Lots of Hats but no Cattle: the UCP unveils its Transformative Plan!

Yesterday, the United Conservative Party, led today by Jason Kenney and Finance Minister Travis Toews, provided the province with an economic update and unveiled their plan for relaunching the Alberta economy. What I saw was reminiscent of Jim Prentice’s update, delivered following a crash in the price of oil and subsequent recession in late 2014. Once more we had “Alberta Shock and Awe,” delivered by a Conservative premier to his heretofore fans and supporters. They claimed 330,000 unemployed in a province of just over four million people. The Finance Minister, in a 180 degree turn from the party line, spoke of “good debt” vs. “bad debt.” To complete the announcement, the Premier declared $10B in infrastructure spending to kick start the province’s recovery, among other things.

                The most significant declaration though was that the provincial Corporate Income Tax rate was being lowered immediately from 11% to 8%. This, in conjunction with the infrastructure spending, was claimed to cause the creation or support of a combined 100,000+ jobs. It’s easy to say why it’s significant – it isn’t just an immediate, apparently giant move, but it’s actionable. Of all the things discussed yesterday, this one can and is happening.

                I had the distinct pleasure of not watching the press conference in toto. However, I did skim through the short “plan,” published on alberta.ca. The premier promises that the ideas don’t stem from ideology, a popular refrain of his, but are rooted in good common sense. I suppose that’s half true, in that looking at the details, this transformational plan is nothing new. Common sense at work, I guess. Expectedly, much of the plan isn’t anything at all, being vague, or simply plans to make plans. This deserves some elaboration, but I’d like to focus on the main themes.

The Unemployment Perspective

                330,000 unemployed is a massive number. It warrants an asterisk, though. It needs to be kept in mind that in the first year of the UCP, Alberta lost 50,000 jobs – all while cutting corporate income taxes. Furthermore, during the crisis, the UCP took the unprecedented and unrivalled step of “letting go” of tens of thousands of education assistants and supports – all just to “save” a figure slightly north of $100,000,000 (a cost that was simply uploaded to the Federal government’s CERB, more or less). Of course, to these numbers we can add the dozens of doctors shutting down their practices and moving away, resulting in further losses throughout rural Alberta.

                Next, who is getting work? Notwithstanding the hope that the corporate tax cut will attract a variety of white collar workers back to Calgary (“they’d be negligent not to” – Kenney), this plan at best supports jobs in the construction sector, which, while hard hit by the completion of the build out of the Oil Sands several years ago, was not overly affected by COVID-19. In fact, hiring signs have been up along the Stoney Trail expansions as one example. These are jobs that haven’t been filled, regardless of unemployment, for ages.  Moreover, this money, invested wholly in infrastructure construction and maintenance overwhelmingly helps men, when we know that women have been the sex hardest hit by the pandemic. This isn’t to say that infrastructure spending is unimportant – it’s very important – but this move clearly ignores the biggest group of victims from the pandemic. It certainly raises eyebrows what influence the 15 women UCP MLAs have had on their overwhelmingly male caucus.

The Capital Spending that Wasn’t

                The UCP declared they were spending $10B on infrastructure, a move, which in their words, was the biggest investment in Alberta history. This is false on a variety of levels – private investment in the Oil Sands was far greater, often for individual projects. Government infrastructure investments under Manning or Lougheed, adjusting for inflation, were no doubt greater. Lastly, and more embarrassingly, it falls billions of dollars short of what the Trudeau Ministry in Ottawa has provided just for the Transmountain Pipeline, no less their direct aid to Alberta municipalities.

                Infrastructure is an incredibly important asset to have in any society. Sanitation systems reduce the incidence of death and disease. Power systems make everything move faster, more reliably and safely. Transportation systems enable the more efficient movement of people and cargo. All of these make society richer while lowering the costs of living and business. There are few places in the world where this investment is as essential as Canada, a nation with great expanse and few people; great resources but great barriers to extraction, such as the climate and geology. Within Canada, there are few places as poorly situated as Alberta, which is effectively an island of rich people separated from civilization by 1000 km of mountains, lakes, forests, and bad weather. Look in any direction: the nearest major population centres to Calgary are over a 1000 km away – either west, south, or east. Edmonton is even more isolated. We need connections.

