Essay

WE’RE IN THE MONEY

Alberta is about to be debt-free. So what should Ralph Klein do with the freed-up funds?

BRIAN BERGMAN September 6 2004
Essay

WE’RE IN THE MONEY

Alberta is about to be debt-free. So what should Ralph Klein do with the freed-up funds?

BRIAN BERGMAN September 6 2004

WE’RE IN THE MONEY

Essay

Alberta is about to be debt-free. So what should Ralph Klein do with the freed-up funds?

BRIAN BERGMAN

Were in the money, come on, my honey, Let's spend it, lend it, send it rolling along!

ONE CAN ALMOST imagine Ralph Klein humming that Depression-era ditty as he does his daily treadmill workout in the basement gym at Alberta’s legislature building. And who could blame him? Thanks to soaring oil and natural gas prices, the provincial treasury is bursting with surplus dollars. Alberta recently revised its projected royalty revenues for the current fiscal year to over $8 billion—nearly double the figure forecast in last spring’s budget—and announced that the bulk of the resource windfall will go to retire the province’s outstanding $3.7-billion debt. That will make Alberta the first debtfree province in more than three decades, a goal Klein has doggedly pursued since becoming premier in 1992. What’s more, it’s all coming together just prior to a provincial election, widely expected this fall, not to mention the celebration of Alberta’s centenary as a province in 2005. Wouldn’t that make you want to break out in song?

For an encore of sorts, Klein is urging Albertans to engage in a public debate over what exactly should be done with the freedup money. A survey asking for suggestions will appear in mailboxes across the province this week. Among the options the premier has already floated: lowering taxes, issuing annual dividends to every Alberta resident, socking more away in the provincial piggy bank (otherwise known as the Heritage Savings Trust Fund, now standing at $12.4 billion), or spending more on a variety of services and infrastructure needs.

It’s an exercise bound to rankle many outside Alberta. For one thing, all other provin-

cial governments remain heavily in the red (accumulated debt loads range from $1.3 billion in tiny Prince Edward Island to a whopping $142 billion in Ontario), and struggle to provide basic services without running up annual deficits. For another, Albertans already pay no provincial sales tax and enjoy the lowest overall tax burden in the country.

But before resentment sets in too deeply, it should be acknowledged that Alberta’s robust fiscal health is not due solely to the good fortune of sitting atop massive oil and gas fields. When Klein took over, he inherited a $22.7-billion debt and $3.2-billion annual budget deficit from his Conservative predecessor, Donald Getty. Klein eliminated the deficit in two years, and went on to tackle the debt. To his credit, he rejected the more radical approach taken by Ontario’s Mike Harris; there were no significant tax cuts in Alberta until the deficit was gone. But, in the early years, Klein’s spending cuts were sweeping and, in some cases, draconian

Provincial transfers to cities and towns plunged by 78 per cent. Several key departments, including health, education and social services, took hits of between 12 and 30 per cent. Class-

room sizes swelled, hospitals closed and thousands of civil servants had their wages rolled back—or lost their jobs entirely.

So there has been plenty of collective pain to get Alberta to its state of fiscal bliss. The question now is: who stands to gain?

There are already some obvious winners. Spending on health and education has been on the rise again for years. Since March alone, the Klein Tories have hiked funding in these two areas by a total of $1.7 billion,

money that will help pay for more hospital beds and teachers.

Starting on Oct. 1, Alberta seniors will no longer have to pay provincial health care premiums—a $93-million-a-year concession. Expect more largesse in the coming weeks. Municipalities are pressing hard— and with just cause—for a bigger share of the province’s surplus. Alberta ranchers, devastated by the mad cow crisis, can also look forward to another hefty compensation package before the writ is dropped. But one constituency that continues to

be forgotten—as has been the case for the last 12 years—is Alberta’s poor. Some of the harshest cuts Klein made in the early 1990s came at the expense of the province’s least fortunate residents. Welfare rates were slashed by around 20 per cent. The government decreed that “employable” welfare residents— by which it meant nearly everyone but the severely handicapped—must seek job retraining or risk losing their benefits. Tens of thousands were struck from the welfare rolls. Some fled to British Columbia, where monthly welfare payments were significantly

higher, clutching one-way bus tickets supplied by Alberta social services.

Unlike other government departments, the social services cuts were not restored once the fiscal storm passed. Today, Canada’s richest province boasts some of the lowest social assistance rates in the country. A single parent with one child gets $730 a month. The maximum benefit for someone with a severe disability—by definition, a person who is virtually unemployable—is $850. This spring, the government announced a revamped welfare policy that

includes modest increases in health and child-support benefits for some recipients who take job training, but no hikes in monthly living allowances. The new policy is dubbed “Alberta Works.”

That moniker provides a broad hint of the government’s operating philosophy on this file. I once asked Klein what he thought of critics who said he was balancing the books on the backs of the disenfranchised. “I have a lot of compassion for people who are on low incomes, including people on welfare,” he told me. “But I also have a lot

of sympathy for the so-called working poor— those people who will take a job, whether it’s doing dishes or flipping burgers, and will do what they can to upgrade their skills.” It’s a noble sentiment, but one that’s undercut by his own government’s policies. The legislated minimum wage in Alberta— the sort that people “doing dishes or flipping burgers” earn—is $5.90 an hour. That’s the lowest in the country, and it has inched up only 90 cents during Klein’s tenure. This at a time when Alberta’s inflation rate leads the nation. Homeless shelters, food banks and soup kitchens are all doing a brisk business and, increasingly, deal with people who are employed, but simply can’t make ends meet. “We’re seeing working poor who can’t

THE FISCAL health

is a result of more than energy revenues-there’s been a lot of collective pain due to spending cuts

afford their rents,” says Marjorie Bencz, executive director of the Edmonton Food Bank. “We also have people on welfare who don’t even have enough to buy a bus pass to look for work.”

One reason the poor get neglected is that there’s so little political pressure to do otherwise. The Klein government’s own polling shows that welfare cuts have never been a big issue for the majority of Albertans. That’s a reality Nicola Fairbrother understands all too well. “Spending money on health and education—that’s election-winning stuff,” says Fairbrother, executive director of the Edmonton Social Planning Council, a charitable organization that speaks on behalf of the poor. “There’s a strong middle-class constituency who are able to comment on that. It’s different for the poor. It’s hard to be a good advocate when you’re trying to figure out how to feed your kids to the end of the month.”

So when Albertans receive Klein’s questionnaire about what to do with all the surplus bucks, they might spare a thought for the less fortunate in their midst. It’s a rich province that truly knows how to take care of its own. I?]

Brian Bergman is Maclean’s Calgary-based Prairie Bureau Chief. brian.bergman@macleans.rogers.com