The Alberta NDP vs. budget reality

What happens when the NDP’s plans to transform Alberta run up against ugly budget realities?

A scarecrow, used to deter birds from the tailings pond, stands near the Syncrude Canada Ltd. upgrader plant of the company's mine at dusk in the Athabasca Oil Sands near Fort McMurray, Alberta, Canada, on Tuesday, June 2, 2015. Canadian stocks rose a second day as commodities producers rallied after the price of oil climbed to the highest level this year while gold and copper led metals higher. (Ben Nelms/Bloomberg/Getty Images)

A scarecrow near the Syncrude Canada Ltd. upgrader plant of the company’s mine in the Athabasca Oil Sands near Fort McMurray, Alberta.  (Ben Nelms/Bloomberg/Getty Images)

Last month, Alberta Premier Rachel Notley and her team drew 600 people to a $250-a-head fundraiser in Calgary, a city where “dozens” used to be a respectable turnout for her party’s events. The crowd was dotted with business lobbyists—read: former Tory government aides—who wished more elected members wore name tags. They played an increasingly popular game at Alberta functions: is that a government MLA, or just some guy in an ill-fitting suit?

Notley’s speech drew healthy applause, even if she seemed unconvinced she deserved it all. “Our party, the New Democratic Party of Alberta, has taken on an enormous responsibility in stepping up to government in these times, and you know what? I think so far we’re not doing that bad a job,” the premier said. Cue the claps and hoots. “Okay. It’s arguable I might have asked for that applause just a little bit,” she added.

There’s reason for Notley to feel unworthy of such acclaim. In fact, she downgraded her assessment to “not bad” from the “pretty good” her speechwriter had scripted. Her government in October dropped a $6.1-billion budget deficit, and the first full-year NDP fiscal plan in spring may not be any prettier. That’s predominantly thanks to the ugliest oil price rout in a generation, which also prompted tens of thousands of Alberta layoffs and likely more throughout 2016. It’s hard to blame the recession on the NDP’s would-have-done-them-anyway moves like hiking corporate taxes, reviewing oil and gas royalties and the massive overhaul of emissions rules. It’s easier to say that a combination of them hasn’t helped with business confidence in the young government.

The NDP’s own reformist agenda will add to pressures in 2016. It will enact changes recommended by a barrage of reviews on energy royalties, the mental health system, agencies and boards, payday loans and more. The government has pledged to, somehow, implement the United Nations Declaration on Indigenous Rights, and budgeted $4 million for it—that’s mostly just to facilitate discussions with First Nations and Metis on how to accomplish this potentially sprawling task.

Having announced the climate policy shakeup, Notley must design this carbon tax and offsetting rebates, along with ways to wean Alberta off coal power by 2030 without Ontario-style price shocks. She’ll need careful, ongoing maintenance of the tentative new alliance of environmentalists and some energy executives—and, gosh, wouldn’t a new pipeline to somewhere be nice?

Ambitious social justice agendas never come cheap, which will make budgeting the New Democrats’ biggest headache and vulnerability. As oil prices continued to slump, they had to slash former premier Jim Prentice’s revenue forecast while proudly reversing his ending cuts. Unless oil prices leap back to a year-long average of US$61 per barrel (it’s currently below $40) to square with the NDP’s budget figures, the government will have to learn how budgetary scissors work. While Alberta’s almost 40-year-old Heritage Fund remains intact, a contingency account started in 2003 as a budget buffer will run empty next fiscal year. For every dollar the oil price falls short of what the government hoped, $170 million more melts from Alberta coffers.

Notley and her finance minister, Joe Ceci, keep using the word “prudent” in speeches but haven’t shown signs they know how to use it in action. Not when they depict the right-wing Wildrose Party’s approach in these binary terms: “But unlike those friends of ours in the official Opposition, we also know you can’t make the price of oil go up by laying off teachers and nurses,” Notley said at that November fundraiser. The hopeful budget already commits Ceci to trim $550 million from “lower priority programs,” and even that may prove stressful for the NDP.

It took Standard and Poor’s credit rating downgrade in December to prompt a shift in tone. Along with end of the province’s triple-A rating after 14 years came the agency’s warning of more cuts to come if conditions don’t improve and the government continues to show “inability” to control spending. Days later, Ceci said his cabinet will discuss removing some spending promises from spring’s budget, and said it’s a “dire” situation. “Lots of things have to be on the table because of the financial challenges that we have,” the finance minister told reporters.

New Democrats won May’s surprise majority by sweeping the Edmonton area and making inroads in Calgary and the rural north. A badly bungled farm bill, however, hurt them dearly in the countryside, and continued economic pain may wound the leader further in Calgary.

Notley has until spring 2019 before voters must judge whether she’s done a “pretty good” or “not bad” job, or worse. It’s become exceedingly hard lately to place bets on Alberta politics; 3½ years ago, Tory premier Alison Redford had just won a stunner over the Wildrose’s Danielle Smith, and now both are in political exile. It’s even harder to predict what shape the opposition will take, as Wildrose bids to consolidate Alberta’s right wing, while the third-place PCs head into 2016 deep in debt and with no clear plans for its leadership contest or anybody leaping to pursue that once-shiny prize. The year ahead will help clarify whether Alberta can still bleed Notley orange, or if it’s simply bleeding.