Unfortunately, the Alberta government of the 1990s took the fantastically neo-liberal position that the Private Sector could and would provide the province with the infrastructure it needed. This failure in historical thinking resulted in the notorious infrastructure deficit that afflicts the province to this day as the market failed to deliver them. But I digress; the Klein government, then his successors, may have paid off the provincial debt (how consequential was that), but at the cost of putting much of the province’s infrastructure decades in arrears – all the while the population grew from 2,500,000 in 1991 to an estimated 4,500,000 today, and its needs grew, too.

Now, Jason Kenney, leader of a province that could soon pass British Columbia to become the 3^rd most populous (it already has in terms of GDP), has boldly declared his government will spend $10B on infrastructure. We must always ask, regardless: on what are you spending this money? When are these amounts being spent? Is this an action, a promise, or an intention? The UCP have promised schools, hospitals, roads, long term care facilities. This is good. Now, when? Who can say?

The Relaunch Plan fails regarding these questions quickly and comprehensively. Don’t mind the details – since there aren’t any outside of Alberta’s new public investment hotspot: Peace River. Focus on the numbers. Is this really a new investment of $10B? Apparently not. First, the government already earmarked $7B for infrastructure spending in its catastrophically short-sighted first budget in March (the “oil at $58/barrel” budget), which is consistent with previous NDP budgets. This number is included in the $10B, however, so the response to COVID-19 is reduced to $3B – less than 1% of Alberta’s GDP. That’s not all: also included in that figure is the $1.5B given away to support the passage of the Keystone XL pipeline – money that is likely going to be written off when the Democrats win in the USA in November and finally put that white whale to rest.

If you’ve been following, that leaves the government proudly leading our revival with $1.5B in new infrastructure spending. For perspective, that’s as much as the New Cancer Centre at the Foothills Hospital costs. This amount could build two new “Grande Prairie” hospitals. It could build 2/3 of the Stoney Trail ring road. In fairness, this amount could build, potentially, 50 new high schools modelled after All Saints in Calgary. Or, more fantastically, a single new arena for the Flames in the West Village. As you can understand, this amount of cash, likely representing less than 0.5% of the Alberta economy, in the face of the greatest economic challenge since the 1930s simply isn’t significant or remotely world changing.

Even this paltry amount isn’t even new either. The Alberta government, on April 9^th, announced a $2B investment in infrastructure in response to COVID-19. Is this a separate amount? If it is, why not roll it into the announcement of yesterday? $12B is a larger figure than $10B, and it almost equals what the Federal Liberals have committed to Transmountain. Given that the UCP already included two previous announcements in yesterday’s, why not a third? Oversight? Possibly, but more likely that it is included – the half billion-dollar discrepancy could very well stem from elimination of duplication or redundancies.

As a last – yes – last component of this issue: the Calgary Green Line. The provincial government promised $1.5B in funding for the Green Line, yet issued a letter to the city immediately after the municipal government voted to go forward with it. Basically, the letter threatens to remove that funding. A project whose can has been kicked as long as I’ve lived just might have got its final, Jon Ryan-punt into the red zone. Ottawa save us.

So, is $10B a lot? Yes. Is it needed? Yes. Is it a lot? Maybe. Yet, there remain many questions concerning this plan: when will that money be spent? On what? Is it even $10B? What of the Green Line? Is this $10B the end?

So, we have a big announcement: the biggest infrastructure investment in Alberta history, and none of it is new or anywhere as significant as alleged. It may be more aptly declared the biggest non-event in Alberta history since Aberhart’s recall election. So why include it at all? First, probably because without it, the plan doesn’t look like a plan, but a number on a napkin. Second, because that number on a napkin: corporate tax cuts, is a tired, Hail Mary pass to Toronto, Canada’s business capital.

