With the impressive win by Rachel Notley's New Democrats, Alberta is benefiting from competitive politics. Monopolies are no better for governments than those in the private sector. Albertans have rejected an entrenched party that was in power for too long, which is ultimately unhealthy for democracy.
Winning an election is one thing: The big challenge now is to govern. Oil prices are expected to remain low for the foreseeable future. Alberta's economy is in the doldrums with a recession on the horizon. People are losing jobs. Municipal governments want money. So do health and education authorities. The deficit is climbing and Alberta will soon be a net borrower, as its liabilities will trump its financial assets. This was the same scenario faced by outgoing Premier Jim Prentice, whose budget has now been resoundingly rejected by the electorate.
As shown by the postelection decline in energy stocks, the business community is worried that the new government will not just increase taxes but take on regulatory policies that will make it less competitive. Royalty reviews and tepid support for market access have gotten business leaders concerned. Policies that push for more government-guaranteed profits from upgrading will also result in more carbon emissions in Alberta. Will hikes in the carbon levy also be on its way? Ms. Notley is trying to calm the business sector as she makes clear that she understands the energy sector. However, confidence will be built based on policy actions, not words.
So the water-cooler discussion is this: Will Ms. Notley's government be like Bob Rae's NDP government in Ontario from 1990 to 1995, or Gary Doer's NDP government in Manitoba from 1999 to 2009? Despite much respect for Mr. Rae himself, he did not have a strong caucus. His win came as a surprise product of vote splitting.
Much like Alberta today, Ontario was facing a recession when the New Democrats were elected. Hoping to spend its way out of the downturn, Ontario opened up a large deficit that had to be dealt with through austerity measures for three years, including tax hikes, spending restraint and labour furloughs (known as "Rae days"). Losing its base, his government was turfed by Mike Harris's Progressive Conservatives, leaving the Ontario NDP in purgatory ever since.
This clearly is not a path Alberta's NDP would like to repeat. Ms. Notley would rather see something like the success of Mr. Doer's Manitoba government. However, Mr. Doer faced a fairly good period of economic growth, with the exception of a minor recession in 2001. Such growth enabled him to balance his budgets with good-news measures.
His New Democrats were returned to power after restoring spending on health and education and reducing corporate income and capital taxes, as well as some other levies. So good was his party's performance that it remains in power today, under Premier Greg Selinger, who served as a capable finance minister under Mr. Doer.
So Ms. Notley has a cousin who has demonstrated good NDP government. Mr. Doer became Canada's ambassador to the United States after a successful term as Manitoba premier, getting rave reviews, ironically, for his advocacy of Keystone XL – a project for which Ms. Notley has expressed much less enthusiasm. Ms. Notley's campaign promises include some new Rae-like tax hikes on corporations and high-income Albertans, along with increased spending.
With a weak economy and a large deficit, these campaign pledges will likely be fulfilled. In economic terms, it will be getting off on the wrong foot, but perhaps some other confidence-building measures will be used to convey a plan to help the economy.
Certainly, some NDP policies, such as a destabilizing royalty review, can be delayed until the economy recovers, something Ms. Notley has wisely indicated. It may take some time before oil prices rebound.
Albertans wanted a change and now they have it. The question is what type of government will they have now as the province stares down difficult times. Perhaps Ms. Notley is already on the phone with Mr. Doer.