A new report recommending that Alberta put away more of its resource revenues is "dead on arrival," national affairs columnist Jeffrey Simpson wrote in Wednesday's column. "Consumption today ... is always easier to sell politically than saving for tomorrow - in Alberta and elsewhere."
Mr. Simpson took reader questions Wednesday about his column. A partial transcript follows, or scroll down to follow the discussion as it unfolded.
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Moderator: You noted that it's also easier "elsewhere" to sell spending than saving. So why should we be highlighing Alberta's resource revenues in particular?
Jeffrey Simpson: Alberta's resources revenues, as the panel underscored, are highly volatile, leading to a boom-and-bust that has been the curse of Alberta's fiscal situation for many years. More precitable revenue sources, such as higher personal income taxes and/or a sales tax would flatten out this volatility somewhat. In addition, you never know ten, twenty years from now what the world's energy situation will look like. The assumption seems to be that oil prices will just continue to rise, and that Alberta has so much oil in the tar/oil sands that it does not have to worry. The panel wonders about both assumptions, especially the first. But the overarching argument is that the so-called Alberta Advantage of low taxes is not as good an argument as making strategic long-term investments with the resource revenues.
TD: As nice as it is for the Alberta government to save for the future, and I would not suggest that it not do so, but is it not more democratic for the province to provide to its citizens the benefits of the resources through the construction of infrastructure and tax relief than by placing the receipts solely under government control? While governments supposedly provide benefits for society the truth is that the benefits tend to heavily favour a select few, while most receive at most a nominal or indirect benefit.
Jeffrey Simpson: The construction of infrastructure is not going to mainly benefit the "few," because all of society benefits directly or indirectly from having, say, a better education population. The democratic argument is a telling one: Do Albertans want to spend most of the revenues from resources today and keep their taxes down but save next-to-nothing for the future? Or do they wish to follow the path outlined by the panel? In the past, except for the Lougheed years, Albertans have preferred the first option, and I believe they still do, which is why I said that the report was "dead on arrival" in the political culture of the province. At least for the forseeable future.
KMacRae: Mr. Simpson, you assume Albertans will not undergo "short term pain". We had that short term pain in the mid 1990's, in a plan devised by then Liberal leader Laurence Decore and Mike Percy, but coopted by Mr. Klein. How do you reconcile that with the assumption in your column?
Jeffrey Simpson: Yes, Alberta did have short-term pain when Mr. Klein eliminated the province's deficit. That was short-term. The panel is talking about a structural shift amount to about 30 per cent of government revenues from resources to taxation on individuals and/or companies. So I guess it depends what you mean by short-term. I meant it in the sense not just of today and the next few years but of half-a-generation which in the context of Alberta's long-term revenues from resources is short. If you believe that Albertans are prepared for such a shift, then I am obviously quite wrong in saying that the report is dead on arrival. I have not noticed the Alberta Conservative leadership candidates rushing to endorse the report, and predictably the Wild Rose Alliance is trashing it. Togehter, they represent politically speaking a large majority of Albertans.
Cindy F.S.: I read the report of the Premier's Council - the authors stressed that their document is "written to all Albertans, not just to political leaders." But you say it's caused "barely a ripple." Is there a more effective way than a report to move the public on a broad philosophical issue like this?
Jeffrey Simpson: I am aware of some editorial writers' comments on the report, but with due respect to that breed, editorials are read by very few voters. Television has the attention span of a gnat, so don't look there. The Alberta political culture is difficult to move. It is extremely narrow -- the narrowest in Canada -- in the sense that the debate is among different shades of conservatism.
d.j.: When I look at the most recent federal government accounts showing that $20B was lent from/transferred out of Alberta in 2007, am I not looking at the same money that Norway is plowing into its Sovereign Fund?
Jeffrey Simpson: The money that flows out of Alberta into the rest of Canada is not the same, in that some of that money gets recycled back into the province through purchasing of Alberta goods and services, such as natural resources. Yes, Alberta is a net contributor to the federation in terms of fiscal flows as the per capita wealthiest provinces, but some of the money flows back. It was the same for Ontario when it was wealthier.