Since taking over last fall, Alberta Premier Jim Prentice has made few false moves. Rather, he has demonstrated an enviable political skill set, which has included a proficiency in making decisions with which the public largely concurs.
But most of those moves came before the bottom fell out of the oil market. That dynamic has changed everything, perhaps irrevocably, and now Mr. Prentice is facing a set of choices that will likely define his premiership. Among the matters he is assessing is whether to go to the polls this spring, a year earlier than mandated by legislation.
There are compelling reasons to go soon.
Firstly, the Premier is extremely popular and has more political capital to exploit than he'll likely have at any other point in his tenure. His brief time on the job has been so impressive, in fact, it compelled the leadership of the Opposition Wildrose Party to wave a white flag of surrender and join him rather than fight on. Over all, the political opposition in the province is remarkably weak at the moment, a fact many in the Progressive Conservative camp believe should be taken advantage of. Finally, as bad as the economic state of affairs in Alberta is currently, it will likely deteriorate further. Consequently, there is a line of thinking that says it would be better not to wait until that happens.
Election or not, one thing is certain: Mr. Prentice is girding to have a difficult conversation with Albertans about the fallout from oil's collapse. He knows there may not be a better opportunity to make some necessary, but politically unpopular moves that should have been carried out by Progressive Conservative governments years ago.
The Premier effectively admitted as much, saying recently that Tory governments have not been responsible fiscal stewards and have used oil money to balance budgets on the backs of future generations. He referenced the reckless rates of spending on health care and public-sector salaries, which have far outdistanced counterparts in other parts of the country for years.
Mr. Prentice has even dared to mention the S-word – sales tax – saying he's prepared to be educated on the matter. This is a rather shocking reversal. It wasn't long ago the Premier nixed any talk of a sales tax; it's funny what happens when 15 per cent (and climbing) of your provincial revenues disappear overnight. The $7-billion fiscal black hole Alberta is staring at thanks to a sub-$50 (U.S.) barrel of oil has compelled Mr. Prentice to be educated about a whole range of matters as they pertain to how much Albertans are taxed, or rather how little they are.
That vaunted Alberta (tax) Advantage has suddenly become a huge handicap for the government, and it seems unlikely that Mr. Prentice can afford to introduce a budget this spring that doesn't include an increase in taxation at some level. Possibilities include a small harmonized sales tax, something economists in the province have been arguing in favour of for some time; an increase to the 10-per-cent flat tax that is applied to income; or a gas tax.
Either way, it would seem Mr. Prentice is preparing to rewrite, and throw out entirely in some cases, fundamental political laws that have been used to govern the province for decades. Oil money allowed successive Alberta governments to mostly avoid making many of the tough calls every other province has had to make at some point. In part, that is what has enabled the Progressive Conservatives to stay in power for four-plus decades.
But the decision to use those revenues to paper over grievous structural problems with the province's financial system was ultimately doomed. There was bound to come a time when Alberta would have to pay the piper and no longer use oil revenues to fund operating costs – and it appears that day has arrived.
That reality has precipitated the hard discussion Mr. Prentice is about to have with the people of his province. One scenario has the Premier tabling a spring budget but not passing it before seeking a mandate from the public in May or June. That would allow him to make changes to his fiscal plan based on feedback he receives on the campaign trail – and how he's faring in the polls.
Either way, Albertans should brace for change because it's coming whether they like it or not.