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Big government, federal or provincial, is a pain in the neck

By: Nathan Anderson

  |  Posted: Wednesday, Mar 21, 2012 06:00 am

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What a difference a decade makes.

On July 13, 2004, Premier Ralph Klein announced the end of Alberta’s debt. Over the span of a decade, Klein and company paid off $22.7 billion in debt, worth about $8,400 for every man, woman and child in the province. The province had also moved to a flat tax and soon mailed royalty cheques directly to Albertans. Government spending was under control and times were good.

In claiming the debt-free mantel, Alberta became the shining example of fiscal conservatism in Canada. Alberta was the only debt-free province in the country, and made Paul Martin’s federal government - also somewhat renowned for its deficit slashing in the 1990s - look like drunken sailors. If big government is a pain in the neck, the federal government was cause and Alberta was the chiropractor.

Fast forward to the present day.

The shoe is now firmly on the other foot.

With this spring’s federal budget, the Conservative government is poised to rein in out-of-control spending and make good on an election promise to slay the deficit a year sooner than originally forecast.

The feds have a plan to cut the public service by five to 10 per cent, or $4 billion to $8 billion, over the next four years. The full extent of the cutting will not be known until March 29, but it is expected to be Prime Minister Harper’s first truly conservative budget.

Compare that to Alberta. Then sigh and shake your head.

Premier Redford’s first budget picks up right where Ed Stelmach’s last left off. Record spending reached $41.1 billion.

Even using wildly optimistic revenue projections, a fifth-consecutive deficit will be recorded, one more than originally forecast.

Blowing through another $3.7 billion from the Sustainability Fund, the PC government has nearly bankrupted the rainy day account, which held $15 billion in 2009.

And, in the retiring finance minister’s own words, we can expect a re-elected PC government to start walking back the tax cuts instituted during the Klein-era.

“Budget 2012 makes no change to Alberta’s tax structure or rates,” Ron Liepert told the National Post.

“But as we move away from volatile resource revenues to fund ongoing programs, and move toward a more sustainable revenue base, we know that a discussion on taxes must lie in Alberta’s future.”

What does he mean by that? It’s pretty clear when you look at a previous statement, as reported by the Calgary Sun.

“(Sales tax) is not a term Albertans are afraid to talk about,” Liepert said at the Edmonton Economic Development Corporation’s annual luncheon, in November.

“There is a growing interest in Alberta to have that discussion — and we should be having those discussions... We cannot continue to rely as heavily on resource revenue as we do.”

Yikes.

In the span of a decade, Alberta has gone from Canada’s shining example of the benefits of fiscal conservatism to one of the country’s highest spending jurisdictions per capita, toying with the idea of a sales tax and poised to plunge ourselves back into debt when the sustainability fund runs out.

That pain in your neck? It’s not just big government. It’s whiplash.


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