The theory that new Alberta finance minister Ted Morton was put in place to placate the fiscal hawks and play the cold-eyed budget-slasher—a zombie Steve West—was always dubious. I’m not saying Morton wouldn’t suit the role, and he may still be called upon to wield the scalpel. But the Stelmach government has one obsessive, overriding imperative: to announce a budgetary surplus for the fiscal year 2012-13, immediately before calling an election. And Alberta’s revenues depend to a fantastical degree on world prices for commodities, chiefly natural gas (though the end-products of the tarsands are catching up fast).
So either the Tories will pull it off or they won’t. Morton’s job is to keep the fiscal plan on track for the 2012 “Mission Accomplished” announcement and pacify various interest groups in the meantime—if possible, without exhausting the rainy-day Sustainability Fund established in 2003 to address temporary revenue downturns resulting from the volatility of Alberta’s petro revenues.
As of today, the master plan is still pretty much on target. Revenues were slightly stronger than expected for 2009-10, limiting the deficit to $3.6 billion. Today’s 2010-11 budget allows for another deficit of $4.7 billion with a 4% overall increase in spending. After that, the government expects gas prices to rise slowly from the present trough and pull Alberta out of the red. The futures markets expect pretty much the same thing. (Alberta finance ministers could conceivably play dirty with oil-and-gas pricing projections, since they ultimately get to pick which forecasters they listen to; but while the temptation must be strong, as a rule they refrain. International lenders and rating agencies are watching, and they expect stern realism. From governments, anyway.)
That’s not to say that Morton and his predecessors haven’t cut things close. The projected 2012-13 surplus is tiny and the amount expected to be left in the Sustainability Fund account is less than $3 billion. One unexpectedly warm global winter or other economic shock could eat into both quantities fast, as could a simple continuation of the methane glut. And that would mean scalpel time. The Finance Minister is already screwing a tight lid on spending in some areas that are, considered from a non-Machiavellian moral standpoint, particularly recession-sensitive: child-welfare interventions, employment retraining for adults, anti-homelessness measures and social housing (whose relevant ministry’s 2010-11 budget takes a 19% boot in the shorts).
But, like the political scientist he is, he’s taking care of the electorally armed-and-dangerous departments: seniors, health, and education—the S.H.E. Who Must Be Obeyed when governing a province. Anybody who still thinks of Morton as a whip-cracking Wyoming cowboy bent on Goldwaterizing Alberta should contemplate the astonishing reactions to this budget. The president of the Alberta Federation of Labour called it “clearly a victory” for public services (by which they mean, “for the union”). The Friends of Medicare (i.e., the Most Holy Order of Nurses Militant) agreed. The President of the Alberta Teachers’ Association, still amicably disposed after its pension bailout, declared with satisfaction that “The government listened to Albertans.” These are the dogs who have barked loudest and most persistently during the past 17 years of Conservative government. Ted Morton sure makes for a funny-looking pack leader.