We Need To Ask What Would Ralph Klein Do

[Anonymous]

This is courtesy of Scott Hennig, acting director of the Canadian Taxpayers Federation.

Alberta's 16th premier has a lot in common with Alberta's 11th and 12th premiers. But if Jim Prentice hikes taxes or introduces a new provincial sales tax (PST), he will be repeating a history most Albertans would rather forget.



Don Getty became Alberta's 11th premier in November 1985.



On the day he was sworn in, oil sat at $30.81 per barrel. Four months later, oil prices plummeted to $12.62, turning a small deficit into a large one.



Jim Prentice became Alberta's 16th premier on Sept. 15, 2014. On that day, oil was sitting at $92.86 per barrel. By Jan. 15, oil prices had dropped 50 per cent, making the giant hole in the provincial budget even larger.



Getty inherited a government that had been spending like drunken sailors. In today's dollars, Getty's first budget spent nearly $12,000 per Albertan on programs — by far the highest in the nation.



Prentice has inherited a government that has been spending like bankers at a bachelor party. Last year the government spent nearly $10,800 per Albertan on programs — nearly the highest in the nation.



The rest of Don Getty's story is written, whereas Prentice's is not.



Getty opted to run up the credit-card bills and hike taxes. His 1987 budget raised business taxes by more than a third, health-care premiums by 28 per cent, nursing-home fees by 40 per cent, new fuel and hotel taxes were introduced and liquor taxes, insurance taxes and income taxes went up across the board. However, the one tax he would not touch was the introduction of a provincial sales tax.



Ignoring possible spending reductions, taking on debt and hiking taxes did little for the budget and nothing for Alberta's economy.



Alberta's 12th premier, Ralph Klein, never faced a rapid, massive drop in oil prices during his tenure — mostly because they were very low for half of his time in office. Oil prices never reached $30 a barrel again until February of 2000 — over seven years into his time as premier.



But like Prentice, Klein inherited a systemic, long-term deficit. When Klein took office, the books hadn't been balanced for seven straight budgets. And again today, we are nearing the end of the seventh straight budget that hasn't truly been balanced (as long as you don't count borrowing billions, draining contingency funds or changing the definition of a balanced budget).



Even during the days of $11 oil (prices actually hit $10.86 in December of 1998), Klein never hiked income taxes or mused about the introduction of a PST. In fact, Klein was so opposed to a PST that his government passed the Taxpayer Protection Act — a law in place today that would require the Prentice government to take a PST to a provincewide referendum.



Klein recognized that spending was the real problem, not revenue. The same is true today. Last year, Alberta spent 21 per cent more, per citizen, than neighbouring British Columbia. We are one of the highest-spending provinces in the nation.



While low oil is far from ideal, it's no excuse to hike income taxes or introduce a PST. Premier Prentice would be wise to look at the similarities he shares with both Getty and Klein and decide which history to follow.



He can hike taxes, maintain sky-high spending and deficit budgets while driving Alberta's economy into the ditch like Getty — or cut spending, balance the books and eventually get to lower taxes like Klein.



The choice should be obvious.

[Anonymous]

Calgary's mayor and city council accepted a raise for themselves.

 ac_dunno

[Anonymous]

Calgary's mayor and city council accepted a raise for themselves.

 ac_dunno

If it's the same as Edmonton and unlike most Canadian cities mayor/city council salaries are 1/3 tax free. ac_wot

[Anonymous]

Calgary's mayor and city council accepted a raise for themselves.

 ac_dunno

If it's the same as Edmonton and unlike most Canadian cities mayor/city council salaries are 1/3 tax free. ac_wot

Calgary and Edmonton elected council accepting a pay increase while those of us working for the provincial government will be asked to accept pay cuts as hinted by our premier will make it that much harder to accept.

[Anonymous]

^You may have your wages rolled back. Now the bad news(haha), they won't cut deep enough, so tax increases are looming.

It's simply impossible to balance the provincial budget without either rolling back public workers' wages or laying off thousands of them.



The other day, the premier told my Calgary Sun colleague Rick Bell that in light of the large revenue drop the provincial government is expecting this year, it may be necessary to ask public service unions to accept wage rollbacks.



"The reality is there's only $39 billion of money and it's costing us $46 billion for services. Something's got to give." Prentice added, "You cannot ask Albertans to tighten their belts and pay more unless they see a reduction in the size and the cost of government."



So what the premier giveth in one breath, he taketh away with the next.



In the first instance, the premier says something encouraging. He says something bold that indicates he and his government are getting ready to take tough action - wage rollbacks - to deal with an anticipated $7-billion revenue drop.



Quite correctly, Prentice says "something's got to give," meaning that given plummeting government revenues it will be necessary to cut the generous wages, salaries and benefits paid to civil servants, nurses, teachers, hospital workers and other public employees.



Meanwhile, in the second half of his statement, Prentice beats his higher-taxes drum yet again. "You cannot ask Albertans to...pay more unless..."



"Pay more?" That's simply codespeak for higher taxes.



Since Christmas, nearly every public statement by Prentice has contained a bigtime hint that higher taxes are coming - a sales tax, a progressive income tax or other "enhanced revenues." His comments to Bell raised the same ugly spectre.



The premier's remarks also left the impression that talking rollbacks with public union bosses is simply part of a scheme to sell ordinary Albertans on the need to pay higher taxes.



No thanks, sir.



The provincial government's budget problems were not caused by Alberta taxpayers. So it should not be taxpayers who are punished for bad spending decisions the Tory government has made in the recent past.



Premier Prentice admitted pubic-sector pay is a huge part of the province's overspending. "A lot of it comes down to wages because wages are 60% to 70% of the overall budget."



But it's worse even than that.



According to a study by the University of Calgary's school of public policy, "the public-sector wage bill in Alberta increased 119%" from 2001 to 2010. The average increase in the other nine provinces was just 63%. Even after accounting for inflation and for the fact that Alberta's population grew by 900,000 in the 2000s, the amount the province spent on public-sector pay and perks rose by 20% above the national average.



Once oil revenues began flowing in, the Tories made unsustainably generous contracts with public workers in order to buy labour peace. For every new dollar the province spent in the 2000s, 95 cents went to hiring new workers or paying existing workers more money.



Nurses, for instance, have a clause in their contracts that if they are scheduled to work, say, 16 hours but end up working 40 hours in a week, the additional 24 hours are paid as overtime.



Another example: Health care spending has nearly doubled since 2006, from $9 billion to $17 billion. But at least 70% of the additional spending has gone to administration rather than to more beds, newer drugs, increased surgeries or improved technology.



That means the amount of patient care has not kept pace with population growth, but expansion of the health care bureaucracy has outstripped population growth.



These were not decisions made by Alberta taxpayers, though. So it should not be up to taxpayers to make up the difference.

http://www.edmontonsun.com/2015/01/28/gunter-taxpayers-stuck-with-the-tab">http://www.edmontonsun.com/2015/01/28/g ... th-the-tab">http://www.edmontonsun.com/2015/01/28/gunter-taxpayers-stuck-with-the-tab

[Anonymous]

Our premier and his cabinet are going to take a 5% voluntary cut in pay..



If my wages are rolled back it will not be voluntary.

[Anonymous]

Our premier and his cabinet are going to take a 5% voluntary cut in pay..



If my wages are rolled back it will not be voluntary.

Deja vu anyone? Klein did something similar to this in 1993 before he took out the knife on public sector wages. This is the part of the Prentice plan I like. However, he will deviate from Klein by raising taxes.