Back in the spring of 2015, Alberta’s New Democratic Party candidates were campaigning on what their platform called “leadership for what matters.”
“We will balance the budget in 2018,” the platform declared. Job creation topped the NDP’s list of primary priorities. By taxing “large, profitable corporations” more, the party would balance the budget in just three years.
Fast forward to today: the most recent quarterly fiscal update revealed a deep operational budget deficit that increased by another $500 million, bringing the grand tally to $10.9 billion – over $14 billion when accounting for capital spending. The wildfires in Fort McMurray accounted for some of the deficit growth on the expenditure side, but the major cause of the growth was a dramatic decline in corporate tax revenues, which dropped by $877 million.
Could it be possible that raising taxes on businesses doesn’t always lead to an automatic increase in government revenues?
A little tongue in cheek, but the reality is staring Albertans in the face like the pink slips in the hands of over 100,000 laid-off workers. The government’s plan to hike taxes to balance the budget just isn’t working out. Low oil prices are already negatively impacting investment. Disincentivizing businesses from investing in Alberta is completely illogical if the government wants more revenue.
That balanced budget date in the NDP platform has been revised multiple times, now sitting at 2024 – a soft promise the government likely hopes Albertans won’t take too seriously.
Our government has been dealt some curve balls. It would be unfair to suggest otherwise. They’re the same curve balls thrown to businesses and families across the province. Oil revenues have declined. Natural disaster has stricken Alberta once again. Times are tough – and in tough times, people expect their government to make tough choices. To provide “leadership for what matters.”
Yet, unlike businesses and families, the government is exercising no restraint. In fact, not even including the $500 million spent as a result of the Fort McMurray fires, government expenses increased by $700 million. Finance Minister Joe Ceci has declared time and again that he rejects “draconian cuts” – ignoring humble suggestions to at least try to bring Alberta’s spending in line with that of other provinces.
The minister pulled out the same line in response to credit downgrade after credit downgrade, while ignoring the reality that poorer credit ratings increase the likelihood of higher borrowing costs and therefore less money to spend on education, health care and poverty reduction. This fiscal update confirmed that Albertans would now be forced to waste $1 billion per year on debt interest payments alone.
Leadership in government requires making priorities. Perhaps the clearest evidence that our government’s priorities need a rethink is the recent decision not to outsource laundry services for Alberta hospitals. This change would have saved taxpayers millions of dollars in equipment upgrades. Outsourcing would have meant moving jobs outside of the government sector. Apparently, that would have been draconian.
When the NDP promised “leadership for what matters” – most taxpayers likely weren’t thinking that the overpriced, unionized washing of linens was what mattered. If the government still wants job numbers in Alberta to go up and not down, as it promised in its campaign, the government should try focusing on business-friendly policies instead of tax hikes and feeding its insatiable addiction to unsustainable government spending.
Paige MacPherson is Alberta director of the Canadian Taxpayers Federation, a non-profit, non-partisan citizens advocacy group dedicated to lower taxes, less waste and government accountability. For more information, visit Taxpayer.com.