LYTLE: Let's keep Alberta worth invading

In discussions about globalism with high school students, I stress that mass migrations of people groups into other regions such as we are seeing across the western world, are hardly unknown to history. And the drivers are always economic: People want a better standard of living with greater freedom and will wander long distances to find it. And this leads to discussions of personal and political economic principles... things such as deficits, debt, debt spirals and interest rates.I thought of these issues as I filled out a recent survey from the Alberta government about where I would like the government to spend more money. Should we direct more resources to education or health care? To parks or to transportation? And on and on. It became tiresome to always enter “Other” and write out, “Don’t spend more but reduce the cost of governance such that you don’t go into deficit when commodity prices inevitably crash.” I am still a bit bitter about the Kenney government crowing about its superior fiscal management when the Alberta budget was balanced and went into surplus. Of course, nothing could be further from the truth. Our fiscal butt was saved by rising commodity prices and not budgetary prudence.My sense that nothing had changed was confirmed by a recent study by the Fraser Institute and reported in the Western Standard. The study demonstrates that our magical surplus will quickly turn into an ugly deficit when commodity prices return to their historic norms as shown on the graph below which is based on the Fraser Institute data. The chart below also shows the impact of a budget balanced to average commodity prices when the commodity prices move up (blue columns). Why are we complacent and congratulatory of our provincial government for the current surplus when it could more than double that surplus simply by building a budget based on average commodity prices?.Madam Premier, what exactly are you doing to reduce government costs today in anticipation of lower commodity prices tomorrow? I get that it is more fun to give out goodies than to have a planning horizon longer than five years, but these are the days to wear our big-people's clothes.Another way to evaluate the fiscal prudence of the Alberta government is to compare it to the per capita expenditures of other provincial governments. To make this comparison, the attached data table was prepared based on population and budgeted expenditures by province for the 2018/19 fiscal year. The numbers and perhaps rankings may have changed post COVID-19 but, in the face of rising commodity prices, it is considered more likely that Alberta’s per capita budget has increased rather than shrunk in comparison to other provincial governments.The table shows that the average budgeted provincial expense per capita weighted by population was $12,076 in 2018. The Alberta budget was almost 10% higher than this norm and, interestingly, the BC budget was almost 10% lower than the norm. If the Alberta government budget was no more than the weighted average per capita spending of all provinces it would save approximately $5 billion per year. If it were to budget to the average per capita budget of British Columbia it would save close to $10 billion over current spending. .Presumably, budget levels at the provincial average or the BC level will satisfy the needs of Albertans. Would I prefer that the additional $5B to $10B in savings go to debt reduction or investment? That is the definition of a rhetorical question. Another rhetorical question might be, “Can’t we in Alberta ever get a budget right?”And so, Madam Premier, I want you to stop asking me to help you spend more. In fact, I want you to bring Alberta per capita spending into line with average provincial per capita spending as an interim goal towards a budget that is equal to the lowest provincial per capita spending. And failing that, use average commodity pricing in your budget deliberations.I am sick of the roller coaster ride of ongoing deficit financing based on the hopium of short-term commodity booms. With this in mind, I look forward to a questionnaire asking me where I would cut spending. Let me count the ways…Murray Lytle P.Eng was a commissioner on the former National Energy Board

LYTLE: Let's keep Alberta worth invading

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