Part 3 UCP Economics Alberta

As Alberta’s debt and deficit is manageable without cuts if Alberta implements a PST, following the Mackinnon report recommendations without looking at increasing potential revenues would undercut Jason Kenney’s claim of being a fiscally responsible Premier.

Neither pixie dust nor magic wands are needed to inform Albertans that the Mackinnon report is a political document with an incomplete mandate of only looking at Alberta’s expenditures and not the potential revenues available to the lowest taxed and wealthiest Province in Canada.

The Magical Ms M and the Blue Ribbon Panel on Finances

EXCERPTS: ” For a government that prides itself on being willing to use “all of the tools in its toolbox”, the fact Kenney prevented Ms M from considering the revenue side of the budgeting process confirms he was looking for a political report, not one based on economic logic.

Ms M started by reassuring Albertans she understood the importance of revenues.  She defined a budget as a plan “outlining anticipated revenues and expenditures” and warned that to manage Alberta’s finances it would be necessary “to increase stable sources of revenue and decrease reliance on volatile non-renewable resource revenues”. 

That said, she began to spread the pixie dust.

So, who do we trust:  Ms M or David Dodge, the former governor of the Bank of Canada, and the national and international community?   

The magic continues

Ms M expects Alberta to increase its revenues by growing the economy.  She applauds the corporate tax cut as one way to get there.  Given the fact Alberta was already the lowest tax jurisdiction in Canada it’s questionable whether the $4.5 billion gift to corporations will make a significant difference.  However, any moves on Mr Kenney’s part that damage publicly funded and publicly delivered healthcare, education and other public services will negatively impact Alberta’s reputation for offering a good quality of life.   
And no amount of pixie dust will change that. 

  

Comments on the Mackinnon report & comparisons with other Provinces

09/03/19 EXCERPTS by ChangeAlberta on Facebook: “The truth is that if we paid the same provincial taxes as other Canadians, we could get rid of our deficit and have universal daycare provision, and improvements in our other social programs quite easily. The UCP nonsense that equalization or “NDP overspending” holds us back is actually unsupported by real statistics on public spending and public revenue in Alberta as the Parkland Institute article below, written as the Mackinnon commission was assembled, makes clear.”

05/10/19: Alberta’s ‘blue-ribbon panel’ – the sound of one hand clapping

EXCERPTS: “The panel’s mandated approach of tackling Alberta’s fiscal picture with one hand tied behind its back provides in the case of Alberta an answer: it is the sound of severe—and unnecessary—cuts to education, health, social services, and other programs.

As McMillan explains in his report, Hard Math, Harder Choices: Alberta’s Budget Reality, “Household incomes are a useful comparator for three main reasons. The first is that income is a major determinant of demand for goods and services, including those provided by governments. A second reason is that household income is a measure of fiscal capacity; that is, it accounts for the ability of a province or country to provide or finance public outputs. Finally, because labour is an important input into public goods and services and governments must be competitive in the wages and salaries, average incomes reflect a significant cost component of government budgets.””

09/09/19: Alberta conservatives prepare for a revival of Klein-era budget cuts

It’s important to note that during the Klein-era cuts, together with low oil prices, Natural Gas prices were at an all-time-high which kept Government coffers brimming with revenue. NG prices are in the toilet today and not expected to rebound.

EXCERPTS: “Conservatives still like the idea of austerity budgets no matter how often such measures have failed.

It seems to warm their cold hearts.

And so it is with Alberta premier Jason Kenney, who empowered a panel of like-minded right wing experts to suggest how the Alberta government can balance the books and return to what it considers fiscal rectitude.

That such fiscal rectitude might in fact put more people out of work when the unemployment rate here has been higher than the national average for three years doesn’t seem to enter into any of the calculations.”

Why has someone not thought of this before said no one ever!

Provincial sales tax and carbon levy needed to help balance Alberta’s books: U of C professor

EXERPTS: “Alberta should introduce a sales tax while retaining the recently cancelled carbon levy to help rescue the province’s fiscal future, says a report authored by a prominent economist.

The MacKinnon report released Tuesday recommends more private health-care delivery and to freeze spending on K-12 education while cutting other expenditures.

In response, Ken McKenzie of the University of Calgary’s School of Public Policy said those moves should be bolstered on the revenue side by a GST-harmonized provincial sales tax.

That move would wean the province off its now unfeasible reliance on petroleum revenues that face an uncertain future due to market forces and environmental concerns, he said.

“The dizzying ride that roller-coaster created, and its concomitant blithe fiscal philosophy of ‘don’t worry, be happy,’ has to come to an end,” said McKenzie.”

Is the MacKinnon report a new direction for Alberta or are we just muddling through?

Everyone knows Alberta has an inherent fiscal problem that it has not handled well

“There is a great deal of wishing for a magic wand that could annihilate the volatility in public revenues”

“There is no question that the report features favourite conservative themes, the major ones being “Let’s try to get public-sector compensation under control (if necessary by neutering the collective-bargaining powers of those employees as much as the courts will allow)” and “Hey, there might be opportunities for privatizing stuff.”

MacKinnon Report endorses Jason Kenney’s political agenda, doesn’t fix Alberta’s big revenue problems

EXCERPTS: “The MacKinnon Report is very much a political document written by political people who were appointed because they share the government’s vision.

The MacKinnon Report calls for funding freezes or cuts to public services across the board, including increased privatization of health services, changing the funding formula for Alberta schools (and likely introducing more private and charter schools), increasing government control of post-secondary institutions and lifting the current freeze on tuition fees, and downloading more infrastructure costs on municipalities.

When premier Ralph Klein and treasurer Jim Dinning imposed drastic cuts on public services, Albertans were told that balancing the budget and paying down the provincial debt was necessary to get Alberta’s fiscal house in order.

Successive governments, both Progressive Conservative and NDP, spent decades trying to fix the damage those short-sighted cuts had on Alberta’s communities, public infrastructure and public services.

The “blue ribbon” panel was created to provide an endorsement of Premier Kenney’s political program, and, if its recommendations are adopted, could be the most radically ideologically conservative agenda Albertans have seen in decades.

The narrow mandate of this panel was a missed opportunity to actually address the fiscal challenges facing Alberta, which includes issues with revenue ranging from low taxation and over-dependence on oil and gas royalty revenues.

The report frequently compares public sector spending in Alberta with British Columbia, Ontario and Quebec, but only when it comes to government spending. The big problem with comparing Alberta with our provincial counterparts on the spending side is that our revenue – generated through taxes – is significantly lower than every other province.

If Alberta had the same level of taxation as BC, which is the second lowest in Canada, then Alberta could have no deficit and could be collecting billions of dollars in additional revenue each year.”

Who would really benefit from Kenney’s corporate tax cuts?

EXCERPTS: “Given the high rate of foreign ownership of the biggest corporations in Alberta, a large share of the increased corporate profits would flow to corporate owners and shareholders outside the province.

Kenney’s platform promises a reduction in provincial spending by $7 billion over four years largely to finance his tax cuts. Analysis by economist Hugh Mackenzie estimates the UCP plan would lead to a net loss of 58,300 jobs over four years. These estimates are consistent with economic and job multiplier figures for public spending just published by Statistics Canada.”

SEE Neoliberalism post about tax cuts not delivering benefits claimed

And Further Economics posts:
Part 1 Conservative Economics Gutting Fiscal Capacity
Part 2 Conservative Economics
Part 3 UCP Economics Alberta

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s