Smith's austerity effort rooted in economic fallacy

Trickle-down tactic doesn't work, Gil McGowan writes.

With seven little words, Premier Danielle Smith has dismissed growing concerns about our health-care and education systems and put her government on a collision course with the 250,000 public-sector workers whose contracts expire this year.

Those consequential little words were part of her recent pre-budget address to the province and were as follows: She committed to

“keep spending below inflation and population growth.”

The first big problem with this statement is Albertans are currently being slammed by a cost-of-living crisis — and the best way to help them cope with that crisis is to make sure they have wage increases that keep up with inflation.

When Smith pledged to “keep spending below inflation and population growth,” she was basically telling nurses, teachers and other public-sector workers that they're going to have to accept a permanent reduction in their real wages and their standard of living.

She's also signalling that she's not going to address the issue of critical staff shortages in our hospitals and schools. In a province as wealthy as ours, this is completely unacceptable.

To put Smith's comments in context, consider this: The cost of living in Alberta has increased by 15 per cent over the past three years. That's double the 7.5 per cent over four years that was offered by government-funded employers when they opened bargaining last week on new contracts with nurses and other public-sector workers.

At a time when family doctors are closing their practices and teachers and nurses are fleeing to other jurisdictions that treat them with more respect, this is exactly the opposite of what's needed from our government. We can't expect to retain, let alone attract, staff to fill these critically important jobs under these conditions.

The premier's plan is a recipe for gutting the public services that support our families.

Albertans need to understand the full implications of what Smith is proposing. She's not saying “keep spending below inflation and population growth” for one year. She's saying that's what we should do from now until 2050. That's 26 years of underfunding.

The premier's plan is a recipe for gutting the public services that support our families and act as a foundation for our economy.

Moreover, Smith is offering a vision for the future featuring a small and impoverished public sector and a private sector dominated by big corporations that pay next to nothing in taxes. It's the old trickle-down model of economics that was tried in the 1980s and '90s — and turned out to be a disaster, both for citizens and the economy.

Smith is basically using buzzwords about savings to disguise and justify an ideologically driven campaign to shrink the role of government in society and the economy. This would be counter to the interests of Alberta citizens and families at the best of times, but it's downright perverse at a time when we're dealing with unprecedented challenges that require a robust public sector, rather than one that has been deliberately turned into a weakling.

These challenges include the affordability and housing crisis; the continuing fallout from the pandemic; a rapidly growing population; the increasing challenges posed by droughts, wildfires and climate change; and the implications of the unfolding global energy transition for jobs and the economy in Alberta.

We can't hope to deal with these multiple challenges without a strong and vibrant public sector. So, instead of shrinking our capabilities to respond to their challenges, we need to be talking about how to enhance those capabilities.

And, yes, that means talking about the other side of the budget ledger: revenue. In her remarks, Smith said we should be more like Norway. But she didn't mention that Norway has much higher taxes and royalties to support its public services.

So, instead of talking about program cuts for citizens and tax cuts for corporations, we need to be talking about getting corporations and the wealthy to pay their fair share. That's the real conversation we should be having right now, not the warmed-over trickle-down economics nonsense being served up by our premier.