD was wrong in not allowing a teacher to use children’s books portraying same sex parents in his classroom. The court ruled that the board relied too heavily on religious reasoning to make its decision:

The overarching concern motivating the Board to decide as it did was accommodation of the moral and religious belief of some parents that homosexuality is wrong, which led them to object to their children being exposed to story books in which same-sex parented families appear. The Board allowed itself to be decisively influenced by certain parents’ unwillingness to countenance an opposed point of view and a different way of life. Pedagogical policy shaped by such beliefs cannot be secular or non-sectarian within the meaning of the School Act. The Board reached its decision in a way that was so clearly contrary to an obligation set out in its constitutive statute as to be not just unreasonable but illegal. As a result, the decision amounts to a breach of statute, is patently unreasonable, and should be quashed.

There is an important distinction to be made between the Alberta education system and the BC system - a distinction that relied heavily in the Supreme Court's decision. The BC School Act has a clause on secularism in public schools (a very good policy in my mind), whereas the closest thing in Alberta is a clause on diversity in shared values (see section 3).

So, when Minister Blackett moved to introduce amendments enshrining equality for homosexuals in human rights legislation, the so-cons seized the opportunity to bring in so called "enlightened family policy." The result is that instead of having a secular education system where teachers and students can have objective discussions on religion, sexuality and sexual orientation - we will have teachers interrupting and muzzling conversations for fear of appearing before a human rights tribunal.

The question lingered for me: how is it that these so-cons were able to convince Stelmach and the rest of caucus to introduce and fight for this so-called parent right provision? Well the answer to that lies in the first paragraph of this post. Stelmach is up for a regular leadership review in November. With Morton's campaign team still in operation and, I suspect, money left in the bank, Stelmach is fearful that his content supporters will stay him and Morton will bring out his supporters in droves. A coup could be in the works. If you are Stelmach, you either appease him or open yourself up to being overthrown - and if Morton can't do it within the party, he can always leave and take his supporters over to the Wildrose Alliance. Unfortunately, this means that sensible progressives in the PC party are left carrying the burden of Morton's back room politicking.

As I alluded to in my previous post, Albertans don't need a sleazy back room tradeoff to bring in equal rights for gays and we should be apalled by this move. This issue specifically, but more generally the issue of the PCs promoting social conservative policies needs to be the next campaign issue - I know a lot of PC supporters who do not appreciate this fundamentalist social policy.

I can't believe I waited so long to do a Bill 44 post or why I'm bloody tired of the PC Party

It occured to me this evening what gets me upset the most about this so-called Progressive Conservative Party. It occured to me while thinking about Bill 44. I cannot believe that we still allow this party to govern. Albertans are changing and this party is the same party it has been since 1971 when it first came into power. This is not my party, it does not represent my views. I do not need the Supreme Court to tell me that homosexuals deserve to be treated equally (It took them 11 years to write it into law and they fought it for four years before that). And, I will not accept that achieving that equality requires some sleezy closed door political trade-off. We deserve better.

I am insulted when cheap politics gets in the way of good governance and sound policy. I am ticked off that progressives like Dave Hancock and Lindsay Blackett have to trade away their values to good ol' boys like Ted Morton and Rob Anderson. It's ridiculous that they have to join this party in order to achieve good government in Alberta in the first place.

I resent the fact that funding for my education was cut by these people in 1994, 1995, and 1996. And I really don't get why, but they did it again in 1999 and 2001? I didn't like it when I left school to rally on the legislature in 1994 and I don't like it now.

This is not my party. This is the party of my father's generation and the party my grandfather first voted for. This party got elected because Peter Lougheed was ticked off with Pierre Trudeau.

Well, times have changed. I care about treating people like people no matter how they were born. I care about the environment because I understand we live in a finite space and we can't keep doing what we are doing to it. I care about universal health care, I care about people in poverty. I am actually progressive, not just called it.

I can't stand that we continue to allow my parent's party to be elected. Where's my party?

The real reason gender reassignment surgery was delisted.

I love debate! For a few reasons. First, it helps me to think comprehensively about an issue. I truly enjoy considering what others have to say about an issue, while I analyze my own biasses on the issue. Furthermore, debate allows for effective policy making. So long as the participants debate the merits of the issue and avoid partisan and personal attacks, we end up with well thought out decisions.

I enjoy twitter because it is a forum to share information and interesting stories, and it is a forum that encourages healthy public debate (reminiscent of London's speaker's corner). Today's blog post is inspired by the discussion I had last night with Doug Griffith (@GriffMLA) and one of our friends from Alberta: Get Rich or Die Trying (@AB_get_rich). The topic was delisting of gender reassignment surgery (GRS).

What I am about to say requires a couple of important caveats. I acknowledge that I have no idea what it's like to be born into a body of the wrong gender. So whenever I'm in the situation of speaking about people for whom I don't know what its like, my motto is to be compassionate. I also acknowledge that no segmented group will speak with one voice - there will always be individual opinions within a group of people with similar lived experiences.