The Corporate Income Tax Cut

                This is the centre-piece of the whole plan, and it echoes throughout the pages of the short document. As of Canada Day, Alberta’s CIT will be immediately reduced to 8% - 2/3 of the CIT in British Columbia. We aren’t even out of the pandemic yet, but the government’s only real decision in their whole plan was to speed up the pace regarding their planned cuts to big business taxes. It seems a little crazy that with insurance rates increasing, liability growing, uncertainty reigning, a pandemic raging, that any private enterprise would decide to gamble on Alberta, but there goes the UCP. As economist Dr. Andrew Leach has pointed out, this cut isn’t even news to business, who would have been making plans about the 8% CIT since the last election – so their moves or non-moves would already be planned or decided. Really, this smacks of a last desperate attempt by neoliberals to right the sinking ship of their ideology. It has to work, this time, it has to!

                Because, if we remember – it didn’t work from 2019 to 2020. The UCP were in, the NDP were out, the CIT was cut, and yet companies still moved away. 50,000 people were laid off in just that year (granted, many were public service employees), but making Alberta cheaper for the most successful didn’t make anyone want to come here. At the sacrifice of hundreds of millions of dollars every year in revenue – compounding year after year – the UCP have doubled down on this strategy that has failed since its introduction to the world almost half a century ago. Toronto Banks and Vancouver video games companies aren’t going to rush over to fill our empty office space. They probably don’t want to fill office space anywhere, honestly.

Prospects

                In a world economy shackled by fear of the Coronavirus, it’s highly unlikely that the UCP will achieve success in its goals of attracting major businesses to Alberta. This was a failure, after all, before the virus, and was a failure for the previous NDP too. The risks from moving a business are simply too complicated for the foreseeable future, on top of being difficult in the best of cases. At worst, it is simply old-fashioned thinking.

Further, the virus has depressed the value of Alberta’s premier natural resources – oil and gas – in a period where many fossil fuel assets are at risk of becoming stranded. The current temporary collapse in demand for fossil fuels is a taste of what the near-future holds as the world weans itself off traditional oil and gas energy systems for renewable energy. Alberta, which has some of the highest marginal costs for oil extraction in the world, is in no condition to compete in a shrinking market. Ultimately, this means the province loses billions in lost royalties and bad investments, and not just this year, (AIMCO), but in perpetuity. However, in a more immediate sense it is the royalties and their impact on the deficit that will have the greatest effect.

This deficit risk is further compounded by the sacrifice of revenue to cut the CIT permanently. This feeds into a structural Alberta deficit situation that no amount of wage-rollbacks or spending cuts can correct, as much as it may pain Conservatives or the general public to admit. However, we can all look at the Relaunch plan, past UCP habits (mid-year budget changes, by which I mean cuts) and guess that when public service contracts expire at the end of August, the UCP will be seeking grotesque quantities of wage and spending cuts both.

In summary, we can anticipate a milquetoast, if not negative reaction from the private sector (Fitch has already downgraded the province’s credit rating, releasing a re-assessment of the province’s finances less than 24 hours after Kenney spoke). The infrastructure spending, though sounding big, is too small and too shallow to impress investors, no less aid even a small fraction of Alberta’s unemployed under the plan’s own wildest dreams. Lastly, a spiralling deficit situation only ensures that a belligerently and dogmatically anti-labour, anti-public service UCP government attacks Alberta’s already lean public sector in the near future, ensuring the last years of the 30^th Alberta Legislature is punctuated by lots of business-attracting public labour conflict. None of this is transformative in a positive sense.

The premier’s plan is just a big hat and a big blue truck. The cattle have left for BC.

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.

Alberta Media and Politics

Historically, it is not unusual for provinces to be governed by a single party for decades at a time. Some of these dynastic governments delivered great and positive change not just to their province, but the country itself. Saskatchewan's NDP dynasty inspired our modern health care system. Ontario's Conservative dynasty of the 19th century established the power of the provinces over the federal government. Many others had delivered good economic and social growth. They won elections because they were good governments.

Alberta's 44 year PC government (1971-2015) was not of the same calibre. I have already castigated this government on previous posts, but I think its impossible to say that the PCs ever inspired a wise action inside or outside the province, at least after Lougheed. So, that said, I do not believe that the PC dynasty started off badly. Peter Lougheed was probably the best premier the province had. Conveniently, he left government during the depths of Alberta's 1980s recession; the premiership was then picked up by fellow Edmonton Eskimos alumni Don Getty. Lougheed died only a few years ago, his funeral attended by all his successors who had made a living ignoring  his advice on development.

