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There were few surprises in this week’s first budget from Alberta’s NDP government, but one great paradox. Projections of eventual fiscal balance depend on the recovery of an industry which the government is committed not merely to diversify away from but euthanize.
The environmental left usually has the luxury of living in a dream world in which they can enjoy the fruits of a fossil-fuelled society while they condemn it, and dwell in Utopian visions of a wind- and solar-powered future. The Alberta NDP is unusual in being forced to confront fossil-fuel reliance very directly, although it doesn’t appear to have quite caught on. Then again, that’s why it’s an NDP government.
As the Canadian Association of Petroleum Producers noted in a submission to the province’s royalty review panel this week, the oil industry employs approximately one in three Albertans, it generates two-fifths of Alberta’s GDP, and is responsible for more than a third of provincial revenues.
So the government wants to get away from it as quickly as possible, both for the sake of diversification and the health of the planet.
When it comes to diversification, Finance Minister Joe Ceci praised the vision of Peter Lougheed, thus confirming just how red a Tory Lougheed was. Certainly there was no acknowledgment that Lougheed’s diversifications were a disaster.
The budget was predictably heavy on spending and light on belt-tightening. Putting the social policy cart before the economic horse is a trade mark of left-wing governments, but now the cart is also being sold as a Keynesian countercyclical “shock absorber.”
There are meddlesome new bureaucracies to “partner” with the private sector, and the prospective pillaging of provincial birdsnests such as the Heritage Fund – or what’s left of it — to pay for new adventures into government economic mis-management.
For the rest of this column, click here: http://business.financialpost.com/fp-comment/peter-foster-the-alberta-disadvantage