Budget 2013 (If you want to play with the Big Boys, you play by Big Boy Rules)

 Opening new markets across Canada and around the world has become job one for this government.”—Finance Minister Horner on the 2013 Budget priorities, Alberta Hansard p1440.

That simple sentence tells you all you need to know about Budget 2013 and how your tax dollars are going to be spent in the coming years.  What it doesn’t explain is why the government thinks that it’s in the oil and gas business.

But I’m getting ahead of myself.

On March 7, 2013 I dragged myself out of bed                                                                            (I had the flu) to watch Finance Minister Government deliriously happy Horner deliver the “transformational” budget.  What I saw was Mr Horner unfurling a baffling budget that would plunge Alberta into debt and the PC caucus go all dewy-eyed as he invoked the legacy of Peter Lougheed (really guys, this is wearing a little thin).

Mr Horner set out three priorities:*

  1. Investing in Alberta families and communities by investing in schools, health facilities and roads.  Isn’t that their job?  They weren’t planning on investing in BC families and communities by any chance were they?   
  2. Ensuring that the government lives within its means by “challenging every dollar this government spends.” That’s definitely their job.  I’d hardly expect a budget priority that said we’ll waste the taxpayers’ money at every opportunity.    
  3. Ensuring that Alberta’s resources—food, technology and especially oil and gas, get to market for the highest possible price.  A glimmer of hope for agriculture and technology that sputtered and died under Mr Horner’s relentless focus on oil and gas and his pitiful defense of the government’s forecasting fiasco of 2012.        

The PCs were deliriously happy with Mr Horner’s brilliant speech.  The rest of us were stunned.

Budget 2013 is all about the coddling the oil and gas industry—at the expense of the young, the old, and the sick and those who educate and care for them.  The government is under the delusion that it is capable of playing with the Big Boys instead of being played by them.

Big Boy Rules

Given that the government doesn’t own oil and gas, or the companies that extract it, or the companies that transport it, it’s impossible for the government to achieve its #1 priority—getting our natural resources to markets for the highest possible price.  That’s industry’s job, not the government’s.  But pause for a moment to consider what would happen if government pulled on its Big Boy pants and played by Big Boy rules.

First Rule:  Deliver Results

Big Boys deliver consistent results or die.  Consider this government’s tBudget 2013 Bar Chartrack record.

If the government were a business its shares would be in the tank and it would have been ousted by its shareholders in 2011.  ’Nuff said. 

Second Rule: Develop A Robust Business Strategy

The only way an executive leadership team (the Premier and Cabinet in this case) could possibly hold on to their jobs with its appalling track record would be to come up with a creative new business model—a transformationalbudget might do the trick.

Ms Redford hasn’t proposed a new tax structure or a new royalty structure or a new anything (other than debt), so what’s her strategy?

Are you ready for this—it’s hope!  In the words of renowned economist Jack Mintz:  “There is really no plan in this budget except for hope—hope that prices come back and they have money coming back in.”**

Third Rule:  Don’t Do Something Stupid

When times get tough (say for example you’re sitting on a $2 billion deficit when you promised to break even) an executive leadership team has to resist the urge to do something really stupid while it’s waiting for the markets to rebound.

Ms Redford and her team must have missed the memo.  They’ve decided that the only way to avoid drowning in the rising deficit is to take on more debt—something in the $8 to $12 billion range.  They say this makes sense because interest rates are low.

To which Mr Mintz replies:  “There’s no such thing as a free lunch.  A province like Alberta should not be taking on gross debt”.*** Period.

Fourth Rule: Be Honest With Your Shareholders—especially when times are tough

Big Boys have to disclose the financial health of their businesses in clear, unambiguous language.  It’s the law.   Failure to do so results in fines to the company and jail time for its executives.

Budget 2013 is a marvel of opacity.  Instead of presenting one budget Mr Horner presented three:  an operating budget, a capital budget and a savings budget.  This obscures the total amount of the deficit and the only way to figure it out is to ask (good luck with that).  The government says the all-in deficit is $2 billion.  The opposition parties put it closer to $5 billion.

That’s a material difference and enough to invoke the ire of the securities commissions in the Big Boy world, but not in the world of politics.

A Transformational Budget

A truly transformational budget would have restructured the revenue model instead of saddling Albertans with billions in debt.  It would have eliminated government waste and corporate welfare and made the Big Boys pay their fair share of taxes and royalties.

It would have provided a framework for fair negotiations with public servants instead of drawing a line in the sand and daring the doctors, nurses, and teachers to cross it.

It would have provided incentives to diversify our economy.  It would have encouraged curiosity-driven education to underpin non-resource based businesses, instead of forcing universities and colleges to push a curriculum that feeds the oil and gas industry.  Above all it would not put the interests of the oil and gas Big Boys over that of Albertans.

A transformational budget needs political courage—something this government sadly lacks.

Ottawa entrepreneur John Kelly said it best:  “When the horse is dead.  Dismount”.   The PC horse is dead, luckily there are a number of horses waiting in the paddock—pick one and ride!

