Monday, August 22, 2005

Embarrassment of Riches

The federal government surplus will be higher than predicted, at 4.8 billion dollars. GASP! What does this mean? Ralph Goodale is going to be able to come out with a very generous tax cut proposal right before the election this year which means Harper is going to have to find another issue to make his own during the campaign.

But while 4.8 billion is a lot of money, it's nothing compared to the Alberta government, which is now looking at a...wait for it...7 B-I-L-L-I-O-N dollar surplus. It's gotten to the point where the biggest problem facing Ralph Klein is that he really has no idea what to do with all this money. With this kind of revenue, Alberta has to potential to dream big and do whatever they want. A high speed train between Calgary and Edmonton? Free tuition? The best research facilities in the world? The end of income tax? Massive investments in alternative energy? A 50 foot solid gold statue of Pierre Trudeau in downtown Calgary? The sky is really the limit right now.

What Alberta really needs is a leader with some vision, not one sticking around because he wants to beat Peter Lougheed's PC longevity record. I'm not delusional enough to think that person will be a Liberal, but if I were advising PC leadership contenders, I'd tell them to aim big. Albertans want a big project they can get behind, not more of this aimless drift we've seen over the past 3 or 4 years.


  • It will be interesting to see what Klein does. What would make a good deal of sense is to look for sets of investments in things like education which will not exacerbate the existing labour shortage and payoff down the line. Combine that with a progressive reduction in income tax and you pretty much have a recipe for long term growth and stability.

    Plus, Alberta will become a magnet for Canadians from other provinces - as if it isn't already - who want to escape from the high tax, high unemployment traps of the Maritimes, Quebec and Ontario.

    By Blogger Jay Currie, at 5:57 p.m.  

  • I'd agree with building the high speed train from Calgary to Edmonton. Maybe I'd even incorporate Medicine Hat somehow.

    I'd set up a tax system to encourage corporations from other jurisdictions to relocate, thus diversifying Alberta's economy.

    I'd invest heavily in R&D, in an effort to attract the brightest minds from around the world.

    By Blogger Michael Fox, at 6:12 p.m.  

  • Give it all to Ontario before Ottawa steps in and makes you.

    By Blogger Greg Staples, at 6:15 p.m.  

  • Easy, Greg. Eaaaasy.

    Most of that is from Natural gas, which Auntie Jack proposed putting an export tax on. This would curb demand for Natural gas (a little) and transfer some $$ to Ottawa.

    Gambling and liquor taxes take in more than oil and tarsands revenue (not combined, I recall).

    By Blogger AWGB, at 6:24 p.m.  

  • Typical Liberal idea: start a bunch of new social programs based on projected revenues that we might receive in the future.

    With every new initiative the government starts, its not just a one time cost, rather its a future commitment to years of new expenditures.

    Say the Alberta government took all these surpluses and started a series of new social programs. If the oil prices drop dramatically, then the Alberta govenrment would have costs that current tax revenues couldn't cover because all the new programs were based on the predicted oil revenues. This happened in the 70-80's and it caused us to go into deficit spending.

    Remember, its much easier to start new programs (which people then begin to rely on) then it is to cut these programs in hard times.

    Being fiscally conservative is a much better option then to start basing expenditures on revenues that we MAY get in the future. Its not a good idea and I applaude the Alberta government for not spending like a drunken sailor (ie: Mr. Paul Martin).

    With regards to the federal government, the surplus this year will be about 10 billion dollars. However, this doesnt' include the money that the Feds transfer to foundations. Even though the money isn't used by the foundations, the Fed's book it as an expense in the fiscal year thereby decreasing our real net income. Even the auditor general said this:

    The Government has recorded these payments as expenses, even though the foundations do not expect to use the funds for many years. At 31 March 2004, nearly $7.7 billion of these funds were still in the foundations’ bank accounts and investments, earning interest. This accounting treatment has resulted in a reduction of the reported annual surplus when funds are transferred to foundations, rather than when funds are distributed to the ultimate intended recipients or used for the ultimate purposes that the government announced for this spending

    So even though accounting rules are being violated, the Liberals still do it anyway. But then again, when have they ever played by the rules?

    By Anonymous Anonymous, at 6:33 p.m.  

  • Don't worry. I was joking. Just seeing if could get a rise out of anyone.


    By Blogger Greg Staples, at 9:01 p.m.  

  • I've heard it said that Alberta has a fairly significant infrastructure deficit, thanks to frugal spending in order to pay the debt down. Now that the debt is down, I'm thinking it might be of benefit to Albertans to kill that "other" deficit that's been lurking for so long.

    Congratulations, Alberta! Sure, this Ontarian is a little jealous, but it's the luck of the draw, and you're drawing well. Congratulations.

    By Blogger James Bow, at 10:21 p.m.  

  • m.k. said: "Typical Liberal idea: start a bunch of new social programs based on projected revenues that we might receive in the future."

    No need to start new programs. How about the Alberta Government begin to re-invest in the programs which it cut so dramatically in order to "slay the deficit?"

    PSE funding for example was cut by 24% between 1993 and 2003. During this time, the system expanded by 19% and is still has the fifth funding lowest per FTE in the country. Surely we can do better than Manitoba?

    In 1993, AB funded roughly $14,000 per Full-time equivalent (in 2003 dollars). In 2004 it was closer to $10,500 per FTE. Even with the 18% funding increase over 3 years (6% per year), it will only level out to roughly $11,000 per FTE after 3 years.

    I think starting re-funding the programs which already exist should be the first order of business.

    By Blogger daveberta, at 12:48 a.m.  

  • Martin said tax cuts were irresponsible in last election. It would be nice if he meant it (or meant something - just once).

    Here's a tax cut that Paul Martin promised in 1990:

    Scrap the GST.

    Why not junk it, as you Liberals have promised 1000 times.

    By Anonymous Anonymous, at 8:46 a.m.  

  • Former Liberal pollster Michael Marzolini has made about 13 comments over the past two years about how the Liberals could win a majority if they actually did scrap the GST (or, at least, reduced it).

    But that would be a huge revenue hit.

    By Blogger calgarygrit, at 1:38 p.m.  

  • I agree that you can’t start a spending spree with non-renewable resource revenue. However, what you can do is pump this money into well structured endowment funds that will provide reliable and sustainable source of revenue in perpetuity (i.e. the Heritage Fund). The Alberta government made a good start with the “Access to the Future Fund” last February which would see 3 billion put away for future growth of the PSE system. Now they need to fully fill that fund (it currently has only about 200 million in it), and perhaps think about providing some cash flow straight into the university and college individual endowments. The UofC for instance has about 300 million in its endowment, compare that with the best funded University in the world, Harvard, at 20 Billion. Other good expenditures could be in one-time funding projects such as the High Speed train, public works, infrastructure upgrades, and R&D.

    By Anonymous Anonymous, at 2:26 p.m.  

  • Any largescale infrastructure investments (ie: High Speed Train) should HAVE to include access to Ft. Mcmurray as it will soon become the 3rd largest city in Alberta, and arguable the most important in North America over the next 100 years.

    By Anonymous Anonymous, at 3:42 p.m.  

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