Not long after Alberta’s former deputy premier, Ron Stevens, resigned from his seat in May to accept a judgeship, the lightning-rod issue in the riding of Calgary-Glenmore was a high-speed ring road—the kind of thing, in other words, that proves the old adage that all politics are local. Since then—with a by-election to replace Stevens now just days away—the ballot question in Calgary-Glenmore has morphed into the little matter of Alberta’s ballooning deficit. Suddenly, Alberta finds itself with something unusual on its hands: a political dogfight, one that is no less than a referendum on the Tory government.
A Tory stronghold since the party first swept to power in 1971, Calgary-Glenmore is, according to Diane Colley-Urquhart, a well-known alderman and the Tories’ feisty by-election candidate, “a microcosm of what we’re hearing in Calgary—sort of a focus group for the whole city.” The real shift in the by-election arrived last week, when Finance Minister Iris Evans announced that once-booming Alberta, debt-free for five years, now faces a $6.9-billion deficit. Flanked by charts depicting plummeting commodity prices on the one side and collapsed provincial revenues on the other, Evans called the predicament a “real kick in the head,” and blamed the shortfall on declining natural gas prices. (Natural gas, rather than oil, is normally Alberta’s major source of revenue, and even Evans’s most recent numbers presume an increase in natural gas prices that is by no means certain.) Keeping the deficit to just $6.9 billion, meanwhile, will still force the government to find $430 million in further budget cuts.
As recently as April, Evans had projected a shortfall of $4.7 billion, requiring a move in the legislature to drop former premier Ralph Klein’s law banning deficits altogether. And only last August, Evans projected a surplus of $8.5 billion. That $15-billion gap has startled Albertans, many of whom are now looking for the Calgary-Glenmore by-election to deliver Premier Ed Stelmach his comeuppance. Last week, an online Ipsos Reid poll found that 56 per cent of Calgarians disapprove of the way the Stelmach Tories have dealt with the economy. Dissatisfaction over Stelmach’s fiddling with oil and gas royalties, health care and that massive deficit is rampant. It is hard to find anyone eager to vote for the Stelmach government.
In Calgary, Evans’s financial update has galvanized an old political divide by angering anew southern Alberta urbanites who’ve always viewed Stelmach, a northerner from rural Vegreville who finds his most solid support around Edmonton, with skepticism. “It’s got to be said—the elephant in the room—these guys blew it,” says Pete, a scraggly bearded 57-year-old landscaper, standing on his lawn in an affluent, tree-lined section of the riding. A long-time Tory supporter, Pete plans to park his vote elsewhere this time. “I was always very much behind Ralph,” says Pete. “I always felt he was speaking for me.”
Progressive Conservatives worry privately that Colley-Urquhart will lose the by-election on Sept. 14—perhaps to Avalon Roberts, the Newfoundland-born, mile-a-minute psychiatrist running for the Alberta Liberals. “I like her,” says 52-year-old Bruce Anderson, who a door-knocking Roberts bumped into on the street this week. Anderson, originally from Saskatchewan, works in the oil patch and has traditionally supported the Tories. He won’t this time, citing changes to Stelmach’s new royalties, which came into effect Jan. 1. “They threw it in at the worst possible time—it’s a Saskatchewan NDP mentality,” he says. “Who likes to see people stinking rich, but they’re the ones who spend the money.”
Ever since oil peaked at $140 a barrel last July, life has been a series of unfortunate events for Stelmach. On the heels of his 2008 election victory—the Progressive Conservatives won 72 of the province’s 83 seats, decimating the opposition—he made good on his promise to eliminate health premiums, saving the average Alberta family $1,056 a year but costing the provincial treasury an annual $1 billion. Stelmach’s changes to the province’s royalties, introduced to exploit Alberta’s rocketing oil patch activity, came into effect just as commodity prices cratered, required what seemed like endless tinkering, and ended up chasing money into the U.S., Saskatchewan and British Columbia.
