Alberta should have been prepared for oil crisis

It’s déjà vu all over again in Alberta.

Not just because the price of oil has collapsed, but because of how our provincial government has reacted to it.

Any sensible person would surmise that after almost 44 years in power the Progressive Conservatives would have figured out how to manage the province’s oil and natural gas wealth so as to avoid the shocks of oil-price volatility.

It’s not as though no one knows that the oil price can swing quickly and sharply in a matter of weeks. Petroleum companies know that. So do all the bureaucrats at Alberta Energy. So do the elected politicians, especially our newbie premier who is very close to the industry.

Everyone in Alberta — except maybe infants and pre-schoolers — is acquainted with this simple fact.

And yet our provincial governments have always responded as if this is an unanticipated crisis with dire consequences that requires the government to renege on promises.

So forget that new cancer treatment centre in Calgary that would mean patients won’t have to receive their chemo in storage rooms.

Forget those new schools in new subdivisions bursting with young families.

Sorry, but if you work anywhere in the public sector — hospitals, universities, the justice system — you will have to take a wage cut.

And all of this is delivered in a breathless, panicky fashion that implies Albertans must pull together to get through the “crisis” or the consequences will be even worse.

“The circumstances that we are in are the most serious financial circumstances we have seen in this province in 25 years, if not 50,” Premier Jim Prentice said in early December. “Certainly they will affect every Albertan . . . it’s inescapable.”

What he means is that the provincial government will have a $6-to-7-billion shortfall in revenues — about 15 per cent of the total budget — because revenues from petroleum activities will shrink significantly and they account for about 30 per cent of all government revenues.

A drastic drop in oil prices creates a huge hole in the provincial budget because natural resource revenues amount to almost as much as revenue from personal and corporate income tax combined.

But then Alberta likes to brag that it has the lowest taxes in the nation. That sounds good when the petroleum industry is riding high but it sounds dumb when suddenly there isn’t enough money in the kitty to keep schools and hospitals running smoothly.

What’s the point of bragging about low taxes when the government doesn’t have enough money to build the infrastructure needed to support the rapidly growing population — people who flock here to partake in the province’s booming economy?

It’s downright embarrassing to brag about low taxes when the Heritage Savings Trust Fund has accumulated a mere $17 billion over 40 years, most of which is tied up.

Prentice has haphazardly thrown out ideas about increasing taxes. But as soon as he lets one loose he shoots it down. He has already nixed a sales tax, increased corporate taxes and a carbon tax.

But he seems keen to have an election, so, in his words, he has a “mandate to govern.” So it’s likely that the government will bring down a budget in early March and call an election shortly after.

Will he introduce new taxes? Increased taxes? A stringent savings plan? It’s possible. But a three-week election campaign seems an awfully short time for Albertans to get their heads around such complicated issues, changes that would really alter the course Alberta has been on for decades.

Not that it really matters because Prentice and the Tories will surely win the election. They already have 70 out of 87 seats since most of the Wildrose party MLAs and their leader caved in and crossed the floor to join Prentice.

The Wildrose are still the official Opposition. They are fervently anti-tax but they have been weakened and would be going into an election with an interim leader, as would the Liberals.

Political opposition to the PCs is at its weakest ever. The NDP could well end up as the official Opposition with just a handful of seats in Edmonton.

An election seems completely unnecessary — a waste of resources and time when there are more pressing problems. And Prentice would be reneging on the fixed election law which calls for a general vote to be held in the spring of 2016. But we’re in a “crisis,” so anything goes. It looks like the Tories will continue to govern for years to come even though it’s becoming clear that they have badly mismanaged the province’s petroleum wealth and have had us unnecessarily spinning from one crisis to the next.

Gillian Steward is a Calgary writer and journalist, and former managing editor of the Calgary Herald. Her column appears every other week. gsteward@telus.net

“The circumstances that we are in are the most serious financial circumstances we have seen in this province in 25 years, if not 50.” JIM PRENTICE ALBERTA PREMIER