Alison Redford’s government hopes to “reshape Alberta” by saving more of its cash, building closer ties with Ottawa and continuing the push for pipelines to carry its resources abroad.
They just won’t specify how – or when – they plan to do it.
In the first Throne Speech since Ms. Redford won the leadership of the Progressive Conservative Party last fall, her government outlined “sweeping change[s] to level out the boom-and-bust budgeting the province has long grown accustomed to. To do so, it would sign three-year funding deals with major ministries (such as education), rely less on resource revenues and boost systematic reviews of government spending.
The speech came two days before a budget, and two months before an anticipated spring election. It also stressed Alberta will “put aside jurisdictional differences” to collaborate with the federal government, “design initiatives to access global markets” for its energy sector, review its tax structure and expand health-care services – but Ms. Redford wouldn’t provide any details. “There’ll be a budget on Thursday. The picture will become clear,” she said.
It’s clear, however, she wants to start putting money in the bank – while leaving the door open to a tax hike.
Tuesday’s speech, delivered by Lieutenant-Governor Donald Ethell, praised the vision of the government of Peter Lougheed, the first premier of the dynasty Ms. Redford’s party has enjoyed. The province nurtured its energy sector, invested in the oil sands and created its Heritage Savings Trust Fund, initially pouring a third of all resource revenue into the trust.
Ms. Redford’s government hinted at a return to those values of saving, saying in the speech the province relies “too heavily on volatile energy revenue” and will revisit its “entire fiscal framework,” specifically citing personal income taxes and gaming revenue.
“It’s going to be important for us as Albertans to think about what our reliance on non-renewable resource revenues will be,” she told reporters.
The speech also said the government would prioritize “saving intelligently for your future and for generations to come,” and one of her ministers on Tuesday said the budget would take concrete steps to look at boosting the Heritage Fund.
Largely ignored for over two decades, the fund has decreased in inflation-adjusted value, sitting just under $15-billion at the last estimate. Mr. Lougheed had hoped it would have grown by now to nearly $100-billion.
“The challenge is: Are we going to keep putting more into the fund?” Ms. Redford said.
Annually, more than $8-billion – or 23 per cent – of Alberta’s current deficit budget is funded by non-renewable resource revenue, including royalties from conventional oil, oil-sands bitumen, natural gas and lucrative land-lease sales.
If she were to start diverting some of that to savings, as Mr. Lougheed did, she’d either need to make cuts or find new sources of revenue. “Something has to take up that gap,” Finance Minister Ron Liepert said Monday, adding anything is on the table but that major moves won’t be taken until after the election. “There simply isn’t time,” he said.
If a move to save non-renewable revenue leads to tax hikes, health premiums or a sales tax, Ms. Redford will be under some pressure at the polls. The Liberals have proposed raising taxes for corporations and people earning over $100,000, but the right-wing Wildrose Party has pushed for axing spending and pledged not to raise taxes.
“After months of speculation about how the PCs are going to raise our taxes, we now have a pretty clear road map,” Wildrose Leader Danielle Smith said. “Income taxes are going up. It was very clear in the Throne Speech they'd be looking at ways of increasing revenue.”
Ms. Redford dismissed the criticism, but the Alberta government has long been under pressure to rein in spending, reduce its reliance on non-renewable revenue and start saving money again. In its submissions to the government’s budget process, the Calgary Chamber of Commerce called for a cap of just over $5-billion on annual non-renewable resource spending, committing the rest to savings.
“We’re really hopeful we’ll see some meaningful change coming from Premier Redford’s agenda,” said Ben Brunnen, the Chamber’s chief economist.