Now, by 1993 it was not clear that the PC dynasty would survive. Alberta, like the rest of Canada, became terrified of its debt levels. The Liberals looked like they could win the election that year, promising deep cuts to the budget, but were narrowly defeated by Ralph Klein's PC team. His first four years were hardly free of scandal, but Klein's 1997 victory, I believe, can be considered the beginning of the end for the PC dynasty. In the absence of a real opposition, poor government and corruption became hallmarks of his administration; however, not only did people not care, he became the evermore popular "King Ralph."

Why was this?

My family has lived in Alberta for over 100 years. From them, and from my own experience, I can speak to one alarming phenomenon: the monopoly of mass-market media by right wing interests. This monopoly began, at least in Calgary, in 1980 with the demise of The Albertan newspaper. I would say this monopoly has only ended recently thanks to online citizen journalism, and in a physical sense, by the publishing of the Metro by the Toronto Star and Albertaviews magazine. These things have only had an effect in the past 10 years at most, so we can say that the Right dominated Alberta's mass media from 1980 to around 2005/2010.

This domination was embodied in the newspapers, in the talk radio stations, in local TV, and in magazines like Alberta Report and later, the Western Standard. In cities with more than one newspaper, the editorial angle ranged from soft-right to far-right (in both Edmonton and Calgary, represented by the Sun). Even the Universities, contrary to popular belief, presented a right-wing perspective, as they continue to do today, with various representatives of the "Calgary School" presenting their dubious arguments in favour of the neoconservative perspective. The disreputable Fraser Institute and its supply of titled minions is usually a conspicuously regular presence in the media, and so merits my honourable mention as a source of right-wing claptrap. Alternate views were limited, if at all, to the letters to the editor.

The only alternative to the mountain of neoconservative rhetoric that dominated the province for a quarter century lay in the province's publishing industry. There are many titles published during this period which illuminate the dubious successes of the province's leadership. However, the market for such books never proved significant enough to affect debate within the province. I suspect some books, like William Marsden's "Stupid to the Last Drop," sold better outside Alberta than within it.

The effect this monolithic media presence in Alberta can be seen in the ways Albertans remember the past. The National Energy Program is a misunderstood boogieman invoked to crush debate and fuel hate towards the East. Ralph Klein squandered the province's wealth, squandered its crown corporations, and acted like a buffoon, but is remembered as our lovable saviour. In contrast, the Federal Liberal government of Chretien is not remembered for slaying the deficit, but is thought to have increased it. Stephen Harper apparently never ran a deficit, either. The Sponsorship Scandal, which cost the country $150M and became another reason to hate the Liberals, had nothing on contemporary provincial scandals. but those remained forgotten or ignored.

Indeed, the province exhibits a memory of events almost totally at variance with history and reality. Why this is so can only be considered a product of the province's partisan press. All media sources slavishly promoted conservative interests and parties, and if it wasn't conservative - it wasn't good. The NDP were blamed for "ruining provinces" even though the Saskatchewan NDP government was probably the most effective in Canada in the 1990s, and almost certainly saved it (after the Conservatives had gone off to jail). The Liberals hated the west. Quebec steals our money. The Atlantic provinces do too. Alberta was the model for the whole country, damn the facts and damn reality! It's just everybody who voted against the Conservatives from 1993 on was too stupid to notice.

A very good example of the provincial media's lingering double standard is blatantly apparent at the moment. First, there is the Purchase Power Agreement scandal. If what the NDP alleges is true, which we have little reason yet to doubt, then the scandal should be yet another example of PC corruption. Instead, we have series after series of articles in all the Alberta papers trying to establish the incompetence, corruption, and bad faith of the current government. The Calgary Sun typically picked and chose its sources quoting people saying the government has little chance to win its lawsuit, when its Siamese twin, the Herald acknowledged other claims that its actually 50-50, or better. I can only assume the papers are looking out for our best interests, and not the interests of their corporate overlords.

