One week, three budgets — and a
lesson in how hard it is to be the grown-up in the room.
No government in Canada is enjoying an
easy time of things these days, especially in the area of fiscal
management. Budget decisions are never easy, but in a time when
people expect top-level government services (at least for themselves) and when revenue resources seem to be near exhaustion, keeping
civil society functioning and voters relatively happy gets near
impossible.
That's why we expect leadership from
the people we elect to government.
In Ottawa, leadership came in the form
of extreme caution hidden beneath a lot of distracting words in last
week's budget. Infrastructure spending was announced (again) but the
actual money for those projects has been deferred — to a time
closer to the next election, when they can be announced yet again.
But overall, the budget's tone was
about holding the line amid concern about how the decisions of an
irrational U.S. government will affect our economy. And, yes, there
will be more deficits.
Alberta's NDP government worked very
hard to please almost no one in their recent budget speech. Yes,
there will be continued deficits — like just about every other
jurisdiction in the land.
But the hard decisions were avoided.
Incredibly, given the rhetoric of the NDP while they were in
opposition, instead of attempting to wean the province off of
near-total reliance on variable oil prices, they doubled down on
them.
Like the Tory governments before them,
the NDP employed wishful thinking that oil prices will soon magically
rise and save the province from having to act like an adult. That's
not going to happen, no matter how many new pipelines get built in
the next decade or so. As soon as oil price benchmarks reach a
certain point (most recently barely over $50 a barrel), shale
producers in the U.S. open the taps and drive the price down.
Oh, but we are reminded that Alberta
has the lowest tax rates in the country.
Fiscally conservative Saskatchewan took
its time, but finally learned to read that writing on the wall. Their
recent budget did the things Alberta should have looked at.
In their budget the province raised its
sales tax rate from five to six per cent, and hiked the usual sin
taxes on booze. Not only that, but items that have been exempt
from the sales tax are to be included. Some pundits suggest that will
raise the effective sales tax rate by an extra two points.
Where Alberta protected jobs and wages
in the civil service, Saskatchewan will cut service costs (by various
unannounced means) by 3.5 per cent. Trouble with the province's
teachers union was already on the horizon, so expect school boards, teachers and students to suffer the consequences.
And yes, in conservative Saskatchewan,
this is the fifth deficit budget in a row, with no relief coming
soon. But at some point you eventually hit a wall of fiscal reality.
The point to be made here is that if
you can't tax your way to prosperity again, neither can you get there
without paying for what you demand from government.
Difficult times demand hard decisions.
If Albertans can't accept taxing income like every other government
in the developed world, you need to find substitute revenue to fill
the gap. Or, you either get eternally mounting debt or severe cuts to
services. Probably, you get both.
Oil revenues will not fill that gap. To
believe so in the new higher-supply, lower-use global condition is
just magical thinking.
Saskatchewan has realized that. Late,
but they've arrived. Alberta is still dreaming.
It takes a grown-up to say so, but
Alberta needs a sales tax. Or we'll be closing schools and hospitals,
and leaving our lower income generations in a much colder province.
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