It’s funny how some events can come as a big surprise, while other things are merely inevitable. The Wildrose Party crossing the floor, that was surprising. But take cold weather during an Alberta winter. If you don’t know it’s coming, you must be sleeping. Falling oil prices are kind of like winter weather in that respect. If you don’t plan for the inevitable, chances are you are going to be a bit uncomfortable, and that brings us to oil prices, which dipped into the $46 range this week.
For a province growing by 100,000 people a year that depends on oil revenue for 15 per cent of its budget, the news is devastating. We still need the new schools and hospitals to serve this population, and the money for the civil service to run the whole thing. But according to Premier Jim Prentice, low oil prices will mean a $6 billion shortfall in government revenue this year, and $5 billion a year for two years after that, should prices remain low as globally anticipated.
That’s a lot of extra change to find in the chesterfield, so the province must again – as it has in decades past – look at reducing spending, increasing taxes or borrowing the money it needs.
While the salaries of government workers, from MLAs on down, have certainly come under scrutiny, so has the suggestion of increased taxes. As the Progressive Conservatives love to point out, Albertans have enjoyed the highest services and lowest taxes in the country – a situation not sustainable at $100 oil, never mind oil at $50.
Perhaps more than any of the other surprises that have come its way in recent years, this is beyond a doubt its worst “yikes” moment. While the premier says he is personally not in favour of instituting a provincial sales tax, the idea has been floated by other high profile members of the same political club. Former finance minister Ted Morton, for instance, has promoted the idea as a cheap and efficient way of raising government money, if piggybacked onto the GST. If his figures are correct, every one per cent in sales tax would be worth $1 billion to provincial coffers. Taking that suggestion forward, a six per cent sales tax would wipe out the shortfall.
That sounds fantastically easy for government, and as some have suggested, maybe it is time we all pay up. Unfortunately, it would also suddenly lop six per cent off the take-home pay most average Albertans and voters use for their groceries. Another idea, floated in some circles is to raise Alberta’s beloved flat income tax rate of 10 per cent or move to a progressive tax where the rich are supposed to pay at a higher rate than the poor.
Either way, this is a crucial time in Alberta politics, where the ruling party is going to have to go keep an eye on spending and go against its own dogma, or otherwise face a huge budget deficit – something that doesn't sit well with Albertans. When the province likely calls an election in the next several weeks, it has no choice but to sell us a brand new vision of Alberta’s future. This election we have to pay attention and ask very tough questions. After oil’s collapse in the ’80s, a bumper sticker promised, “Next time I won’t piss it away.” Now is time to collectively make sure that doesn’t happen.
