After the Fall

Premier Alison Redford just resigned under extreme pressure from her caucus and the PC party organization. More is involved than just lack of political skill.

After 43 years without creative alternation of government, Alberta has developed layer upon layer of hard-to-defend perks for people in government and the senior civil service. Why does Alberta need a fleet of four government planes when British Columbia, a larger and more mountainous province, gets by without any? Why is the premier’s chief of staff paid $316,000 a year, much more than Barack Obama’s chief of staff and very nearly as much as Prime Minister Stephen Harper? Why do political staffers who voluntarily resign get large severance payments?

The real abuse is not the $45,000 that Ms. Redford blew on a trip to South Africa, but rather the government’s recent $45 billion budget. The Finance Minister trumpeted an operating surplus, but the true bottom line was the borrowing requirement. The pseudo-surplus in the operating budget was created by moving capital expenses into a separate capital budget, largely financed by borrowing.

The government likes to justify this borrowing to build schools, hospitals, and roads by comparing it to a homeowner’s mortgage, but the analogy is specious. A house creates income for the owner by substituting for rent, appreciates in value over time, and can be sold to recover the capital investment. Government “assets” create spending obligations rather than income, depreciate over time, and are almost impossible to sell. Who wants to buy a used hospital?

It is disappointing that the Redford government could not balance Budget 2014 when conditions were so favourable. Interest rates are low, oil prices remain high, bitumen is being moved by rail in lieu of pipeline, natural gas prices rebounded because of the cold winter, and the federal government increased transfer payments to Alberta for health care. Is there a term for a benign “perfect storm”? Except for the effects of the 2013 floods, that’s what Alberta has experienced over the last year. If the Redford government couldn’t balance the budget this year, what would it have done when some of these conditions became less favourable, as inevitably would happen?

No one can predict who will compose the government two years from now. Maybe the Wildrose opposition, maybe a revitalized PC party under new leadership, maybe a political grouping that doesn’t even exist yet. But the lessons of Ms. Redford’s fall are obvious. Anyone who hopes to survive in government for more than a few months will have to level with taxpayers. They need to come clean about all the hidden perks and entitlements, and cancel those that cannot be justified in open debate. Stop telling fairy tales about the budget. Go back to a reporting system that taxpayers can understand. Be honest about the deficit, and produce a realistic plan for balancing the budget within a few years. Any premier who acts differently won’t last very long.