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Antiquated neoliberalism and Alberta

This op-ed by Parkland Institute Director Trevor Harrison appeared in the April 22, 2016 edition of the Winnipeg Free Press.

A few days ago, I attended Edmonton’s Wild Rose Antique show. The annual event has been running since the mid-1970s. I rarely buy anything, but it’s a nice nostalgia trip, if a bit disconcerting. After all, what does it say about you when the games, toys, sports cards and vinyl records you remember from your youth are now classified as antique?

This time, however, I actually did buy something: a Ralph Klein button from the 1990s. The seller wanted $7.95. I offered $5. The speed with which the seller scooped up my money — no bother, no fuss — told me I could have gotten the button for less. The lesson? Just because something is antique doesn’t mean its value can’t be discounted. The same goes for ideas.

Ralph Klein still evokes nostalgia in some Alberta quarters, no more so than within Alberta’s official Opposition, the aptly named Wildrose party.

Two days before the antique show began, Alberta’s New Democrat government brought down its first full budget. Much of what it contained had already been hinted at, including a deficit of more than $10 billion.

The deficit number drew the most attention from pundits and party leaders. With the exception of Liberal leader David Swann, the other party leaders became hysterical. Beyond apocalyptic rhetoric, however, few offered any real solutions.

This lack of workable solutions is understandable for the Alberta Progressive Conservatives, still licking their wounds after mercifully being put down by the NDP last spring following a near Jurassic-length period in office, and the Alberta party (which has only one MLA, Greg Clark), though it did at least provide a shadow budget.

More should be expected from the Wildrose party, however. It is, after all, Alberta’s official Opposition, presumably the governing-party-in-waiting. Instead of realistic solutions, Wildrose fell back on the memory of Ralph Klein. The party argued for cuts and freezes in the public service that would, it suggested, carve $2 billion from Alberta’s deficit. But this would still leave a hole of more than $8 billion.

The real culprit, as even the NDP’s worst critics admit, is the province’s loss of 90 per cent of its oil royalties. In short, Alberta has a revenue problem.

The genesis of the problem is well known. In the years after 1971, the PCs created the Heritage Savings Fund. Petroleum revenues were supposed to go into an investment fund and perhaps, during severe downturns, shelter Alberta from the storm. But over time, the PCs became captive to the oil industry, offering it more and more incentives to develop Alberta’s oil, through reduced royalty rates. At the same time, the government — especially under Klein — began treating resource money as a government slush fund allowing them to buy Albertans votes through lower and lower taxes. The government came up with an advertising hook that would make Mad Men’s Don Draper proud: low taxes were "the Alberta Advantage."

But the Alberta advantage was dependent on highly volatile petroleum royalties and thus unstable. With every shock to the world price of oil, Alberta’s economy went into cardiac arrest.

There is no easy way out of Alberta’s fiscal mess. Alberta must find new revenue streams and must break free of oil dependency. The transition will be hard.

The NDP has struggled at times in looking for solutions. It is not perfect — no government is; it has made mistakes. It could use some real world advice on how best to make the transition. Instead, all the government, and Albertans, gets from the Wildrose party is the regurgitated mantra of low taxes and shrunken public services — something Manitobans may be hearing under the newly elected Pallister government — while praying for the price of oil to return. In short, the Wildrose party continues to be a variant on the now-extinct Klein government and its policies. Can the time be far off when Wildrose party buttons become collector’s items, fugitive pieces from an antique political world?

Trevor Harrison

Dr. Trevor Harrison is Director of Parkland Institute. He is a Professor of Sociology in the Faculty of Arts and Science at the University of Lethbridge, and Associate Director and Research Affiliate of the Prentice Institute for Global Population and Economy.

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