Fuelled by collapsing oil prices and the economic impact of COVID-19, the Province of Alberta is projecting the largest budget deficit in its history at $24.2 billion.
The dwindling fortunes are mainly due to provincial revenues dropping by $11.5 billion and spending – COVID related – increasing by $5.3 billion. The province’s real Gross Domestic Product will decrease 8.8 per cent and see an unemployment rate of 13 per cent, with more than 170,000 jobs lost.
Alberta is the first senior government to announce the impact of the pandemic. And while Covid isn’t the only serious economic hit the province is taking, the long-term impact is apparent.
As part of the update, provincial Finance Minister Travis Toews levelled with Albertans, telling them a further fiscal update will be coming in November and it will include “cuts.”
These cuts will not only be a result of the province’s dwindling fortunes, but also to respond to the spendthrift ways of the previous government. The government the United Conservative Party under Premier Jason Kenney was elected to replace.
The question is: with all of the damage that has been done to the economy in other parts of the country, will other governments be as courageous as Mr. Kenney’s?
We have already seen here in Ontario a conservative government elected to replace a Liberal government that spent money like drunken sailors on shore leave. We have also seen any attempt by the government of Premier Doug Ford to reign in spending be met with shock and awe, protests galore and veiled threats against his life.
Remember the guillotine on the Queen’s Park lawn?
With the have your cake and eat it too band filling the opposition benches, a similar approach as Alberta’s by Mr. Ford and his Finance Minister Rod Phillips may be a no-go.
Even as children head back to school we are seeing teachers unions and the Ontario Liberals using COVID-19 to push their agendas and seek funding. In the teachers’ case, they want more money, more teachers and smaller class sizes – the same argument they have been making since Ontario was known as Canada West.
In the case of the Ontario Liberal Party, a most craven snitch line has been started to complain about back to school in which you leave your info and agree the OLP can contact you. I wonder what for? Could this really be a sickening fundraising ploy in the midst of a pandemic, using the fears of parents and children?
All this being said when Ontario comes to the mountain to reveal the massive debt, deficit, and how the government plans to deal with it – will they be able to take the steps that are needed?
Years ago my former boss and then Ontario PC leader Tim Hudak spoke at Queen’s Park and said, “… we’re digging ourselves into such a hole that if we continue at this pace, we may never be able to climb back out again. That’s why it is crucial to get the size and cost of government under control and focus on the basics.”
That was April 7, 2011 and nothing to get the size and cost of government under control has been done since. In fact even when former Finance Minister Charles Sousa was able to deliver a balanced budget it only lasted one year before deficit spending returned.
Now in the wake of a worldwide pandemic where governments of all stripes spent uncomfortably, hard decisions will need to be made. They will need to be made to protect necessary services: schools, health care, energy infrastructure and roads.
As another quote from that same Hudak speech reads, “Ontario families must constantly re-evaluate their wants versus needs and how they’re spending the family budget. Whether it’s cutting back on dinners out, bundling services like cable and Internet or shopping around for a better deal on car insurance, families are always looking for better ways to save money. I believe we need to apply these same principles to government.
“Instead of trying to be all things to all people, we need to focus on the basics, on services that people care about and need, like front-line health care.”
This is what is needed now more than ever from the Ford Government, and the one in Ottawa too. But let’s focus on something we might be able to fix and a government that was elected to do this very thing, rather than one that was elected to spend.
In the coming weeks I hope to see Premier Ford and Minister Phillips do what their Alberta cousins did and that is be honest with Ontarians. Tell the province what kind of fiscal mess we are really in and set out a plan to deal with it.
The plan needs to include three things. First, a reduction in spending. That includes bringing efficiencies to government to limit what things cost and fewer government workers.
The second is increased revenue in the immediate and that means targeted tax increases – not income mind you, but consumption taxes, a half-point increase in sales tax for example, but only until things are manageable.
The third is cuts to services. That will be unavoidable, but can be done by removing unnecessary agencies, boards and commissions – a simple three step process to see if we need all 600 plus ABCs in the province.
If they work and can prove value then keep them. If they are broke and can be fixed then do so. If they are broke and unfixable or no longer needed then they go.
It is something that can be done now to protect Ontario’s must-have programs.
Because there is a difference between nice-to-have and must-have, and if we continue to focus on the nice-to-have we will lose the must-haves like good schools, roads, electrical system and hospitals.
The decisions that are made today will be the difference in maintaining the services we need tomorrow.
That is why Premier Ford was elected and that is what we need his government to do, now more than ever.
Kelly Harris is Principal of Harris Public Affairs. He is a regular commentator on Global News Radio 640. He has spent the last decade working with Canada’s credit unions and served as Director on the Board of the Canadian Credit Union Association. An internationally published journalist, he has held senior positions in the Gordon Campbell government in British Columbia and Tim Hudak’s opposition at Queen’s Park. An avid traveller, cyclist, member of Bills Mafia and die-hard fan of the Toronto Maple Leafs.