The Alberta NDP vs. budget reality

  1. “Notley has until spring 2019 before voters must judge whether she’s done a “pretty good” or “not bad” job, or worse. It’s become exceedingly hard lately to place bets on Alberta politics”

    Au contraire

  2. Bottom line? We ran Alison Wonderland outta town a few years early, we can run Notley out the same way. Half her caucus packs room temperature IQ’s, and most of the rest ain’t much better. Notley could be packin’ up her crap by the end of 2017 with a good effort.

  3. let me see if I can sum this up Redford was in bed with the secret societies prentice committed political suicide which seemed fishy to me which let the ndp come into power who jumped right into bed with the globalist and now we have a 7% carbon tax yes 2017 is looking good bill greenwood

  4. We win. We will get our raises. The budget can sink into the red for 10 years. All of the oil workers who made $200,000 for a couple years are drying up and blowing away. We, the public service are still standing. We weathered the horrible storm of PC government in this province for decades. Now we have conquered. Sell your houses and pawn your toys you losers. Only those of us with enough common sense to take the steady course have prevailed. Now witness the rising of the true Alberta Advantage. Go Union!

    • My my……it is the civil service workers who qualify as the very rich in Alberta Gofa. Or perhaps you don’t understand what physicians and top provincial administration are being paid in government and education in this day and age in our province. Rachel Notley has no choice but to make cuts in every portfolio, although you won’t hear them announced. She simply won’t fill empty job postings. When the head of the provincial health authority is making 1/2 million dollars I am not sure what you are cheering for. The cuts will be made to front line workers….not to administration. At one point AHS had 85 vice presidents. 75 are gone but not really. 65 remain in new job titles. Rachel Notley had no desire to rock the boat claiming front line staff were traumatized by changes….right! The cuts will all occur in the frontline. The administration won’t lose a position.


    • God you’re dense. Who do you think funds the public sector? Without industries and private incomes, the public sector becomes defunct. You need to move back east to Ontario to the socialist utopia.

      Just because you don’t want to try hard in life and actually achieve something it doesn’t mean everybody else is the same way. The socialist in the herd is always the child that got participation ribbons in track and field. That mentality will bankrupt our province.

    • Well before I move to new zealand because of people like you . I’m going to find you coward or I’ll meet you somewhere you vile pos.

    • I am copying and posting this and then I’m going to find out where you work exactly and give it to your superiors and if they do nothing then I’m to make sure every person who lost their job reads what you just posted. I would be scared if a “loser” oil worker finds out where you work and live. After all they have nothing to lose now. Scumbag

    • Ah you belong to the United brotherhood of carpenters and joiners…. you made this too easy see Ya around

  5. The right wing in Alberta has been smug and conceited for decades. Now that Saudi Arabia is calling all the shots in the global oil market, the chickens have come home to roost in Alberta. The reality of capitalism is causing pain to its biggest boosters and they are in shock. This reality is well known almost everywhere in Canada but Alberta thought it was somehow imune because of a quirk of nature called oil. Right wing Albertans came across as if their own enterprise put the oil in the ground, when in fact all they did was take it out. They positioned themselves as the economic saviours of Canada and their egos ballooned. Their mismanagement of their resource has left them standing like deer in headlights not familiar with the reality of the semi barreling towards them full speed. Of course they need social democracy in such times. Right wingers have no concept what it is to be vulnerable.

    • So much dumb here, so few electrons. Where to start? Government workers routinely fail to grasp that without them, our lives pretty much go on as normal. In fact, the fewer times in my day or month or year that I encounter any agent of the state, the better. The flip side is that without healthy private enterprise, there can be no public sector. With nothing to tax, from where would you propose to get your raises, Gofa Kyoursel? We can easily get by with far fewer of you, than you can without us.
      You might do well to read some history, BTW. I know you find this hard to grasp, but we’re your customers, and just as the business graveyard is chock-a-block full of companies whose employees told the customers to go f— themselves, there is no shortage of jurisdictions where the government workers who were contemptuous of those who ultimately dictate public fiscal policy are now the front line at MacDonald’s and Arby’s.
      There are two things at work that I can tell, you lack the intellect to grasp. One is that taxes are not infinitely elastic. Just because the government can compel the customers to involuntarily pay punitive levels of taxes does not necessarily mean there is more money flowing in to government. In spite of open and plain evidence, the Socialist Overlords have determined that more money comes only from higher taxes. Since adopting a flat tax, Alberta has enjoyed the highest per capita tax take of any province, yet Notley insists on throwing the evidence out the window and moving us regressively towards progressive taxation. I know you aren’t smart enough to get that. That’s why you work in government.
      The other thing you don’t get is that, in a democracy, public fiscal policy is the sole purview of the legislature at the behest of the tax paying public. It is not something that can or should be determined by public employees in a union meeting. Those people are not elected by the tax payers, nor are they legally entrusted with the public treasury. If the people decide that spending and deficits must be cut in order to reduce tax burdens and debt, then the public service has no choice but to go along with that. Don’t ever forget that.
      As for Man-o-man, you’re right. The oil industry didn’t put the oil in the ground, but you need to quit watching the Beverly Hillbillies. Last time I checked, it’s been a long time since anyone in Alberta found bubbling crude while out hunting for some food. If you invest $15-20 million, you can poke a hole in the ground and maybe make oil come out. Invest another few million more, and you can get that oil to market. That money invested gave jobs to Canadians from all over the country. That governments overspent the revenues from all the taxes on all that economic activity isn’t the fault of the oil industry. It’s the fault of progressive governments that always- ALWAYS- spend more than they take in, and then can’t figure out where all the money went.