On the other hand, Jason Kenney recently began his travelling tour of the province. His speech from the Legislature grounds was broadcast live across the province, and all the talk was about the possibilities in store for him, us, and ultimately, the defeat of the NDP. In other words, the return of our Golden Future. What went totally unsaid was the question of why a taxpayer paid Member of Parliament is spending all of his time campaigning outside of his riding, outside of election time, and in a different level of government altogether. That this is a basic ethics violation should not come as a surprise to the editors of Alberta's remaining newspapers (which are all basically the same one at this point), but remember, these were the people who endorsed the Wildrose Party and the Conservatives in the last provincial and federal elections, regardless of the effect on their readers.

While I have already mentioned how new forms of media, and new entities like Albertaviews helped break the right-wing monopoly in Alberta, I believe the real nail in the coffin was something much more ironic. While the PCs remained the sole right-wing option (of repute) in the province, there could be no criticism of them. This all changed after Premier Stelmach's royalty review. The province's oil industry turned the Wildrose Alliance from a southern, regional, rural fringe party to competitor. Now that there was a more corporate friendly party on the scene, Alberta's mass media began to do its job and hold the government to account. Stelmach is rather demeaned in provincial memory as an incompetent nincompoop sort of Premier. Alison Redford was basically the Antichrist.

However, the long awaited return to form was not without its issues. I found especially dubious the U of C economics professors using their lectures to tell students to vote Wildrose. But more significantly, Danielle Smith, former leader of the WRP and member of the "Calgary School," was married to the head editor of the Calgary Sun, coincidentally the party's biggest cheerleader. Such a conflict of interest remained unnoted, though I noted that they were the first news source to publicize a Wildrose lead in the 2012 election polls. Following her disastrous decision to abort the WRP in 2014, Danielle Smith found employment as a talk show host on Calgary's QR77. You can imagine her take on events.

During its heyday, the neoconservative leaders of the Province were able to effect a near-total echo chamber in Alberta discourse. Its effect on public memory can still be seen in the bizarre myths that still pervade and pervert the province's population. I do mean pervert: there is ample evidence both on the internet and on people's cars and shirts that don't just reflect a distaste for the new governments, but a vitriolic hate for them, and democracy itself. Unfortunately, it will be a long time indeed before the damage to our consciousness is healed, but I am hopeful. After all, Albertans rejected the "no new tax" and "big cuts" of the Wildrose Party in favour of reasoned answers and acknowledged realities with the NDP. That really is a sign of something to be celebrated.

Now all I can recommend from this point is to go read some history.

Thanks for reading.

Alberta's Perfect Storm, Part 2

Last time I looked at some of the ways Alberta's economic pillar, the fossil fuel industry, was recently affected negatively by a combination of technological change, competition and strategic interference. However, to understand the present economic bust more fully, we need consider more than the industrial side of things, but the human side, too. Unfortunately, much of the province's suffering today is result of poor choices made by people in government, and in their private lives, as it is a matter of circumstance. Accordingly, I believe much of what has happened was avoidable, as our predicament was predictable, but our leaders, and our selves, failed us.

To be gentle, we should start by considering the failings of the PC government.

The most common complaint about the past government is that they failed to plan for the future. This is a big charge, made up of two major components. The first is that they failed to save for days like this. Another component is that they failed to diversify the economy.

On the first charge, that they failed to save, rings all too true. The PCs, from Klein to Redford will forever be condemned as both reckless and irresponsible. The Province's Heritage fund was left to stagnate, left undisturbed since the downturn of the 1980s. Since that downturn, Alberta had paid off its debt, and was in the position, I remember, "to pay off the debt of other provinces, so long as they promised never to go into debt again" (this was actually argued in the National Post over a decade ago). Instead, the government cut taxes on the rich, on corporations, and on royalties.

That the tax cuts favoured the rich is undeniable; a flat tax, set at the relatively high rate of 10%, were you poor, or the incredibly low rate of 10%, were you rich, was a massive giveaway of billions of dollars a year in revenue. It needs be remembered, for all time, that tax cuts for the rich were very much in vogue in the English speaking world of the early 2000s, but that just serves to reinforce how shortsighted these governments were globally. Now tax cuts in general are not necessarily bad things; I would argue though that you can't afford them when people are dying in your hospital waiting rooms, and the insane are being put out on the streets. The only thing that made these tax cuts doable were the high revenues the province received from natural gas, gambling, and oil, the complicity of the province's media, and the wishes of the voters, in that order.

