The provincial government has been recording substantial annual deficits. This means it is spending more than it is collecting in revenues. We need to find a way to move to a balanced budget without any increase in taxes (even though Alberta has the lowest per capital tax revenue of any province).
According to panel of experts appointed by the Alberta Government and chaired by former Saskatchewan Finance Minister Janice MacKinnon, the solution is to cut government expenditures. One wonders how long this expert panel had to deliberate to figure out that this was the only option if revenues can’t be increased. The panel’s limited terms of reference allowed for only one response. If you asked elementary school students how they could get the numbers 6 and 10 to balance without increasing the number 6, they would not take long to conclude that 4 must be subtracted from 10.
Alberta is now looking at the closing of some hospitals and universities, fewer doctors, lower wages for public servants and various other spending cuts as the solution to its annual deficits. Asked why the panel could not consider tax levels, the Minister of Finance explained that Albertans had no interest in tax increases. What a surprise! And in how many provinces did we find residents who were keen on the idea of tax increases?
Alberta’s deficit and debt problems stem from poor management over the years by successive governments – Conservative as well as NDP. When the oil economy was booming, Alberta failed to build up substantial reserves as some of the Scandinavian countries have done. For much of this century it also spent rather lavishly, until the preceding NDP Government began to rein in the expenditures.
Some further expenditure restraint is in order, but more emphasis on improving efficiency in the delivery of services rather than just imposing cuts, would have been preferable. It is also ludicrous and unnecessarily harsh to focus only on the expenditure side in addressing the deficit. Alberta may have a spending problem, but it also has a revenue problem, and remains the only province in Canada without a sales tax. A more reasonable approach would have been to deal with the deficit through a combination of expenditure cuts and revenue increases. Given this flexibility, the elementary school students would have brought the numbers 6 and 10 into balance by making them both 8.