“There is no fortress so strong that money cannot take it.” — Cicero
On Mar 24, 2015 Jim Prentice sent Albertans a message of such heartless cynicism that only the most naïve amongst us would fail to understand.
Here’s what Jim Prentice’s Budget 2015* told Albertans.
Corporations matter, you don’t
When asked why the government did not raise corporate taxes, Finance Minister Robin Campbell replied “The corporate sector is going to do their part, but we have to do our part also.”**
This is utter nonsense.
The corporate sector did its part for its shareholders when it laid off 14,000 Albertans in the month of February alone. It protected its balance sheet and kept its shareholders happy.
The government failed to do its part for Albertans when it refused to entertain an increase in the corporate tax rate. The decision to raise personal income taxes by 1.5% for those earning over $100,000 should have been mirrored by an increase in the corporate tax rate. Even a paltry 1% increase would have created a revenue stream of $500 million.
Mr Prentice also rejected a royalty review. However his willingness to boost the royalty rates for sand, silt and gravel companies indicates that not all royalties are sacrosanct, only those generated by his friends in the oil and gas sector.
Furthermore Mr Prentice sweetened the pot by granting the Department of Energy an additional $250 million while insisting that the departments of Health, Education, Innovation and Advanced Education “absorb” growth pressures of $950 million, $200 million and $80 million respectively. The $250 million bonus is for “running the Alberta Energy Regulator”, a government agency that was 100% industry funded…until now.***
And if that’s not enough, energy companies need not fret about the government’s plan to diversify the economy. It will continue to proceed at a snail’s pace. Mr Prentice set aside a trifling $28 million to support “commercialization capacity focused on diversifying Alberta’s economy.” Gosh, a whole $28 million in a $48.4 billion budget. Can you spare it Jim?
Other friends and insiders make out like bandits
While Health, Education, and Innovation and Advanced Education are fighting over the short end of the stick other governmental agencies, boards and commissions (the resting place for PC loyalists) get a $60 million windfall, bumping their budgets from $580 million to $640 million, with absolutely no justification whatsoever.
Given the Auditor General’s discovery that one such agency, Travel Alberta (which needs 50 managers to supervise 100 employees) failed to properly approve senior managers’ expense claims, a little caution may be in order.
Cue the little match girl
In addition to asking the departments of Health, Education and Innovation and Advanced Education to “absorb” a $1.23 billion operational shortfall (no more front line staff for you!) Mr Prentice expects schools, universities, colleges and hospitals to augment their capital spending requirements by “self-financing” to the tune of $1.6 billion over the next five years.
“Self-financing” is accounting-speak for “charity”.
And to introduce an element of sport (got to keep those schools and hospitals on their toes) Mr Prentice cut the charitable tax credit from 21% down to 12.75%.
May I suggest that until our government perfects the “field-of-dreams-build-it-and-they-will-come” model of providing education and healthcare, we’ll be better off with fewer understaffed schools and hospitals—unless of course the government has figured out how to educate children in teacherless schools and cure the sick in nurseless hospitals.
Your children don’t count either
With the exception of a minor tweak to the personal income tax rate for people earning over $100,000 and 59 new user fees and levies, Mr Prentice made absolutely no changes to Alberta’s fiscal structure.
Budgetary shortfalls will continue be covered by direct borrowing and funneling projects through public-private partnerships (P3s)—the government plans to borrow $30 billion over the next five years. Debt service payments will hit $1.9 billion by 2020.
The government will continue to rely on oil revenues to round out the budget. It is crossing its fingers in the hope that oil prices improve in the second half of 2015. Bitumen and crude royalties must rise from $1.9 billion today to $7.5 billion by 2019 in order for the government to divert 50% of its oil revenues into the Heritage Trust Fund to buttress budgetary shortfalls down the road.
Not to put too fine a point on it, the government’s ability to provide public services continues to depend on the kindness of strangers—in this case OPEC.
Unfortunately if Mr Prentice’s crystal ball is as defective as that of his predecessors our children will be digging themselves out of financial hole even deeper than the one we find ourselves in today.
The power of money vs the power of the ballot box
Budget 2015 showed us the power of money. Mr Prentice will take good care of Corporate Alberta; the rest of us are out in the cold.
Cicero said there is no fortress so strong that money cannot take it…he was wrong.
There is a fortress that all the money in the world cannot buy. It’s called the Alberta Legislature. Exert your power. Vote.
** Daily Oil Bulletin, Mar 31, 2015
***Budget 2015, p 20 and https://www.aer.ca/documents/about-us/AER_Brochure.pdf