*Hansard, p1439

**Calgary Herald Mar 8, 2013, D1 

***Calgary Herald, Mar 8, 2013, A3 

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16 Responses to Budget 2013 (If you want to play with the Big Boys, you play by Big Boy Rules)

  1. Midge says:

    Boy, you nailed it here. With absolutely no vision, and teachers, doctors, farmers, nurses, universities & seniors now all PO’d, industry might be the only friends this PC government has left, and hell will freeze over before industry gives us Albertans any say in how they rape & pillage our resources, our water and our land. Can you say ‘single regulator’? Written by CAPP.

    • Midge, when the eastern newspapers and Jack Mintz (the epitome of the Calgary school) come out strongly against Redford you knew she’d alienated just about everybody. I don’t know why she thinks the oil and gas industry will stand by her when this all goes pear-shaped. It doesn’t matter to them who the politician is or what party they represent as long as it’s good for business.

  2. Carlos Beca says:

    Your article says it all but I will add one more comment because I no longer have any respect for politicians at all. I think that it is even worse that we as the public allow this to go on and have no guts to stop this amazing display of complete disregard for reason and reality. I really think that we are reaching a point when we are all sick and we can no longer realize it ourselves.
    Watching the finance minister deliver this joke and then get everyone in the PC party applaude and give him the high fives for the great job is something I never thought possible in this province and for that matter in our country. It is scary to say the least. Do these people really believe they are doing a great job? If they do we are in very serious trouble indeed.
    We are at a tipping point for something big on this planet and we are no exception. Just read what Manning said about Flannagan – just shut up and everything will be alright. Be a crook if it benefits you but be smart enough to cover it up well is the important message.

  3. Carlos, you’ve raised something I too found very disturbing–the over the top applause Mr Horner received after he’d delivered the budget speech. The MLAs acted as if they’d made a touchdown! Are they really unaware of how bad this budget really is?
    Apparently so. The Sun asked Ms Redford whether she’d betrayed the teachers and nurses who supported her. Redford replied: “How in the world were they betrayed?” That says it all, doesn’t it. Here’s the link to the story. http://www.calgarysun.com/2013/03/09/wildrose-returns-fire-in-response-to-premier-alison-redfords-budget-claims

  4. david swann says:

    A brilliant analysis of a duplicitous premier and government. Poverty in the midst of plenty while our most vulnerable languish for lack of real commitment to achieving their full potential. Alberta is actually a poor province due to this government’s lack of vision, planning and integrity.

  5. David, I know you and your colleagues in the House (in all of the opposition parties) are working hard to keep Alberta from sliding deeper into this mess. It must be very difficult but I urge you to keep fighting for what is right. Albertans are lucky to have you on our side.

  6. GoinFawr says:

    “The loans…will ensure that today’s children and their grandchildren will be held hostage.”-John Perkins.

  7. Carlos Beca says:

    This province is a failed state due to bad management and nothing else. It is time that people like David Swann start fighting hard for Proportional Representation so that we can end this awful perpetual incompetent right wing control of our province. With PR we can at least have a discussion at the Legislature. The way it is, nothing is possible anymore. The voices are minimal and Danielle Smith’s party is not there to help regular Albertans. Once they are in they will do the same as the PCs except the relationship with corporate power and the elites will be even cuddlier.

    • Carlos, I’d add cronyism to your very accurate assessment of bad management; both of which are occurring at a truly breathtaking level. The issue of proportional representation is an interesting one, I don’t know enough about how it would work in Alberta where the “progressives” make up such a small part of the electorate. Could be an interesting discussion…

      • carlos beca says:

        Susan – proportional representation would bring more seats to the Progressives. The reason why the PCs have so many seats is because of the winner take all. PR is the way to go and it brings with it a fairer democratic environment. The majority government at the Federal Level would never happen with 39% of the vote in a Proportional Representation and it should not. Now we have 39% dominating the majority because the others split the vote and have no representation. This system is pathetic and has been replaced all over the world except here and the old Britain which prefers the Lords in power.

  8. Pingback: A welcomed commentary on “Bankrupt Budget 2013″

  9. Ah, I get it–39% of the vote = winner take all. That’s the first time someone has explained PR to me in a way that is clear and easy to understand. Thanks Carlos!

  10. carlos beca says:

    Susan I did not explain it. The pure PR is easy. Let me try. For example in Alberta right now we have a total of 87 seats
    61 PC with 44% of vote
    17 Wildrose with 34 %
    5 Liberals with 10%
    4 New Democrats with 10%

    So in pure proportional
    The PCs would get 38 instead of the 61
    The Wildrose would get 29 instead of 17
    The Liberals would get 8 instead of 5
    The ND also 8

    With this distribution the PCs would have to pay way more attention to the rest of the Legislature. At the Federal Level it would be way more dramatic because the PCs have only 39 % versus the rest to be on the center left.
    You should read the Fair Vote Canada site because it helps and there is a lot of material there and the more people read about it the better the chances of getting rid of this decrepit system which is just favoring one party.

    For example at the Federal level the PCs have 39% of the vote and got 166 seats when they should have gotten 120
    The Liberal got 19 % of the vote and 34 seats when they should have gotten 58
    The Ndp with 31% got 103 seats and should have gotten 95
    the Greens with 4% of the vote got 1 seat and should have gotten 12

    So the House would be a completely different place. The greens have a very distributed support around the country and so they get nothing. It is quite bizarre.

  11. Thanks Carlos, the two examples you set out help a lot.

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