January 23, 2012
Where Did All Alberta's Money Go?
The left and right think they know
Karen Kleiss, Edmonton Journal, January 21, 2012
Partisan political operators are battling to define the debate over one of the most explosive issues in the coming provincial election: Why can't a wealthy province like Alberta make ends meet?
The ruling Conservative party has passed deficit budgets four consecutive years, even though the province earned between $6.7 billion and $11.9 billion in natural resource revenue in each of those years. On Feb. 9, Premier Alison Redford is widely expected to introduce a fifth deficit budget.
A conservative, right-wing analysis released Thursday blamed the deficit on skyrocketing public-sector salaries, while a liberal, left-wing explanation released Tuesday blamed ballooning corporate profits.
Who to believe.
"The fiscal challenge facing the province is likely to be the dominant issue in the campaign," MacEwan University political scientist Chaldeans Mensah said Friday. "The general public is not open to increases in taxes; it's not in the culture of the place. But we are beginning to see - even on the political right, among conservatives - a questioning of over-dependence on natural resources, especially the oil sector.
"In other words: Is Alberta open to looking at maybe boosting its revenue sources?"
On Thursday, a research paper published by the University of Calgary School of Public Policy revealed Alberta's public-sector wage bill shot up 119 per cent since 2000 - almost double the rate of growth in the rest of Canada, which stands at 63 per cent.
The study was authored by Ken Boesenkool, a former adviser to Prime Minister Stephen Harper and founder of the Alberta Blue Committee, a group that aims in part to establish a "single right-of-centre political party" in Alberta. Co-author Ben Eisen is a senior policy analyst with the market-oriented Frontier Centre for Public Policy.
The pair explain that by 2010, wages and salaries for each Alberta civil servant were $83,326, a 103-per-cent increase from a decade earlier. Those wages took up 95 per cent of the increase in provincial revenues in the past decade, the report says.
The increase in the rest of Canada was 40 per cent.
"These numbers suggest that if the Alberta government is looking for ways of reducing spending to eliminate its deficit . they could do much worse than setting an objective of bringing their wages in line with those in other Canadian provinces," the pair says. "While this paper does not conclusively demonstrate that public sector wages in Alberta are too high, the data presented here - and the sheer size of the per-employee wage gaps - certainly place the burden of proof on those who claim that Alberta public sector wages are reasonable."
The release of that report came two days after former Liberal leader Kevin Taft released a book called Follow the Money, in which he highlights spectacular growth in corporate profits in Alberta.
The Alberta Federation of Labour, a left-wing labour organization, paid the $50,000 cost of publication.
The book, written with University of Alberta economist Mel McMillan and researcher Junaid Jahangir, also relies on Statistics Canada data, as well as government documents and TD economic reports.
Taft reveals that between 1989 and 2008, corporate profits increased from $4,400 per capita to $16,000.
During the same period, corporate profits more than doubled their share of Alberta's GDP, growing from 9.6 per cent to 22.8 per cent. By comparison, corporate profits in the rest of Canada hover at 12 per cent and in the U.S. corporate profits are historically 12 to 15 per cent of GDP.
"In this election, the province needs to have a discussion about how we will pay for public services," said AFL president Gil McGowan.
"The Wildrose party wants the election to be about deficits and cutbacks. We say it should be (about) the province's low royalties and low corporate tax rates."
The attempts to garner public attention in the weeks before the election is called for this spring may be an attempt to work around new laws that restrict third-party advertising during an election.
Under the new rules, spending is not restricted, but contributions are limited to $30,000 per donor in an election year, and forces third parties to be more creative about getting their message to the public.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."