Alberta Premier Jason Kenney addressed media early Monday afternoon with the government’s response to a 20 per cent drop in oil prices. The “plan B” is apparently to beg, borrow and spend.
As expected, it’s only a problem when other political parties do it.
He’s going to beg the federal government to help out more. Kenney did remind everyone that even during the last five years of the never-ending oil-job recession, Albertans paid $20 billion more in federal tax than it received back.
During those years, the province also posted recurrent deficits that equaled $31.9 billion. So, while an additional $20 billion would have helped, it wouldn’t have kept the province out of debt.
“Obviously, in the short term, there will be some very real challenges with a reduction in capital spending (by businesses) in this province,” Kenney said during a press conference.
The comment, let alone the sentiment is perplexing. Teck pulled out only three weeks ago. MEG Energy asked to hold off on approval for their May River project more than three months ago. Alberta has more than 20 pre-approved projects that were already not moving forward.
There was no spending planned that the province will suddenly be without.
“Today, it’s too early for us to map out a plan because this price collapse has happened just within the last 24 hours and the acceleration of the global downturn, instigated by the coronavirus has really only taken hold in the last two or three weeks.”
Alberta governments have generally been willing to manage spending resource boom dollars but are unfailingly ill-prepared to manage the inevitable bust that follows.
Despite promises to the contrary, it seems the United Conservative Party is just as willing to spend their way out of a recession as every other Alberta government who came before.
One notable difference – this time – is that the government is unwavering in its refusal to consider that the province has a revenue problem – even in the face of a potential multi-billion dollar loss of revenue.
“I cannot imagine a dumber thing to do… than to add a multi-billion dollar tax in an already fragile economy,” Kenney said.
Halting tax reductions is also not on the table. After reducing the corporate tax rates by 20 per cent, and no major spending in sight, this government still hasn’t figured out that demand, not taxes, stimulates growth.
“Albertans have been good to the rest of Canada – now it’s time for the rest of Canada to return the favour.”
“We’re putting more definition on how the federal government could help; with investments to create jobs here – we’re working on a more robust request for action to the federal government,” he said.
No bootstraps for federalists, it seems.
Kenney is counting on the $2.6 billion in retroactive fiscal stability payments and future payments of the same to help the treasury, hoping the feds will invest in oil and gas well reclamation and inject much-needed cash into Alberta businesses.
“All options will be on the table” when it comes to federal assistance.
“Our priority is protecting jobs,” Kenney said.
“Our priority is protecting the economy. And if that means, in the midterm, that we need to borrow money to help make that happen, we will do so.”
And the royalty roller coaster ride continues.
At what point does an Alberta government look at the fact that “other taxes” provide higher revenues than resource royalties and say “we can’t count on this anymore”?
Half a century and counting.
“Here in Alberta we are adding… significant fiscal stimulus to help save and create jobs,” he said.
$7 billion for capital spending, $100 million in loans to the Orphan Well Association, and more “stimulative tax reductions”.
And the addition of yet another panel – the Economic Advisory Panel – which could add another few hundred thousand dollars into a small group of hand-picked Kenney supporters’ pockets.
At least the war room is staying off social media lately. $30 million/year out of sight and out of mind while the UCP try to figure out how to save money during a downturn.
This post is an opinion.
Deirdre is a freelance writer and reporter in Southern Alberta.