“…if you don’t mind my sayin’ I can see you’re out of aces. For a taste of your whiskey, I’ll give you some advice”—Kenney Rogers, The Gambler
If there is one thing we should take away from Finance Minister Toews’ budget presentation last Thursday it’s this: the Kenney government has run out of aces and they refuse to let anyone give them any advice because they’re afraid they’ll lose the next election.
How’s it going so far?
We are halfway through Premier Kenney’s term and despite everything he’s done to create “jobs, economy, pipelines” nothing has worked.
He slashed corporate taxes, relaxed regulations, flung the doors open to coal companies, cut public services (causing tremendous damage to education and healthcare), reduced support for municipalities, and foisted more costs on to Albertans…and for what? At the end of Kenney’s term Alberta will be stuck with an $8 Billion deficit and a $133 Billion debt.
Despite the pain, there’s been no gain.
Naturally Albertans want to know what Kenney intends to do about it.
The go-forward plan
The answer is: not much.
The government will spend $3.1 billion next year on various sectors including energy, tech, tourism, pharma and life sciences but details are sketchy and a significant chunk of the money is slated for ongoing projects, not new initiatives. Even the Jobs Now program that Kenny announced with great fanfare is a federal-provincial grant program that’s been around for years.
So what’s new?
The only part of the Budget document that offers specificity is the bit that gripes about the Feds not doing enough for Alberta and the 5 page discussion of the government’s policy to support ESG.
You remember ESG (environmental, social and governance considerations), the thing Kenney once referred to as the “flavour of the month.”
Well now the Kenny government is going to support the energy sector’s ESG efforts by piggy-backing on to the Feds’ climate change mitigation efforts (assuming Kenney isn’t fighting them in court) and allocating $1 Million to an ESG initiative that will hold entities who view Alberta’s ESG story “unfairly” to account.
Yes, that’s the War Room and the Anti-Alberta Public Inquiry’s job, but hey, what’s another million among friends.
The ESG initiative will be run by the Kenney executive council (ie Cabinet). These folks are responsible for the botched War Room, scrapping the 1976 Coal Policy (and bringing it back temporarily), suspending environmental monitoring during covid, selling off, then not selling off Alberta’s parks, cutting staff and “red tape” in the department of Energy and the Alberta Energy Regulator, etc.
In other words, the go-forward plan is a zombie version of the existing plan, which Mr Toews readily admits isn’t good enough.
Could it be that Alberta can’t balance its budget because its fiscal structure is flawed?
For decades Alberta has relied on oil and gas royalty revenues to balance the budget. Royalty revenues are ridiculously unstable, yo-yoing up and down and wreaking havoc on Alberta’s budgets.
Economists and the Business Council of Alberta say a more stable, reliable revenue source is necessary (sales tax? did someone say sales tax?)
Mr Toews says oh no, not now. The government must wait two to three years when it will have “more economic clarity” at which time it might, maybe, set up a “revenue panel” to review the “efficiency and appropriateness” of Alberta’s revenue structure.
(Mr Toews graciously avoids saying Mr Kenney could have done this in 2019 when he asked the MacKinnon panel to review Alberta’s fiscal structure but restricted the review to the expenditure side only).
So, let’s talk about Mr Toews’ concern about the lack of “economic clarity.”
Have you read the 2021 Budget document? It’s chock full of statistics, forecasts, and energy and economic assumptions; assumptions the Kenney government says are prudent and solid enough to support the conclusion that there will be an $8B deficit at the end of Kenney’s first term.
The issue isn’t a lack of clarity but a lack of political will to set up a revenue panel because this would signal to Albertans that that the UCP government’s economic strategy failed and it’s time to consider a sales tax.
Besides there’s always the (tiny) chance Alberta will be blessed with another oil boom which would allow the Kenney government to slip off the hook it created for itself when it wiped out billions in corporate tax revenues, billions in carbon tax revenues, and propped up KXL by gambling Trump would win the US presidential election.
And yes, covid has kicked the stuffing out of Alberta’s economy just as it’s ravaged the economies of the other provinces and territories across Canada, but no, those jurisdictions are not making things worse for themselves by clinging to what the Business Council calls an “outmoded mythology” ie. Alberta hasn’t had a sales tax for 60 years and god damn it it’s not going to have one now.
The Kenney government is going to play out its hand. Albertans will have a chance in the next election to tell the Kenney government it’s time to fold ‘em and walk away.