The recent St. Albert utilities hike is causing much consternation amongst the citizens of St. Albert. Add this to the hikes to the other utilities through franchise fees and their administration, and people are feeling the economic pinch. The talk in the coffee shops is that these hikes are tantamount to taxation without representation, with council eschewing its responsibility to its citizens in an effort to preserve political optics.
If one stops and takes a glimpse at the greater picture, the problem arises from the city’s insatiable need for revenue. Its creativity in finding other means to raise income starts from the fact that the municipalities are not sovereign entities, which limits how they can raise taxes. Adding to this problem, since the 1990s, municipalities have taken on responsibilities, once the domain of both the federal and provincial governments, leading to greater expenditures that are not the intended role of municipal governments.
Choosing to target utilities, however, is a very myopic and pernicious economic policy, as these are necessities of life for us in Alberta. We cannot live without heat, electricity, water or sewage disposal in our industrial, urban society: The demand is invariably inelastic. We may try to reduce our usage, but in the end we have to use these utilities, and the government, along with the private companies collecting on behalf of government, will continue to raise our costs, as the city itself will become dependent upon this revenue stream.
All utilities should be regulated to help maintain costs. This does not mean that there cannot be variable charges for usage, but the greatest cost of utilities is for administration, which is pure profit gouging by corporations. Deregulation, the policy introduced by the Klein regime, and the selling off of these public assets, has led to higher costs to Albertans, not the lower ones that was its justification at that time. Unfortunately, this policy did not take into account the limited number of suppliers in our small market, offering the needed competition to keep prices down. Instead, it has created an oligarchic, cartel-like situation, which is now crippling the more vulnerable in our society. With city councils relying upon this revenue, it is only adding to this problem.
It is clear that these policies have failed, and another solution is needed. Raising income through the utilities, however, is detracting from the truth, the rising costs of running municipalities. Some of this can be attributed to poor policy decisions, but in the end, municipalities need to find a more transparent and accountable means to raise revenues. It is time that the province addresses these revenue issues that municipalities face, as they are on the forefront of delivering the more crucial government services. And though we are fortunate to have a strong municipal government here in St. Albert, it is time they revisit this policy too, or it is going to continually face the angst and ire of its citizens.
John Kennair is an international consultant and doctor of laws who lives in St. Albert.
