Back in the days after Alberta’s first oil boom went bust, the plaintive bumper stickers in Wildrose Country read: “Please, God, send another oil boom. This time, we promise not to piss it all away.”
A glance eastward over the mountains suggests that few in positions of power took the bumper stickers to heart. They have been spending money like mad, and now the chickens are coming home to roost.
The first time around, Peter Lougheed built a hospital in just about every town big enough to have a gas station. When the bottom fell out, his successors couldn’t afford to keep the lights on.
During the more recent boom, Alberta wisely paid off its debt in 2004, but has been on a spending spree ever since.
All of a sudden, the government is getting less from oil and gas, and is looking at a royalty shortfall of about $6 billion. Now that the inevitable bust has arrived, Alberta has been dipping into the rainy-day funds, which were once the envy of the rest of Canada. But that well is not bottomless.
As happens every time the red ink starts to mount, someone has started talking about a sales tax. This time, it’s Premier Alison Redford, who said on Monday that one of the options she is considering is a five per cent sales tax, which would bring in $6 billion a year.
Albertans have long revelled in their sales-tax-free status, even though they have to pay GST like the rest of us. Apart from the understandable revulsion at any tax, bringing in a sales tax would be like an admission of failure. It would be like saying that, apart from having West Edmonton Mall, they are much like other Canadians.
Redford wants to find a different way to organize the province’s finances, so they’re not so dependent on resource revenue, and she promises to start putting cash back into the Heritage Savings Trust Fund. Her prudence comes very late in the day, but it’s a cautionary tale for all premiers, even on this side of the mountains.
There’s a further caution for all British Columbians: The most effective way to boost Alberta’s royalties would be to sell its oil to China for higher prices — by piping it across B.C.
© Copyright 2013