For those fascinated by grand, competitive matches akin to rams butting heads in an epic clash, keep an eye on Alberta for the next four years. The province's first New Democratic Party government is, as one might expect, charting a very different course from that of the late premier Ralph Klein in his first term. The comparable results will be of great interest once the statistics roll in.
Some history: When Mr. Klein ascended to the premier's chair in December, 1992, Alberta was in its seventh deficit year. Interest on the provincial debt was akin to 75 per cent of the annual budget for social services.
In an attempt to balance the books, a previous premier, Don Getty, resorted to tax increases and modest spending reductions before ramping up spending late in his term. Also, both Mr. Getty and his predecessor, Peter Lougheed, tried to diversify the Alberta economy by offering loans and guarantees to everything from pulp mills to high-tech companies.
By the time Mr. Klein arrived in office, those loans and guarantees had soured and would cost Albertans $2.2-billion in written-off, taxpayer-backed investments.
To prevent more such losses and to deal with chronic deficits, debt and mixed messages on investing in Alberta, the Klein government altered direction. The books were made clear and deficits were no longer covered up by gaming budget numbers. Program spending was cut by one-fifth between 1993 and 1996, including a 5-per-cent reduction in public-sector pay. The Klein government figured it was smarter to do more with less.
Also, to make it clear Alberta was open for business but would not micro-manage investment flows, Mr. Klein and his colleagues ended most subsidies to corporations. The province also privatized all government liquor stores and licence registries. The Klein government did not raise taxes.
That was the Klein experiment. So how did Alberta do?
In four of the five years between 1993 and 1997 inclusive, Alberta's gross domestic product grew faster than the national average. Overall, Alberta's average annual GDP growth was 2.4 per cent. The national annual average in those years was 1.9 per cent.
As for job growth, Alberta added 164,500 jobs between 1993 and 1997. Compare that to employment growth in more populated provinces: Ontario, with four times Alberta's population, only doubled its increase in jobs (352,000); or ponder Quebec (143,600) and British Columbia (133,100), which also woefully underperformed Alberta. And 87 per cent of Alberta's new jobs were full-time – the highest proportion in the just-noted employment growth in those provinces.
The usual retort is that Alberta was lucky with high oil and gas prices. But energy prices in Mr. Klein's first full term as premier were low: Per barrel, oil prices ranged from $14.53 (in 1993) to $25.23 (in 1996), or $21.53 and $35.99 in 2015 dollars. Natural gas prices were in the same (low) range as now. Despite such challenges, the Klein government balanced the books by 1995, two years ahead of its self-imposed deadline.
Back to the newest experiment: Alberta's NDP government faces, in 2015, three of the same challenges as did Mr. Klein and his colleagues in late 1992: First, sluggish energy prices (and thus weak government revenues); second, high government program spending set in motion by previous premiers; third, on deficit déjà vu, Alberta is in its eighth deficit year, this calculated according to Klein-era measurements, i.e., when total spending outpaces total revenues.
That is where the similarities end. Alberta's New Democrats have charted a course opposite to that of the post-1993 Klein reforms. In this, the NDP are imitating their 1993 stand, which cost them every seat in the Alberta election that year, this after both the opposition Liberals and governing Progressive Conservatives urged spending reform and reductions and won all the seats.
New Democrats have apparently not changed their mind about the Klein years.
Thus, the Alberta NDP government is ramping up corporate welfare à la Peter Lougheed and Don Getty and with the same excuse: diversification. Rachel Notley's government just increased government spending beyond the nosebleed levels already set by the previous Progressive Conservative government. The NDP are spending more on public sector compensation, not less. The provincial government is raising income taxes and business taxes. The NDP government will draw down what little is left of Alberta's contingency fund. The province will increase Alberta's total liabilities by almost $24-billion over three years.
By 2019, Albertans will be able to compare two experiments from two first-term premiers: That of Ralph Klein and Rachel Notley. Stay tuned.
Mark Milke is a Calgary columnist and author of four books