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Grant Devine 2.0?

It’s really odd to hear Alison Redford use the same rhetoric in Alberta that Grant Devine did in Saskatchewan during the late 80s.

In a series of interviews following her televised address to the province Thursday night, Redford said that she wanted Albertans to understand that the province should no longer rely on its resource wealth to balance its books, pointing to a $6-billion “bitumen bubble” that will cut the province’s anticipated resource revenue almost by half in 2013-14 fiscal year.

“We can no longer continue to rely on oil and gas for 30 per cent of our revenue,” Redford said Friday. “It’s a fundamental change. It’s the sort of thing a province has to deal with, I think, once in a generation, and this is our opportunity to do it this year.”

The provincial government has received plenty of advice in recent years urging it to wean itself off a practice of using resource royalties to balance its books.

The Premier’s Council for Economic Strategy, a panel of experts established by Premier Ed Stelmach, tabled a report in May 2011 that asked Alberta to divert non-renewable resource revenue instead into a new “shaping the future” fund dedicated to helping diversify the province’s economy.

The council’s chairman, former federal cabinet minister David Emerson, said Friday it sounds like Redford is looking to make that kind of shift.

“She’s looking at establishing a new fiscal regime and that’s essentially what the premier’s economic strategy council was calling for: To stop treating non-renewable resource revenues as a form of operating revenue to be spent on, in effect, buying the groceries and to become more strategic separating natural resource assets,” Emerson said.

“If that’s the case, my congratulations,” he said.

But while Redford said Friday that a “different” budget will be forthcoming, she also said will not be a disruptive document. The government has already sent some signals about what some of those changes might look like, she said, pointing to the government’s plans to borrow to fully twin a 240-kilometre stretch of Highway 63.

“The Highway 63 announcement signalled to people that we’re going to think differently about long-term infrastructure plans,” Redford told The Canadian Press. “We’re going to finance that differently. We’re prepared to go out to capital markets and to really put out stellar fiscal reputation out there and ask people to invest in our province in some of our public infrastructure.”

As of right now, however, Redford said tax reform is not part of that financial restructuring.

Right now it looks like a lot of talk without the deep cuts and probably tax increases needed to bring the budget back in line.  

Mount Royal University political scientist Keith Brownsey said Redford needed to make a case for a fiscal crisis in her televised speech. She did that in a reasoned, effective manner, he said.

Such a statement was needed, he said, because Albertans thought financial problems were something that were a thing of the past because of its resource wealth.

“I think she prepped us for both cuts and tax increases,” Brownsey said. “Now, she may not have said that today, she may have said, ‘No taxes,’ but the current revenue structure in the province is unsustainable. We cannot exist as a modern industrial state living off of revenues from non-renewable natural resources. It’s simply too volatile.”

The truth is that Alberta spends money like no other province in the confederation.  Even during the Klein crisis, they spent more money than everyone else.  People talk of the deep cuts he made but ignore the fact that in Saskatchewan, the NDP made even deeper cuts (and had to raise taxes).  Whatever the solution is that it should be a combination of taxes and spending cuts and it is going to take a bit of time.  

I have no doubt that Redford is serious about making cuts (and who knows, she may even raise taxes) but when the oil prices go up, will they stay the course and remake the economy, especially when the opposition will be calling for restored spending and tax cuts (it’s always going to be like that).  I really hope she sticks with it because the oil and natural gas won’t be there forever.  I know the oil sands are a massive reserve but not all of that is recoverable and there is a point where it gets more too expensive to go after it.

If her hero Peter Lougheed brought in Alberta 2.0, then Alison Redford will need to be the one to bring in Alberta 3.0.  I hope it’s more than Devine era rhetoric.

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