Back to the future, Alberta style

Remember the good old days, back in the early Klein years? Ah. . . the five-per-cent wage rollbacks for everyone, even school teachers and nurses; the one-way bus tickets out of town for people on welfare; the phony consultations with party faithful on the “hard decisions” that needed to be made.

Yes, for conservatives, those were glorious days.

Today's premier Jim Prentice has inherited the same economic conditions that favoured Tories in the early Klein years, times ten. If there's anything that Tories do well, it's a recession.

It's the good times that they fail at. Yes, I know I'm not being completely fair here; it's Albertans in general that can't handle prosperity.

Just as well then; it looks like we'll be having a lot less of it for a long time.

Face it, Alberta, we've bought and paid for what's about to befall us in this current deep drop in oil prices. And all of Canada with us.

An economist's article printed this week studied the history of energy prices in North America. He concluded we're not in an oil price slump at all. Actually, we're closer to historical norms.

It's easy to convince yourself that $100-plus oil is permanent, when you're shipping all you can get out of the ground at that price. It's easy to forget what things were like when oil was as low as $20 a barrel — as it was when Klein got his first majority.

So it was always easy for Albertans to laugh at anyone who said we should be saving a good part of the revenue from our non-renewable resources.

Recently, the Advocate ran a column saying what a waste it has been for Alberta to try to diversify its economy. The column pointed to a list of early losses on investments of public money that led Klein to declare the province would no longer “pick winners.”

That article was a disservice to all of us. It proposed that only made-in-Alberta solutions existed to diversify our revenue opportunities, and that we had to manufacture them out of thin air ourselves.

Had Alberta simply been a prudent saver of the windfall money our resources have brought us since Peter Lougheed inaugurated the Heritage Fund, we'd easily have half a trillion dollars in that sovereign wealth fund by now.

How much diversity would the global interest on half a trillion buy us? How much of a cushion against the price cycles of energy?

Where did all the money go? In short, we spent it. We spent it on artificially lowering our tax rates below what a prudent industrialized economy could sustain.

While conservatives were arguing that good people “pay as they go,” they were robbing the future so they wouldn't have to pay at all.

Here's something I really like about the budget the City of Red Deer has just passed: we will save one per cent of our tax base per year — even in a bad year.

Provincially, we haven't done that for a generation, through any number of good and bad years. And quite a few of those years have been spectacular.

Because Alberta has no savings plan and no sales tax, we have a much-reduced revenue base.

For example, our province supplies all the services required of a modern economy to the workers in Fort McMurray — and up there, government services are much-needed. But Alberta doesn't collect income taxes from all the wages made by of out-of-province workers. They pay taxes in their home provinces — and it's hundreds of millions a year.

That would be OK, but Alberta doesn't even get a sales tax benefit from the hundreds of millions these workers spend. The feds do with the GST, but Alberta gets nothing.

The revenue stream from sales, plus the revenue from prudent savings, would be all the diversification Alberta needs to unshackle itself from oil price cycles.

Much is made of the economic recovery being enjoyed in the U.S. A whole lot of it is financed by out-of-control government borrowing. But state budgets are also financed by state sales taxes, which remain steady, because people almost always spend everything they earn, good years and bad.

Premier Prentice says we're all in this together. He's says everything's on the table to deal with our current crisis — even a sales tax.

I'll bet he's not serious. If the past is an indicator of the future, he's threatening now to hit us with a baseball bat, so we'll thank him later for only just hitting us with a pool noodle.

It won't be enough. We needed to face the tax hit decades ago, when it would have been much smaller, and which would still have been far less than the tax hit borne by people in every other democratic government on earth.

And we needed to save, even in the bad years.

I say being Tory means never having to learn from the past. That's why Alberta's history is so circular. Our future is our past, times ten.