Cutting taxes on corporations remains popular today; probably because all of our news media comes from blatantly self-interested media corporations. However, even I feel that this may have been a good idea at the time. Low taxes do attract new businesses; but it can be seen that this did not happen in Alberta for other reasons, which I will explore later. The companies we did have, those incredibly profitable corporations of Alberta, were able to save their profits, and if you look who owns what, remove them from the country altogether.

The cut in the rate of oil royalties was actually more of an accident than a deliberate giveaway. Still, the story that can be told tells the same story of moral cowardice as before. Royalties dropped because Alberta had two different kinds of royalties: one for conventional oil, and one for the oil sands. Like the rest of Earth, Alberta's conventional oil was cheap to access and of good quality. Accordingly, the government in the distant past effected a decent royalty rate. Cheap access and good quality are two characteristics lacking in the oil sands. The Oil Sands are so inaccessible that for many years the best plan for getting at the stuff was by nuking the ground around Fort McMurray, a plan approved by Premier Manning's government (more amazingly, the Soviet Union actually did this on its own soil). As for quality, the oil sands are so bad they require much refining before even becoming as good as conventional oil; hence the much lower price it fetches internationally. So, to encourage development of the oil sands, the government set royalty rates low, and provided further generous incentives to oil sands companies. The drop in oil royalties basically reflects the historical depletion of Alberta's conventional oil sources, and their replacement by the oil sands.

Now the moral cowardice. Premier Stelmach inherited the government around the time the oil sands displaced the conventional sources as Alberta's economic (and revenue) driver. He proposed a royalty review meant to address the discrepancy between the oil royalties. In those days the price of oil was galloping towards $150US a barrel, and if your Calgary based oil company wasn't insanely profitable, there was something terribly wrong with it, or more likely, you. Nonetheless, the royalty review was aborted, with the specious claim the royalties were fine. The only thing to come from the whole situation was that Alberta's oil companies threw their financial weight behind the offshot of the wilting Social Credit Party: the Wildrose Alliance.

During the Stelmach years, investment poured into the Alberta Oil Sands. The Province's economic growth and population growth were simply stunning. Already, though, problems were becoming apparent. Things were simply too good. The low tax regime adopted by the province undoubtedly encouraged the mass migration and investment we received (reducing regulations also helped, no doubt). It also encouraged massive inflation; at one time, the poverty line in Fort McMurray was an income of over $60,000 a year.

The government lacked the resources to keep up with the growth. Whole neighbourhoods were being built with no schools, community centres, parks. Calgary didn't get a new high school for 15 years, while the population increased by the hundreds of thousands. During the last election, one friend ran in a Northwest Calgary riding. I was astonished that it had as many schools - six - as the 60 year old community I reside in. There was a lack of hospitals, schools, teachers, doctors, nurses - there was a shortage of almost everything necessary for society to run.

There is perhaps a development lesson here. I feel the lesson is don't encourage more development than you can pay for or keep up with. The Alberta governments reckless tax cuts blew up a bubble economy, while reducing its ability to keep pace with it. And all the while, they didn't save a dime. Former Premier Lougheed criticized the government for its haphazard economic development. One think tank went so far as deem Alberta the province with the worst fiscal outlook in the country.

Why did economic diversification fail? Deregulating the electricity markets didn't help. Experts say it has cost the province's people and businesses $20 billion since it was implemented. This alone may not have been fatal to Alberta's other industries, but the massive economic growth in the province drove up rents and leases, too. The last nail in the coffin of Alberta's economic diversification was the success of the Oil Sands itself. One could simply make so much money, so fast, regardless of your passions or qualifications, that almost all the province's energies and talents were sucked into the oil sector. This was not a bad thing at the time, but were something to happen to oil, we would definitely be in an uncomfortable position.

And here we are.

I realize I have spent too long bashing the government. The people of Alberta deserve a shake too. Next time.

Again, thanks for reading.