The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
The census confirmed what everyone knew: The population is growing faster in Western Canada than elsewhere. The issue for the fastest-growing provinces, Alberta and Saskatchewan, is what to do with the challenges of growth. Their populations are expanding, pure and simple, because of natural resources, notably oil (mostly from the tar sands), natural gas and potash.
There are long-term development issues swirling around the nature of their economies. Are they going to be classic rentier economies, extracting resources and shipping them? Or are they going to try to process more of the resources at home? Thus far, the answer has been the former.
With more people come demands for a necessary expansion of public services: schools, serviced land, police, roads and, of course, health. Outside Alberta, for example, people hear about right-wing politics, the populist Wildrose Alliance (quietly supported by many federal Conservative MPs), the perpetually governing Conservatives, low taxes, small government. The picture, so alluring to those who judge the province by rhetoric rather than reality, is somewhat out of focus because the gap between right-wing rhetoric and on-the-ground facts is large.
Alberta has very big government. Its ratio of civil servants to population is high, relative to elsewhere in Canada. Its public services are large and well-funded, again compared with everywhere else. Thursday’s budget didn’t touch those services, except to pour more money into them.
At the same time, Alberta keeps its taxes low: no sales tax, relatively lower personal and income taxes. How does it perform this enviable fiscal miracle: low taxes but high spending? It sure isn’t because of red-blooded right-wingers in the provincial government.
One line item in every Alberta budget shows how the miracle unfolds: non-renewable energy resources. Last year, Alberta took in $8.6-billion in personal income taxes, $3.6-billion in corporate income taxes, $3.8-billion in “other” revenue, $4.7-billion in federal transfers and $8.3-billion in resource revenues. In other words, oil and gas revenues (about half of which – $4.1-billion – came from tar sands oil) poured almost as much money into the Alberta treasury as personal income taxes. What provincial government wouldn’t love that?
Thursday’s budget projected a staggering $15.9-billion in non-renewable resource revenues, most of which will be spent. All Premier Alison Redford would say is that she plans a “conversation” with Albertans about reducing reliance on non-renewable revenue.
For the rest of this column, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/opinions/jeffrey-simpson/albertas-flushing-its-resource-miracle-down-the-drain/article2333090/