Jim Prentice knows what needs to be done

What does the collapse of Alberta’s opposition parties mean?

Phil Elder

What does the collapse of Alberta’s opposition parties mean? First, Rachel Notley’s NDP has to be seen as the big winner. What other opposition party has the record, the money and organization?

She’ll get more seats, at least in Edmonton. Not so much in southern Alberta, although Shannon Phillips in Lethbridge West could win. Who knows where Calgary will go? Not NDP. Probably Liberal David Swann, maybe Green and/or Alberta Party leaders, the rest Tory? Say it ain’t so!

Second, if Premier Jim Prentice is ruthless, he will call a snap election in order to win 75+ seats. Just like the old days.

Of course, he’ll use the excuse about needing a mandate to deal with the latest gutting of oil and gas revenues, and the need for public support of the harsh measures (mostly expenditure cuts) that his party’s continued economic mismanagement has caused.

We must admit there’s a slight case for a new Premier seeking a mandate – otherwise, the province will have been governed by an unelected leader for a year and a half – but the Parliamentary system provides for this kind of turnover.

But a true statesman might decide not to waste a critical month electioneering when he knows what needs to be done.

Given the apparent dimensions of Alberta’s projected $6 to 7 billion deficit, most people would agree both revenues and expenditures have to be assessed. Some people have the delusion we can solve the problem by ‘cutting out the fat’ in government expenditures, without hurting the quality of services we all depend upon.

Surely we can dismiss this lunacy, but some cuts are feasible.

I’m no expert in public finance, but even the Fraser Institute (which seems to think that ‘no tax is a good tax’) suggests abolishing corporate subsidies. Of course, careful analysis might conclude that some of these programs should continue, but starting there is far better than the meat-ax across the board cuts executed by the much-overrated Klein government in the mid ‘90s.

There may be other programs which have become outdated.

(For example, let’s do a cost-benefit review of Alberta’s foreign missions.)

Another strong candidate for elimination is the remarkable severance and pension payments which make life cushy for well-paid government executives.

Once a compassionate review of government expenditures is completed, we’ll still have a multi-billion dollar shortfall, especially true now as we have surely reached the point where we decide never again to use oil and gas revenues to finance ongoing government programs.

Which brings us to the next solution.

We have to acknowledge that not all taxes are bad. Remember American Justice Oliver Wendell Holmes Jr. saying, “I don’t mind paying taxes. They buy me civilization.”

But some taxes are better than others. Economists identify progressive and regressive taxes, depending on their relative impact on various income groups. For instance, every other province and territory in Canada imposes progressive income taxes, which levy an increasing percentage on higher income groups.

Why not Alberta? After all, except for ideological outriders whose policies favour the rich, everyone seems to agree that’s fair.

I don’t know very much about the combined impact of corporate and income tax – some believe this amounts to double taxation. I’d want to hear from tax experts before meddling too much with the structure.

But why not return the rate to where it was a decade ago? Was Alberta so unfair then?

I’m also inclined to suggest we ensure our oil and gas royalty rates are at least as high as under Peter Lougheed, or maybe the average of other similar jurisdictions. As Lougheed said, “Alberta should act more like an owner.”

Finally, we come to a sales tax.

The flat, universal nature of this tax could be a problem, although again Alberta is the only province without one. So it could be set at a low rate, say 3% with rebates for low-income Albertans.

For me, however, the fundamental principle is we shouldn’t volunteer the poor and disadvantaged to bear the burden.

Fairness, not continued favouring of the well-off, is essential.

Phil Elder is Emeritus Professor of Environmental and Planning Law with the Faculty of Environmental Design at the University of Calgary. His column is distributed through Troy Media.