In a year when two heavyweight provinces, Ontario and Alberta, which together constitute 55 per cent of Canada’s GDP, are running substantial deficits, there are three ways to reduce the red ink.
With tumbling oil prices and resource revenues, Premier Jim Prentice had a choice when he delivered Alberta’s 2015 budget. He could emulate former premier Don Getty and raise taxes or follow the Ralph Klein playbook and reduce spending.
Premier Jim Prentice dropped hints for months that the 2015 provincial budget was a once-in-a-generation chance to “fix” Alberta’s finances.
In a recent column about the upcoming Metro Vancouver transit plebiscite, Vancouver Sun columnist Daphne Bramham complained about business leaders who talked “way more about cutting taxes for poor beleaguered taxpayers for the past 30 years than they have about the valuable services tax money provides.”
Over the past decade, the province of Alberta treated boom-time resource revenues like a permanent state of affairs. That set the province up for fiscal failure, for multiple lost opportunities.
Over the last decade, higher energy prices and entrepreneur-friendly policies drove Alberta’s booming economy, generating a significant windfall in government revenue.
It’s budget season again, with provincial governments across Canada delivering their annual budgets amid a backdrop of falling commodity prices and provincial deficits. And once again, a mythology surrounding education spending will likely influence spending choices from coast to coast.
The severity of Alberta’s fiscal problems hit home with many Albertans this week as Premier Prentice announced that the upcoming provincial budget will include an across-the-board five per cent spending cut.