I decided shortly after budget day that I would discuss the delisting of GRS regularly. I decided this because I suspect that most transgendered people just want to live their lives happily and comfortably - they don't want to have to get into public debate over this very personal matter. Therefore, on this issue, I know that they are going to need as much help and support as they can possibly get. Ultimately, that is what makes the decision to delist GRS so repugnant - we are forcing a small disadvantaged marginalised group of people to stand up for something that in many ways only matters to them, but matters so much to them.

My argument today, though, has less to do with morality and more to do with finance.

Generally speaking, there are two types of budgeting: status quo and zero based. In status quo budgeting you begin with the budget from last year and add and delete items to create the new budget. In zero based budgeting, you start with nothing and simply add the items that you want to have to create the new budget. To the best of my knowledge, the Alberta government uses a status quo based approach.

The benefit of status quo budgeting is that it is faster and easier. One of the problems, however, is that you end up with a lot of "beige" programs staying on the books - programs that have no inherent problems, but have no great benefit either. When it comes time to trim spending what typically happens is someone goes through the items and tries to identify the ones that need to go. The items that cost the most tend to be examined more thoroughly and the ones that cost the least tend to stay put.

Thus, I come to my biggest concern with the decision to delist GRS. People involved in the budgeting process were given the task of cutting spending (I suspect that Liepert also suggested to do so by delisting procedures). While big fish like chiropractic care were targetted, someone chose specifically to chase after the tiny fish of GRS. The financial savings amount to around 1/200th of a percent of the health care budget, or the equivalent of 20 cents per Albertan. The reason why GRS was chosen was not financial, it was political. The people who approved this strategy knew they could get away with it - because typical Albertans and the Conservative base would applaud the move and the people who are affected by it are a small group of people that we don't understand. The owner of the gym I go to, essentially called them freaks.

This type of politics is appalling. We need to make decisions based on what is the right thing to do and what is in the best interests of the people of Alberta. Our politicians need to ask the question, why was this decision made and not accept finance as the answer - because it simply isn't so.

So how much does Suncor get?

If you read my post yesterday about the vase distributor you will see here that he has done quite well for himself. I don't want the phrase Alberta Advantage to die, it fits so well for the oil companies.

On a related note, have you ever wondered how much money Albertans lost because of Conservative mishandling of the Heritage Savings Fund. I have. (h/t Alberta: Get Rich or Die Trying)

Martha and Henry pass on - what to do with our inheritance?

Imagine, if you will, that your grandparents were collectors of extremely rare and valuable... oh let's say vases. When they passed on, they left to you a basement full of these vases - more vases than you could possibly imagine.

One day, a vase distributor comes to your door and offers you $10 each for some of your vases. You sell him two and he goes down to the market and sells them for $20 each.

The next day he comes back and says he will buy 10 vases for $10 each. Realising that the extra income means you only have to work part time that day, you sell him the 10 vases. He goes down to the market, where they really like the vases and sells them for $40 each.

Day three - the distributor wants 100 vases (he'll pay $10 each). This means you can take the whole week off. He heads down to the market, where the biggest vase collector has come to buy, and sells them for $100 each.

Before the next day rolls around, your kids suggest that maybe you should charge more for the vases. But since you don't have to work anymore, have a ton of vases left and are reliant on the distributor, you decide not to mess with a good thing and keep the price at $10. The distributor comes by, you sell him another hundred vases and he sells them at market for $150.

Unfortunately on the fifth day, the big collector lost his job and isn't buying anymore vases. The distributor shows up and only wants to buy two vases. It's not enough for you to live off, so either you starve or go deep into debt. Forget about getting a job, there's none left!

Call it simple but the analogy fits for Alberta. In the past 17 years the Conservatives have slashed taxes on corporations and the wealthy, removing all of our sustainable and self-reliant income sources. They've sold off enormous amounts of our non-renewable resource for a pittance while oil companies have walked off with record profits. Worse of all, government has hardly saved a dime.

We need to think about our oil as an accumulated reserve, and every time we cash in one of those barrels we are trading future prosperity for immediate gain. We have a responsibility to future generations of Alberta to not squander this opportunity and to make the most of the money we generate from selling off our oil!

Funny... the conservatives used to talk about sustainability.

Government Plan: Do nothing and everything will be okay.

Smiling Iris, Alberta finance minister, appeared in front of media on Thursday to announce that Alberta will lose 15,000 jobs and carry a $1 billion deficit from 2008/09.

