An Historical Argument for a Deficit

When I was a younger man, I did the first part of my teacher training at a High School in North Calgary. During our orientation we were told not to go into a certain room while a certain class was in session. To do so would be to break the fire code: the room was already so crowded students were sharing desks, and just one of us would push things over the edge. During my brief stay, I also learned that almost none of the students - this in a residential neighbourhood - could not walk there; the school's placings where reserved for the students who lived further to the north. Local students would also have to be bussed south, to the schools closer to downtown, as nothing existed to serve the city past this place. I commented that it seemed like Calgary was built like a refugee camp - all houses, with services to follow. The professor who I addressed could only mumble in agreement.

That was only a few years ago. Alison Redford was premier; then Dave Hancock, and then Jim Prentice. During the latter's short term as premier designate he had to admit, that due to the low price of oil, the province would have to make cuts and raise taxes - which is interesting, as the province had been in deficit for several years already. He even briefly proposed a sales tax - one of those famous "trial balloons" of which he was so fond. An election was called, and he, and the PCs, lost, and lost badly. They also lost in the most unexpected of ways - to an NDP that promised no cuts to essential services and to raise taxes higher than the PCs were comfortable.

So far, the NDP have done as promised. There have been cuts - especially to the gargantuan piggy trough the PCs had installed across the province. As promised, there were no cuts to essential services, though they didn't greatly increase spending in these areas, either. The tax raises were large by the standards of the Alberta legislature, but it must be acknowledged that taxes on almost everything are lower today than they were under Ralph Klein, sin taxes excepted. The only new tax of any significance was the Carbon Tax - which has yet to go into effect.

But, there is the elephant in the room: there is not just a deficit. It is a relatively big deficit. So in spite of the tax increases, the deficit went up, too. However, this is reflective of two things: one, that Alberta was excruciatingly dependent on oil revenue (not just royalties, but land sales and leases), and secondly, taxes are still too low to provide the acceptable minimum of services to the population.

There is a third major factor in the "massive" deficit the NDP is running at the moment. That factor is history.

After the downturn of the 1980s, Alberta was, as one book had it, "the Second Promised Land." The population of the province almost doubled in the time that I have been alive. Though our high birth rate is part of the story, the majority of the increase was from immigration, from Canada and abroad.

Arguably, having children is less of a fiduciary burden on society than immigration. While a newborn requires hospital services (sometimes a lot of them), and will one day come to engage in our 15+ year education system, a newborn does not require its own home. It does not require new roads. It does not require the infrastructure a mature adult immigrant requires immediately upon arrival in a given place. Further, immigrants come with their own families too - so much of the services a newborn would receive are received by an immigrating family, too. Go anywhere in the East of Canada and you realise the people who came here were the young - in some cases, all the youth and young families of some communities moved here.

This is not necessarily a bad thing. I am a firm believer that we can do as much as we wish to do; only a lack of ambition really holds us back. The Alberta these people came to in the 1990s had no other ambition than to pay off the provinces debt. Nothing else mattered, and herein lay the problem.

The population of Calgary almost doubled in the past 30 years. However, in that time, almost nothing was done to accommodate all these people - except build wasteful suburbs. Calgarians could look back and remember a city with the highest homeless population in the country; a city with no new schools; a city with its own "highway of death" (the 22X if you didn't know); a city with a massive poverty problem (in 2005 about 40% of adult Calgarians lived at, below, or just above the Canadian government's Low Income Cut-Off). But at least here you could find work.

Consider the school question. No high schools were opened in Calgary between 1991 and 2005, when Bishop O'Byrne and Centennial opened. Lord Beaverbrook High School had the highest student population of any in Canada - over 3000 - making it larger than many of Canada's universities at the time. Since those two schools opened, only two more have opened, with another opening this fall. In that time the population of the city grew by a half-million. High Schools are not cheap - they require a lot of land, technical engineering, and investments in technology, not to mention upkeep. So we just didn't bother. When one friend ran in the provincial election in Northwest Calgary, we discovered his constituency - a very new one - had only six schools for a population of 55,000, equal to the population of Medicine Hat. Promises made for schools in the early 1990s were simply never honoured. All over Calgary, and I would imagine, Alberta, there were hundreds of fields in residential neighbourhoods that were meant to house schools. Those schools never came, at least until the NDP were elected. The irony was delicious when one PC MLA was quoted in April 2015 talking about how ridiculous it was that his daughter's kindergarten class had 30 pupils. If only there was something he could have done about it.

Ralph Klein famously had blown up half the hospitals in Calgary during the 1990s. The situation in Edmonton was no better. Again - with a booming population, but also with a population with some abnormally high levels of obesity and drug use, among other ailments. There was a persistent shortage of doctors and nurses, and I'm sure many people remember the difficulty in finding a family doctor ten years ago. Health Care services were increasingly privatised - which served to drive up health care costs, in all areas studied, while the cost of dentistry skyrocketed relative to neighbouring provinces.

Infrastructure was - and remains - far behind the needs of the province. With support from the Federal government, the LRTs in Calgary and Edmonton were expanded. Consider the case of the ring road in Calgary - its development has literally taken half a century. Some progress was made - we no longer have "highways of death" south of Calgary and from Edmonton to Fort McMurray; but much of Calgary remains in gridlock due to a combination of poor planning, poor development, and a historical lack of leadership.

The PC government of Alberta was caught in a bind. They had paid off the province's debt - but had lowered taxes too much. When oil royalties started drying up in the mid-2000s, thanks to the transition from "conventional" to "unconventional" oil, the government preferred to do nothing than either raise taxes or debt finance - such was the power of Alberta's low tax, no debt myth. Well, that myth has cost us. Jim Prentice at least had some bravery to confront the power of that myth and accept reality, but his steps were too few, too short, and too late. He did acknowledge something else though: the downturn had brought with it decreased cost of business and lower interest rates. Government spending had not been so cheap in years.

We now have a government willing to raise revenue and use debt finance, and they are doing it. There is much dismay about the size of the deficit - but all people can criticize is the amount civil servants get paid. Apparently, the government isn't blowing this money on unnecessary crap - I am sure we would know about it by now. They are doing what had to be done ten and twenty years ago, today. Perhaps we should be thankful.

Thanks for reading.