Alberta marches forward, on boggy fiscal footing – Macleans.ca

CeciandNotley in the legislatureearlier this month(CP)

For budget speechwriters, a common ploy is to begin and end the finance ministers address with a specific charactera compellingindividualwith a captivating personal story, whose needs and challenges perfectly encapsulatewhat the budget is trying to achieve. For a government investing in health care and seniors care, it might be Deborah, the sandwich-generation single mom whose son has a rare disease and whose mother needs home-care service. For the belt-tightening minister, theresoldtimer Dwight at the small-town coffee shop, who worries about the debt burden his grandchildren will pay. For a province that wishes to tout a new skills program: Mo the plumber, from Syria.

Alberta now has the perfect individual to help frame the Rachel Notley governments vision and fiscal narrative. His name is Straw Man.

Straw Man wants to write budgets with machetes, with deep cuts to public services, Finance Minister Joe Ceci says near the start of his address. Straw Man wants to give grandparents second-class health care. Straw Man will cram as many kids as possible into a classroom, Ceci says near his monologues end. Straw Man gives tax cuts to his corporate friends, he added in his news conference. Straw Man is not named thusly in the speech. The opposition Tories and Wildrose arent named in this 2017 budget speech eitherand nor is Jason Kenney, the man who will become Tory leader Saturday and try to fusetwo parties into one conservative monolith. But Straw Man is clearly a composite character.

Albertas budget is designed to knock down this villainous figures sinister plans. Its a fairly modest spending plan of lowered public school fees, hospital projects and a slow, optimistic climb to balanced budget early next decade. The plan, to the Notley cabinets credit, lacks wildly ambitious new programs, and through some restraint measures allows operations spending to grow by 2.2 per cent. Thats the slowest rate since the days when the premier was Ralph Klein (the Straw Man avatar of bygone NDP rhetoric) during the cuts of the 1990s and after the post-9/11 crash. This years budget does not let the premiers right-leaning foes depict her as a wild-eyed socialistthough both partisan sides like to play with strawbut the plan does place the long-term and possibly even the short-term future of Albertas public-sector system atop a dangerously flimsy foundation.

RELATED: The line item that shows the NDP cant clean up Albertas balance sheet

The provincemay finally be crawling out of itsdeepest recession since the dreadful 1980s, but its a slow crawl, and years will pass before the economy makes up the ground it lost. The provinces oil and natural gas revenue is projected to shoot up by 54 per cent to the highest level in three years, but those three years combined will beequal to what a good year used to be for Albertas coffers.

The deficit will be $10.3 billion, which isbarely lower than last years record mark. The province stakes most of its future balanced-budget hopes on comfortably higher oil prices than might be realistic: $55 US per barrel this year when theyre now below $50, and a rosy-seeming $68 in two yearsfor every dollar theyre off, add $310 million to the deficitand the timely completion of oil pipelines which could be held up by various challenges and resistance. The accumulated debt will soar to $71.1 billion in two years, compared with the $20-billion debt when the NDP took in 2015, and approaching triple the size of liability that Klein inherited a quarter-century ago, when he branded the situation a grave crisis demandingrevolutionary action.

(Theres a charming chart in the budget book that shows Alberta with the lowest provincial debt-to-GDP ratio, at six per cent. The fine print shows these are 2015-2016 figures. On that same page one can find the real 2017 ratio, 13.8 per cent, set to grow to 19.5 per cent by 2019, still lower than most provinces but ahead of British Columbia and Saskatchewan.)

Notley and Ceci seeno real crisis, despite warnings frombond-rating agencies whocould again slash Albertas credit rating, already below its formerly sterling AAA. To the NDP, the crisis is whatever the opposition parties wishto unleash. But heres the problem: the last time province was approaching fiscal basket-case territory, when Klein took over in 1992, even his Liberal opponents were pledging austerity to restore some alignment to the money Alberta spent and the money Alberta took in. The Notley government has already done plenty to increase revenues, including corporate tax hikes, bigger rates for high-income earners and a much-maligned new carbon tax. Any further taxes would solidify the political doom that polls suggest theyll face in the 2019 election. But on spending, theyre unwilling to go farther than they have so far, with measures to freeze civil service managers pay, target a few Crown agency executive packages and find ill-defined savings worth 0.3 per cent of the current budget.

Contrast this with Newfoundland and Labrador, where the Liberals responded last year to financial shambles with much higher taxes and fees, and Saskatchewan, where Premier Brad Wall wants to scrub a deficit by demanding a 3.5-per-cent cut to public sector compensation, through lower salaries or unpaid days off being dubbed Wallidays.

Ceci hopes Albertans like his plan to maintain services and lower school costs, but isnt sure how voters will receive a future $71.1-billion debt after the good, old Tory-ruled days of high oil prices and debt freedom.I just want to win this press conference actually; so Im focused on that, joked to reporters before his budget speech.

Whatever white knight of the right faces off against Notley in two years (Kenney? Wildrose Leader Brian Jean?)he or she will undoubtedly campaign on restoring fiscal sanity, fending off the straw-man claims that they will ravage public health and education. But the worse the situation they inherit shouldthey win,the more the budgetary beast rages untamedby the current government, the tougher the fiscal conservatives will eventually have to be.

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Alberta marches forward, on boggy fiscal footing - Macleans.ca