Sunday, 27 January 2013

Let's have a frank conversation

As I listened to Premier Allison Redford’s address on Alberta’s fiscal situation, I began to think whether I was living on another planet. What I heard was that we have a revenue problem and not a spending problem that can be fixed by continuing to invest and not cut spending and not raise taxes.

The problem as the Premier saw it was that we had a ‘bitumen bubble’ caused primarily by a $50 per barrel for our oil and not the higher price we forecasted in the budget. Result a possible $6 billion shortfall in revenue. In summary it was not the government’s fault.

Promising Albertans that we shall have to make some tough choices, the Premier did not mention which one they will be. Instead we heard the same rhetoric uttered by most politicians when they are in trouble for not balancing the books: “You gave our government a clear mandate to keep investing in services that support our families and our communities — the communities where we live. You told us to continue building the new roads, schools and health facilities we need.”

This statement casually puts the onus on Albertans for wanting things that they cannot afford.  Things that politicians promised to win elections, but that in the longer term still remains to be paid for by taxpayers. We cannot cut the costs of education, health or infrastructure, and yet we do not want to cut the costs of public sector labor and politicians salaries.

The Premier also stated :” Last year, we initiated a Results Based Budgeting process — a process that challenges every dollar the government spends, while making sure the programs and services we provide are getting results for Albertans.” While this form of budgeting may be a departure from previous budgeting concept, like Calgary’s ‘zero base reviews’ it is nowhere near the zero base budget that the Institute asked for.

Results based Budgeting process is an effort to make government more accountable to its citizens for promises made. However to be truly accountable the taxpayer must have available clear, easily accessible and up-to date- information about the success and failures of programs and services. Currently, as we have seen information has been at best sparse. Results based Budgeting is not bad but does not address Alberta’s spending problems in its entirety.. IPSA still maintains that zero-base budgets that demands that all activities be examined fully as if they were starting at zero, would be a better process to identify and eliminate redundancies and inefficiencies in the system.

I was glad to hear that Premier  Redford wants to start a conversation. To that effect the Alberta Economic Summit is planned. We believe that among the more esoteric discussions the following should be put on the table:
·         An open discussion about  Health Services, including private delivery
·         A discussion about education and its growing costs
·         A consumption tax
·         A complete revamp of the education tax based on property values
·         That debt not be raised for purposes other than long term infrastructure
·         A mechanism by which automatic cuts will be made when revenues fall by 10%
·         The establishment of zero base budgets and managed competition for services

It is clear that in the past 10 years Alberta has lost its ‘advantage’ through poor fiscal management. Now that we have a crisis, it is time to look at things differently. Albertans are prepared to venture into new territory, but they also want accountability and see more value for their money. We must continue to invest in the Heritage Fund, and at the same time provide services differently to maintain the quality of life that we are accustomed to.

Sacrifices may have to be made, but it must start with the government and the public sector. I hope that the conversation that the Premier wants to have include a frank discussion about how Alberta will regain its place as the  best  province in Canada

Marcel Latouche

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