Jason Kenney’s warning came just prior to the government’s economic update announcement. He said “when we get through all of this there will be a fiscal reckoning”.
Reckoning. It has a biblical ring and in this context the implication is that no matter what calamity is visited upon us, we had it coming and we deserve to be punished.
On Aug 27, the Kenney government set the stage for the fiscal reckoning by opening the Legislature with a prayer. The Speaker asked the “Lord, the God of righteousness and truth” to “grant [Alberta’s elected representatives] the guidance of Your spirit.”*
It’s unclear which god the government was calling upon but as a result of his/her/their guidance the Kenney government is facing a $24.2 billion deficit this year and an accumulated debt of around $100 billion.
This in and of itself isn’t the end of the world—Alberta’s debt as a percent of GDP will be 22.3%, this is comparable to BC at 22% and Sask at 20.8% —however finance minister Toews made it clear that the path to a balanced budget and reduced debt was cutting expenses (aka an austerity budget) and not increasing revenues by reversing the government’s decision to cut corporate taxes or, heaven forbid, considering a provincial sales tax.
Finance minister Toews introduced the economic update with an epic myth.
He said before Alberta was blindsided by covid-19 and the OPEC+ oil price war, Alberta’s economy was on the upswing thanks to the government’s job creating corporate tax cut and red tape cutting efforts.
This is not true.
Between Aug 2019 and Feb 2020 Alberta lost 24,400 jobs and not one major corporation relocated to Alberta to take advantage of the Kenney corporate tax cuts and its red tape free business environment. In fact, one major corporation chose to grab its tax savings and run to the US.
Furthermore, the government’s effort to cut red tape made Alberta even less attractive to investors.
Global investment managers like Blackrock are pulling out of Alberta because of its lack of environmental, social and governance (ESG) performance. Morningstar, a global investment research firm, lays the blame at Kenney’s doorstep saying that by cutting staff at the Alberta Energy Regulator and weakening environmental monitoring and oversight “the Alberta government has become the oil patch’s own worst enemy.”
So no, the Kenney government’s economic policies did nothing for Alberta’s economy before calamity stuck.
The day of reckoning requires a bad guy, someone who must be punished for his transgressions.
In this case it’s the NDP. Mr Toews says if the NDP had cut spending as recommended in the MacKinnon report, the UCP would have inherited a $3.7 billion surplus, not a $6.7 billion deficit when it came to power.
Given that Mr Toews is trying to explain the $24.2 billion deficit that exists today, not the $6.7 billion deficit that existed the day the UCP came to power, it would be helpful if he included the impact of his government’s decision to decrease revenue by $4.7 billion in corporate tax cuts, $1.5 billion in equity investment in KXL, an additional $6 billion tied up in KXL loan guarantees, and the millions of dollars wasted on the war room, and the (non) public inquiry into anti-Alberta energy campaigns, to say nothing of the loss of efficiency and manpower resulting his government ongoing battle with Alberta’s doctors and teachers in the middle of a pandemic.
There is only one bad guy here and it’s not the NDP.
The NDP finance critic, Shannon Phillips, made an insightful observation when Mr Toews presented the economic update. She said crisis is an opportunity for leadership but instead of leadership, the Kenney government is returning to the scene of old battles and old ideas.
This government’s retreat to yesterday’s failed policies is shocking given how much the world has changed over the last six months.
And while it may be too much to expect the UCP to adopt a provincial sales tax, there’s no excuse for the government ignoring the advice of an economic expert like Mark Carney, now with Brookfield, the world’s largest money manager, who says the transition to a net zero economy (where carbon emissions are offset or eliminated) is not only vital for climate sustainability, it presents “one of the greatest commercial opportunities of our time.”
One would think a net zero economy deserves a closer look, however instead of showing leadership the Kenney government prefers to do what Dr Lindsay Tedds describes as doubling down on thoughts and prayers.
All we can do is hang on. Yes, our children, the sick, the old and the vulnerable will suffer under the austerity measures that will be imposed by the Kenney government, but there will be another day of reckoning. It will occur in 2023 when Albertans will have the opportunity to reckon with the UCP government and vote them out of power.
That will be the sweetest reckoning of all.
*Alberta Hansard, August 27, 2020, p2587