    • I’m a righty. Raised by a single mom. Fought for everything I have. You are a coward and a whimp

  6. If ‘ugly budget realities’ means contentious, challenging, difficult and painful then every budget has its ‘ugly realities’, it’s just a matter of who’s getting cake and who’s getting crusts. It’s always a conservative practice that giving big business a more than even break is the key to economic success via the trickle-down theory; the problem with that is that it creates a fat and lazy economy while denuding government of managerial skill. When the house of cards collapses, cleanup isn’t so easy as conservative governments have a penchant for embedding their largess in contracts and legislation. Surely, Rachel Notley has been visited by the ghost of Chrismas’s past. Meanwhile the cons can wax nostalgic about the time when Texas oilmen held their hands and winked knowingly.

    • “..denuding government of managerial skill”

      Finally an explanation as to why 10 out of 12 chiefs of staff of Alberta ministers were from out of province – the Alberta public sector was denuded! Who knew! Meantime, the knowing winks this go round are among the brave unionista bureaucrats who held out.

      • There’s nothing wrong with depriving government of upper managers. In fact, by keeping upper management wages exceptionally low, a governing party could successfully pursue a small government agenda. Limiting the money available for payroll is the best way of determining a proper market value for managers and employees of government departments.
        In a healthy economy, an intelligent government would intentionally run down wages and benefits of public sector workers, especially those where there are no related fields in the private sector. Once you reach a point where you can’t get people to apply to work in certain fields that are specific to the public sector, you have effectively established the market value for those jobs.
        In a sense, this really no different than how it works in the real world, other than the reality is a little more complex. But, the consistently high wages spent in government have a deleterious effect on the greater economy. In a period where it’s hard for private sector employers to find and keep skilled and qualified employees, it should also be difficult for the public sector to find good people. However, we find that’s not the case.
        Even in times when companies are unable to fill their employment rosters, governments have no problem filling theirs. This is an untenable situation. The private sector should never have to compete with government to fill positions. It simply makes no sense.
        At the same time, it also makes no sense that we supposedly have to pay people $300K and $400K to manage government enterprises, especially in the hindsight that we now have.
        People in the private sector that earn that kind of money don’t move around in the fashion that we see going on in government. Most of the people in that tax bracket own the company that can pay that kind of coin. Those that don’t are very, very high performers who have no need to falsify their resumes, as appears to be so common among the so-called government executive class. This is something that has occurred all across the country, so it’s reasonable to assume that it’s endemic to government, and points to a larger problem.
        The simple hard truth is that, when you elect to pay someone $300,000 per year to manage what is essentially a socialist program, you are broadcasting to the world that you have failed a simple test of intellect. You’ve completely lost sight of the idea behind what it is you’re trying to accomplish in the first place.
        If an individual is so adamant about the principle of socialized medicine, why would they require high-end capitalist wages in order to manage such an enterprise for the good of their fellow citizens? If one is so adamant in their belief in the ideal of socialized medicine that one is willing to defend it as a right of the citizenry, as most of our legislators do, then why adopt a willingness to pay upper end capitalist wages to those who manage said system? \
        If public health care is truly as beloved as some claim, then it should be very easy to find a coterie of upper managers who would be willing to do a great job for the system, in jobs that are currently costing us $3-400K for considerably less than $200K per year.
        We can extend that logic to any number of public sector enterprises. Maybe we’re looking at it wrong. Maybe we should be using the public sector as an incubator for private sector managers, or even workers at any level. Instead of the “real money” being in the public sector, we should consistently encourage public sector workers to move on to the private sector where they can find better wages and benefits, instead of the other way around. maybe we should consistently reinforce the idea that there is a hard cap on public sector income, say at 2.5 times that of the average Canadian family income, and anyone who desires to earn more than that should be encouraged to move on.
        In the end, it would be intensely Darwinian, but the public would be treated far less often to the sad realization that too many of our current public sector managers are grossly incompetent, liars, and worse.
        (Case in point: How do you hire a $400K health care manager without ever apparently picking up a telephone and talking to enough people to find out the guy’s a dirtball? It happened more than once at AHS.)

  7. Hmmm seems to me if any other party had gotten in we would have been faced with further layoffs in the public sector and perhaps due that a domino effect the private sector too. The NDP government has been in less than a year. Do I agree with everything they stand for…nope. But I am not going to forget the ugly Tory rule the last decade either. Oil prices will go up eventually and Alberta will be back to the industry leader in Canada once again NDP or not.

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