Alberta’s fiscal woes run deeper than politics

Posted on February 11, 2016 by Vauxhall Advance

Albertans, for their part, should be familiar with the boom and bust cycle of their province that relates to prices in the non-renewable resource industry. The tough times the province is experiencing today — which saw jobless numbers in Alberta reach a percentage not seen in two decades last week — should never come as a surprise to those that have lived through the province’s multiple variations of recession and prosperity.

And yet, the best description one might apply to the hypothetical expression found on the faces of many Albertans — those inside and outside of the oil and gas industry — is dumbfounded shock when prices collapse and mass layoffs begin. When the gravy train of inflated prices comes to an end, those who adhered to the spend now, save later philosophy along with the prosperity-will-never-end crowd begin nervously eyeing their bank accounts, as savings dwindle and credit is maxed out.

Unfortunately, more Albertans than fellow Canadians find themselves in the above category — as evidenced by the province’s people leading the national pack in household debt loads and other troubling financial indicators — many of whom seem unable or unwilling to accept that putting all of our economic eggs in one basket, namely our emphasis on the oil and gas industry to the exclusion of virtually everything else — might not in the long term be in the province’s best interests.

Some of this, admittedly, is not as easy to address as it may seem. Successive governments in Alberta have employed the buzz phrase “economic diversification” whenever oil prices head south and there is a limited appetite to look at other potential industries as an option for the province.

While this has been a goal for decades, one look at the reality of Alberta in 2016 tends to suggest the government’s efforts have largely been in vain, because our mono-economy house of cards has come crashing down around us yet again. The problem with a boom-bust cycle is that by the time governments have got around to considering economic diversification, usually prices have recovered and amnesiac Albertans have already forgotten that gold may grow on trees other than those found in dark reservoirs deep underground.

It is almost inevitable that many people will choose to blame governments when economies take a turn for the worse. Here in Alberta in early 2015, the NDP were elected to a resounding majority, toppling more than four decades of PC rule. At the time, the economic warning signs were already on the horizon for the province, but the fiscal straights we see today were still largely speculation in May 2015. Nevertheless, the NDP inherited a province that was charting course for the financial unknown.

The key word here being “inherited”. There appears to be a growing sentiment amongst many Albertans — the term “fashionable” might even be applied — to blame every problem the province is confronting, past or future, large or small, on the NDP government of Premier Rachel Notley. While this tends to open up questions as to how the party managed to get elected in the first place as they struggle with a rising tide of animosity only nine months into their mandate, it is beyond ridiculous to blame everything from the weather to acts of God on a political party.

Persistent cold keeping you down? Blame the NDP — they spread their socialist poison just like a virus, you know. A nasty case of the clap? Sexual improprieties and STDs — that’s just got to be the NDP. Unseasonably cold weather? How could that not be the NDP? Tire blow out? The NDP’s been neglecting highways again. Lost your arm in a farm accident? It’s not tough luck — after Bill 6 that’s gotta be the NDP’s fault.

One of the chief criticisms levelled at the NDP — that they destroyed the provincial economy — isn’t even rooted in the truth. I guess we didn’t know the party was a profoundly influential organization wielding immense, behind the scenes shadow power to have helped create the present situation months before they were even elected.

And of course, everyone knows it’s the provincial NDP that controls world oil prices, not Russia, China, the United States, the Middle East, the European Union or OPEC. International collapses in world oil prices are of course decided behind closed caucus doors in Edmonton. And why would they want to do that? Because they’re communists of course, bent on the destruction of the capitalist system and the overthrow of everything that is right and pure. I mean, who honestly doesn’t believe that, right?

Jokes aside, the situation facing the province is deadly serious. So serious, in fact, that we need to step back from the idea that every black cloud that arises on the horizon must have political origins. Playing the blanket blame game in an attempt to source all problems back to a political origin — as we’ve seen recently from some of the opposition parties — is counter-productive and convenient, allowing for a simplistic solution to problems which are obviously immensely complex once one scratches beyond the surface.

One recent example is the Wildrose reaction to the stay-the-course result of the NDP’s royalty review. Commenting in a news release following the announcement, the Wildrose talked about “the damage the public nature of the review did to Alberta’s economy”.

While there is little question the review was a victim of bad timing, to suggest that the status quo should be literally set in stone for all time, and that even asking the question whether we should be getting more for our non-renewable resources causes untold “damage” to the economy? That’s all well and good during a recession. But will there ever be a time when we should be doing a royalty review? Only silence and the crickets singing from the Wildrose camp on that little policy option. Of course Albertans wouldn’t want to get more for their resources, right? Especially as we plow on through some of the worst deficits and debt the province has ever seen.

All of which is not to say that the provincial NDP are not deserving of some of the criticism that has been levelled at them. Handling of files such as Bill 6 have left the party far from lily white, and other gaffs and faux pas have done nothing to inspire confidence the party is about to overcome previous weaknesses or usher in a new era of prosperity for Alberta in the immediate future.

Many Albertans growing desire to blame their problems on politics rather than other factors is interesting considering the political history of the province.

More than three decades of solid Social Credit rule, starting in 1935, and followed by more than four decades of PC rule, starting in 1971, would seem to suggest that for a long time Albertans chose other things to blame their problems on, not politics. Maybe Albertans just loved the SCs and PCs so much they never questioned their rule — or maybe Albertans are less well disposed to blame their problems on a conservative party, no matter what its problems, as this would require questioning an ideology that many self-identify with. The other suggestion — that there was nothing worth complaining about in Alberta politics for more than 80 years — stretches the limits of credulity.

It has been suggested by some observers that had the PCs or Wildrose carried the day in the 2015 election, either party would not be facing the level of criticism the NDP now faces from its political opponents and ordinary Albertans in dealing with the financial crisis. Some have pointed to the NDP’s ideological background as a leftist party as the culprit for this phenomenon, as well as an inherent suspicion of the party by many who have never lived under an NDP government. Virtually every province in Confederation has at one time had an NDP government — not so Alberta.

And old school notions of socialism and communism, however unfair, complete with Cold War and Cuban Missile Crisis, tend to die hard in provinces with an iron-backbone conservative streak that still runs deep to the bone.

Politics is not a panacea for everything. While it can impact economics and economies, governments can’t change everything with a snap of their magic fingers, although it is sometimes effective if the electorate thinks that you can. Political parties are not blameless here — during elections they love to tell voters just how much real change they can actually effect — and tend to make lofty promises that in some cases they never intend to keep.

While politics is not a panacea for everything, we shouldn’t be surprised that many voters, especially during a recession, seem to regard it that way. And while politics as a solution can be very important in choosing the right road back to prosperity, it is only half the battle. Winning the other battle, economic recovery, is a much harder campaign. And it is a campaign that governments can only influence, rather than being the main driver.