Let's look at the government estimates over the course of the year:

Date	Revenue	Oil (Est)	Oil (Act)	Expenses	Surplus
April 2008 Budget	$38.6 B	$78	$112	$37 B	$1.6 B
August 2008 - Q1 Update	$46.6 B	$119	$117	$38.1	$8.5 B
November 2008 - Q2 Update	$39.9 B	$94	$57	$37.9 B	$2 B
February 2009 Update	???	???	$42	???	-$1 B

It will be interesting to see how the revenue and expense numbers fill out when Evans releases her third quarter update next week. If she knows the $1 Billion deficit number, then she likely knows the other numbers and is trying to release information slowly.

What I found particularly interesting though are some of the rose-colored glasses type statements made in the press release.

The province’s economy is expected to recover beginning in 2010 with modest economic growth. Evans said Alberta is well positioned for recovery, with low unemployment and inflation, a strong resource base, a competitive tax regime, an investment- and business-friendly environment, significant financial assets, and a fiscal framework designed to deal with the ups and downs of volatile resource revenues.

“As we emerge from these turbulent times, we will position Alberta to be the engine of the Canadian economy,” she said.

The government has convinced themselves that Alberta is above the rules of
global economics and that this global economic catastrophe is simply a one,
maybe two, year long wave that we can just ride over.

They go on to discuss their plans for weathering the storm:

The Alberta government’s plan for weathering the downturn includes keeping a close eye on government spending, drawing from its emergency savings to protect the programs and services Albertans rely on, continuing to build public infrastructure to support jobs and the economy, and promoting the province to a global market.

These actions include ... maintaining a low and competitive tax environment - which was enhanced this year with the elimination of health-care premiums, resulting in the injection of $1 billion back into the economy. Government will also continue to invest in public infrastructure through the 2008-11, $22-billion capital plan, a commitment that far outstrips that being spent elsewhere in Canada.

This isn't a plan! This is a combination of tired Conservative rhetoric (keeping an eye on spending, promoting the province to a global market, maintaining a competitive tax environment) and previously announced plans that public pressure forced the government to undertake (overcoming the vast infrastructure deficit, eliminating health care premiums).

This government has always lacked real innovative foresight and been slow to react to legitimate concerns of Albertans. This is a time for real leadership and a real plan instead of tired rhetoric and rose-colored glasses.

A few of my favourite things

I commend all the other bloggers out there who manage to post thoughtful pieces on a regular basis. I subscribe to many of their RSS feeds using Google Reader and subsequently "Share" the ones I like. So between work and home life, I find barely enough time to read the material being put out let alone contributing in a thoughtful way on a regular basis.

So for today's post, I want to encourage you to scan my shared items which are linked to over there (------>) and here.

But I also want to share a few of the things that really grabbed my attention lately.



Dinner with a Stranger

Franke James is an artist who presents her Visual Essays on her blog My Green Conscience. Her latest posting Dinner with a Stranger is incredibly inspiring. Read it and enjoy!



Lost Generation

Perhaps you've already seen this video, as I was referred to it by Ken Chapman who pulls out a lot of these gems. But if you haven't take the time to watch it - its incredibly creative and powerful. I taught high school for 7 years and the greatest thing I learned in that time: "The Kids are all right"!





World Food Program

This is another great video to put things into context. Its a PSA from the United Nations World Food Program featuring Sean Penn. Thanks to AdFreak for this.

Turns out the No Plan commercials were right.

Who knew the anti-Stelmach commercials from the last campaign would end up being right?

Ed Stelmach has no plan for dealing with this recession, so he turns to the only strategy the conservatives know when revenues drop - Massive cutbacks.

It seems to me, Ed was the guy we should have had as premier in the early part of this decade, back when Ralph was the guy without the plan.

Seen as it was Building Trades of Alberta behind "No Plan" it seems appropriate to use the renovation metaphor here.

See back in 1993, Ralph Klein looks at the public service in Alberta and decides that it is a building where expansions have been put on haphazardly (in his mind) and is this big ugly monstrousity. His bright idea... time for a renovation.

Klein is a master at demolition, he goes and tears things apart. Rips off all of the drywall, tears down whole wings of the building and even blows up the infirmary.

Klein looks at his work and is very happy, so he decides to sit back and take the next ten years off. In the meantime things turn good in the economy and the public service starts to rebuild. Spending announcements are made in a reactionary fashion with no coherent plan in place. The government claims they are spending more than they ever have, but little of the spending is planned sustained investment in the core programs that were cut.

Eventually, Klein admits that he hasn't had a plan for government and the Tories decide to turf him. They replace him with Ed, because Ed has a plan and a vision for government spending. But, oops - the money is gone, revenue has dropped and there is nothing left of the boom because the money was spent with no plan in place and no savings made.

We've been saying for years:

1. Royalty rates are too low and we're not getting our fair share.
2. The money we are getting from the boom needs to be saved.
3. The boom will end - it always does.

Unfortunately, I-told-you-sos don't achieve much now and its time for a new plan on the economy. But resorting to the same old Conservative playbook will only make things worse!