Saturday, February 23, 2008

Where's The Money Going To Come From, Kevin?

My friend Duncan makes an excellent point about the Liberal costing of their platform.

Just as important as "WHAT will you spend money on?", and "HOW MUCH will you spend on it?" is the question that Albertans, traditionally, have been quick to ask their federal leaders, but not pursued quite as aggressively with their provincial government: "WHERE will this money come from?"

Nobody expects the Liberals to release their first budget in the middle of the campaign... but, we know where the dollars are coming from for Ed's spending promises - we're running a surplus. Taft had promised the surplus away within a few days of the writ being dropped, so where is the extra money coming from? They've committed to raising royalties an additional 20% (nah, THAT won't cause some of the big players, and their tax and royalty dollars - to leave), and figure that will pump an extra $1.9 Billion into the economy - IF everyone stays in the game (they don't mention that last part). Since they committed 30% of royalties to certain endowments, that leaves $1.3 Billion - again, if everyone stays. What they neglect to mention is, if they have committed 30% of ALL Royalties, then while their Royalty hike grosses us an extra $1.3 Billion in general revenue, it also sucks 30% of the $10 Billion we annually receive for our oil and gas... I'm no economist (Kirk, can you run the numbers when you're done moving offices?), but I'm pretty sure that means our NET from this exercise, all other things remaining equal, is a loss to program spending of $2 Billion - or we don't cut $2 Billion worth of programs, and instead we a) raise taxes, b) institute a provincial sales tax, c) run a deficit, or d) all of the above.

ON A BRIGHTER NOTE, I've got to say I am simply delighted that both of the parties vying for control of the government have seen fit to release a near-fully costed (or one-third of fully costed in the case of the Liberals, according to a PC press release) platform. The voters deserve to know what they're being asked to buy with their franchise. I'll go into detail analysing those platforms in the next few days. In the meantime, check them out for yourselves:

Costed Progressive Conservative Platform
Costed Alberta Liberal Platform


Anonymous said...

Just to be fair, to suggest that the PC program is "near fully costed" is really stretching the definition of "near".

How much does an "ongoing" program cost, really? Basically, by throwing these things into policy the last couple weeks before the election, the conservatives have tried to buy themselves a "Oh, this is already happening, so the cost is already figured in" pass.

Enlightened Savage said...

Anon: You're very right - in going through the PC costing information, I've seen a lot of "ongoing cost" and "TBD"-type stuff.

I'll get more into detail when I post on the specific plans for both parties, but what does "renew our commitment to Alberta's Parks" mean? An extra $10 million for the Canmore Nordic Centre? Or $100 Million to take back all the privatized campgrounds, hire 100 more Conservation Officers, and supply free firewood again?

Neither plan is completely costed... but by comparison, the PC plan seems much CLOSER to complete that the Liberal one, at this point.

Anonymous said...

The main problem I have with the Liberal plan is because it is a little bit of "bait-and-switch". They have made significantly greater spending promises, but then attempt to offset it with $1.6 billion in "savings", so that they show a net surplus.

To take them at their word, they would immediately find $1.6 billion in savings. That is 5% of the total provincial budget. However, given that healthcare, education, and infrastructure are the big picture items AND somewhat sacrosanct given their Liberals spending promises, you will need to chop a lot off a lot of smaller departments.

In the Herald, Taft was quoted as saying that these are not spending cuts, but "re-allocation of funding". George Orwell would be proud.

Kirk Schmidt said...


I was taking a break from doing election prep and figured I'd try to look at what you asked me to. I found this on the Liberals' costed platform:
"We've estimated this increased 20 per cent in royalties at approximately $1.9 billion. Thirty percent of these increased revenues have been subtracted from the total because, under the Alberta Liberal's Funding Alberta's Future
policy, 30 per cent of all of resource revenue collected is immediately invested into four endowment funds."

So it looks like they're not planning to take 30% off the top of current revenues... but of course it doesn't explicitly say they're not. Can someone confirm if they are planning on taking 30% of ALL royalties as opposed to the increase (essentially, 6% of all royalties if that's the case)

Anonymous said...

I am amazed that anyone can doubt that Alberta needs a serious core programs review. We spend the most per capita of any province but actually recieve less.

If we spend the most per capita...we should get the most.

Does anyone actually believe that the Alberta government is getting the best value for our money?

Does anyone even remember the Auditor General's report? Take a peek at the '07 report and decide for yourself if the Stelmach government are responsible spenders.

Comb through some Public Accounts documents and learn about 10 minute meetings billed at $600 or $500 000 contracts with nothing to show for them.

Stelmach's best budget idea is to spend more money. Fulfilling his campaign promises will get more expensive every year.
The Alberta Liberals want to spend smarter, with the goal of improving services and building up the Heritage fund.
Why does Taft get criticized for being unable to fulfill his billion dollar promises without raising taxes but not one person has pointed out that Stelmach is making pledges with the same huge price tags.
How will the PCs pay for those promises without raising taxes? With our resource revenues - we're an oil rich province, after all.
(well, for now)
Shouldn't we at least try to save some of those dollars? Oil doesn't last forever, but our wealth could if we only started keeping some of it!

Kirk Schmidt said...

to anon @2:53: I agree with you about the way we spend. My questioning of spending is merely that - questioning.

That said, I'm all for the idea of slowly trying to move income from other assets into long-term investment vehicles such as endowments - especially when you're moving them from something volatile like energy markets. I actually talked once at an event about what Canada could have done by taking the fiscal surpluses and moved them into low-risk investments such as endowments instead of merely paying off the debt, and the pros and cons of that.

Anonymous said...

^^Anonymous above is basically right. That anyone thinks the PCs are still fiscally conservative is amazing.

However, $1.6 billion is still a LOT of money. I think the Liberals are hoping for a lot more than they can get.

And ES: I don't think the PCs are any "nearer" to full costing than the Liberals--which is disappointing since you'd think they'd know after 37 years in government how to come up with a budget.