Alberta is reaping what it did not sow.
Without a sales tax, the provincial budget is left without an anchor and so swings wildly when fossil-fuel prices rise and fall.
Without a strong Heritage Fund or some sort of sovereign wealth fund that could have used fossil-fuel royalties to diversify the economy or investing overseas, the provincial budget has always relied excessively on the fossil-fuel industries.
Without a wider tax base producing more revenues from income and sales taxes, the provincial budget crashes when oil prices tank and stay low.
Without a much more aggressive program to reduce carbon emissions, persuading others to take bitumen oil or allow it to transit to other jurisdictions becomes much more difficult.
Without spending restraint in the good times, public services are bid up in cost, as in the case of Alberta's health-care budget; it used to be rising by about 9 per cent a year, but has fallen to about 3 per cent.
Over all, the good times allowed Alberta to give itself the most expensive per-capita public services in Canada, and now these cannot so easily be afforded.
Had Albertans taxed themselves properly – that is, with a sales tax and higher personal and corporate income taxes, putting money from fossil fuels into long-term investments instead of the operational costs of government – they would not be in today's pickle.
A few lonely voices suggested variations on the path not taken, but they were drowned out by devotees of the so-called Alberta Advantage: low taxes and big spending paid for by royalties. Let the good times roll was the motto of provincial governments, apparently unaware that Alberta was a price-taker in oil and natural gas and not an "energy superpower," as some pretended.
The failure to be governed sensibly over many years has now caught up with Alberta, handing NDP Premier Rachel Notley's new government a weak hand with which to begin its time in office.
Jim Prentice, the Progressive Conservative premier who briefly led the province before losing to the New Democrats last spring, had begun the education process with Albertans and probably would have done many of the things in this week's NDP budget. But voters were tired of the Conservative dynasty and wanted change. Nor were they eager to embrace Mr. Prentice's criticism of citizens for having not been willing to accept self-evident truths over many years – a criticism founded in fact and now confirmed by current realities.
The difference between what Mr. Prentice might have done and this NDP budget – and this must perforce be speculation – lies in the inability and unwillingness of New Democrats generally ever to see a government program they should end or trim. It is not in the party's DNA anywhere to end or review programs, because the party is supported by public-sector unions whose sense of entitlement and self-pity is profound, as we now see with teachers in Ontario and public-sector strikes in Quebec.
So, unwilling to do much with the public sector, except expand it, the Alberta NDP accepted huge deficits today and tomorrow with a vague, and likely unattainable, promise to balance the budget in 2019-2020. The government will invest massively in infrastructure in the hopes of cushioning the rise in unemployment caused by the shrinking of the fossil-fuel industry and the jobs that disappear with its decline.
Infrastructure investment has become the new elixir for Canada, according to the incoming federal Liberal government and some provincial governments, including now Alberta. The reasoning is sound and simple: Borrow when interest rates are low, invest to create jobs in needed projects.
Getting the investments right – that is, investing in things that are needed beyond those that are politically expedient – is always a major challenge. Done right, infrastructure investment is terrific. Done poorly, it can become an albatross.
What will almost certainly not create many jobs is Alberta's $178-million program to offer companies up to $5,000 for every new hire. This program reflects the same NDP promise in other jurisdictions, including at the federal level. Such programs seldom work because taking on a worker and his or her benefits will almost never be influenced by a one-time, $5,000 grant from the government.
Equally unfortunate as a public-policy matter is the two-year freeze on university tuition fees for two years, which will leave universities with more precarious financing. Infrastructure of the mind is as important as physical infrastructure, although less politically attractive.