As a participant at the Summit, my first impression was the
diversity of the attendees, ranging from Union leaders, Academics, politicians
and citizens on the right and the left, We inevitably had Greenpeace
staging a protest as a diversion.
While the gathering made for very interesting discussions
and ideas, I felt that the summit was held too late to have any impact on the
March 7th budget. Therefore we shall have to wait a year before the
government implements any of the ideas
put forward.
My observations will follow the Agenda which consisted of
four discussion panels:
1.
What is the problem?
This discussion centred mostly on the revenue problem caused
by the lower price of bitumen. The panel all agreed that the price differential
was hurting the revenue. It was explained that we needed to find other markets
for Alberta’s oil and that a solution to getting the oil to different markets
would not happen immediately, but that it may take a minimum of 5years before new pipelines and other means of
transportation are put into effect. My conclusion is that this issue will not
be resolved in the short term and that unless we see a huge jump in the price
of oil, the revenue problem will be with us for some time.
2.
What services do Albertans need?
This panel had a diverse group, which included a union
representative from Health, and a non-profit sector representative. The
discussion was mainly in support of the status quo. That we need to spend to
provide Albertans services. Of course cuts were not part of the discussion but
that the government needed to continue to support the ever increasing costs of
providing services. As a long-time proponent of the provision of public
services through alternative means; I put forward that we should instead be discussing,
not what Albertans needs were but rather that we should be asking whether
Albertans care who provides the services? Public or Private? The panel had some
responses but danced around the issue of private delivery with no real
commitment either way.
3.
Perfecting Alberta’s revenue mix.
A panel made up of Dr. Mintz of the School of Public
Policy, was perhaps the most animated
of all the day’s discussion groups. With Dr. Mintz supporting a revenue mix
including a sales tax and Derek Fildebrandt of the CTF opposing it without a
mandate, made for great debate. Albertan’s have for very long opposed a consumption
tax of any kind, at the Institute we have always supported a reform of the tax
mix, including a consumption tax with caveats. Taxpayers are very skeptical of
politicians when new taxes are implemented.. The real issue is what should we
do with the new revenue? Do we invest in the Heritage Fund or do we just use it
for continued spending?
For those who believe we have a reveue problem a sales tax
may make sense, but it may also be political suicide for any party who
initiates it. The result may be that they would be voted out of office, and yet
the new government would very likely not rescind the tax as they benefit from
the increased revenue. The solution in IPSA”s view is tor educate the public on
the merits and use of any new sales tax, combine with a change in the taxable
income level which could be increased to mitigate the burden of a new tax for
lower income families.
4.
Needs versus wants – setting the proper framework for
spending.
With U of C’s Dr. Tom Flannagan and Mr. Gil McGowan president
of the Alberta Federation of Labour on this panel, the debate got quite
interesting. Dr. Flannagan proposing Ralph Klein across the board cuts while
Mr.McGowan proposing continued spending to provide services, albeit promoting
the benefits of a public sector union> However, the panel still did not address the
question of excessive spending by the government. Participants who made comments
ignored the real question of deficit financing by the government.
My comment to the panel was: “Alberta has a spending
problem, it would be better to make cuts when the economy starts growing
instead of during a recession, when
people cannot find jobs. So if we do not make cuts now, when should we do it?”
Unfortunately I received the usual response : that we cannot and need
not make cuts because Albertans want services. The Chamber of Commerce representative
said that the time was not right because the economy was still sluggish. With
the exception of Dr. Flannagan, who wants cuts now, it left me me wondering whether
any significant cuts will be done under the so- called ‘results base budget’ At
IPSA we advocate ‘zero-base budgeting’ which would identify areas of inefficiency
immediately and then implement ‘ performance -based budgeting’ in following
years.
On the financial status of Alberta, I am pessimistic in the
short term, and yet optimistic in the long term. In my view, too much time was
spent on new taxes and not enough on how to make necessary cuts or provide
services by alternative models. Despite the fact that the Summit did not
provide immediate solutions I believe that it was a worthwhile exercise. I also
believe in the resilience of Albertans to push their politicians to make the right
choice. If not there will be political cost to be paid at the next election.
Marcel Latouche