At the same time, a move designed to help clean up Alberta’s “dirty oil” image saw the Tories commit $2 billion for carbon capture and storage, an embryonic technology. (A recent report prepared for the government now says a successful carbon capture and storage program could cost as much as $3 billion a year—indefinitely—even as it achieves just a fraction of Alberta’s emissions reduction targets.) In a province long starved of roads and public facilities, Stelmach this year will spend over $7 billion on infrastructure. A deal he struck with the Alberta Teachers’ Association in late 2007, meanwhile, aimed at keeping educators from striking during an upcoming election, is costing the government over $400 million a year and now threatens to come to nought: the Tories may still face a showdown with the teachers’ union over salary hikes.
Still, all remained well for Stelmach while the economy blasted onward. No more. Faced with last week’s harsh reality, the premier counselled patience: “We face two or three challenging years as the economy recovers from the global recession,” he told reporters. Stelmach is again facing comparisons with Don Getty, the Tory leader who piloted Alberta during the last major recession, in the 1980s and early ’90s, and saw his political fortunes sink as a result. For Guy Boutilier, the MLA for the oil sands seat of Fort McMurray-Wood Buffalo—whom Stelmach recently booted from caucus for demanding a long-term care facility in his riding—the comparison was irresistible. “This is a record deficit, dating back to the Don Getty era with no plan, and from what I hear the premier say, it’s like, ‘Let’s cross our fingers and hope for the best with energy prices in the future,’ ” said Boutilier, who likes to remind people he “graduated from Harvard with Barack Obama.” (The pair never met.)
Such sundry costs and the decline in revenues might mean tax hikes elsewhere. In Alberta, still without a provincial sales tax, things are different. After some of his own cabinet ministers loudly hinted that Albertans should expect taxes to go up, Stelmach firmly demurred. “As long as I’m premier of this province there will be no tax increases,” he told reporters last month. In an apparent pique, Stelmach went on to rescind a new liquor tax introduced in the April budget, saving Albertans 75 cents for a bottle of wine but costing the province $180 million a year in budgeted revenue.
With the option of tax increases off the table and natural gas prices likely to remain low for some time, Stelmach must slash expenditures. The cuts will be dramatic (the premier will personally vet ministers’ travel expenses). Last week, as students returned to school, Education Minister Dave Hancock announced over $80 million in cuts to the education budget ($44 million of those cuts are to come from surpluses maintained by the school boards). Not included in Evans’s $6.9-billion shortfall, meanwhile, is the Alberta Health Services’ $1.3-billion deficit. The health board has already cut $650 million from its budget. The board says it will do more with less, a tough sell when hospital beds, which numbered 13,300 20 years ago, have since dwindled to 6,800.
The province will pay for its budget shortfall with its $17-billion sustainability fund, a savings plan created to buffer Alberta against volatile commodity prices. Economists warn that can’t last—that the sustainability dollars will likely run out this time next year. Then the Tories will have to decide between new taxes or dipping into the Heritage Fund, Alberta’s savings plan for when its non-renewable resources run dry.
The failure of a name Tory like Colley-Urquhart (who, oddly, would not permit Maclean’s to accompany her door-knocking) would be a black mark against the Stelmach regime not unlike that left by the Calgary-Elbow by-election two years ago, which sent an Alberta Liberal to the leg (the loss would not be as symbolically potent, however: Elbow was Klein’s old riding). Standing at his door in Calgary-Glenmore, Pete, the landscaper, says he plans to vote for Paul Hinman, the Wildrose Alliance Party candidate (and still its leader pending a leadership race). Hinman is capitalizing on the Tories’ fiscal woes with a campaign to “Send Ed a Message.” He is well aware his right-wing party may well split the conservative vote, favouring Roberts, the Alberta Liberal. “The fact of the matter is a vote for Colley-Urquhart is a vote for Ed—and people have to think that through,” he says. “Make the leap. Don’t hang onto a dead horse.”