When the Alberta government instituted the Alberta Sustainability Fund earlier this month, the chorus of disapproval was predictable and foolish from both ends of the political spectrum.
On the one extreme were the tax-cut fanatics saying that increased revenue should be passed on to the taxpayers themselves in the form of lower taxes.
At the other end were the spending-increase fanatics, complaining that Alberta faces a huge infrastructure deficit and that all of our provincial surplus, therefore, should be spent today.
Both attacks are out of touch with reality.
Before I say anything supportive about our provincial Conservatives, let me outline my credentials as a harsh critic of this government. I have lambasted it for dishing out cash just before the last election and criticized its inconsistencies, especially as they pertain to deregulation, energy rebates and aimless health-care initiatives. I am no sycophant for Ralph Klein.
That said, having a sustainability fund is a great idea.
The provincial Liberals may have been the first party to strongly support the notion, but it finally got our government’s attention when Alberta’s Financial Management Commission delivered its final report last July.
Much of the hubbub at the time focused on the arcane proposals concerning the purpose and name of the Alberta Heritage Savings Trust Fund. Especially controversial was the idea that we use it to gradually pay off Alberta’s debt.
Using the numbers given by the commission, Finance Minister Pat Nelson has cleverly distilled the commission’s underlying intent toward achieving sustainability, but she is not touching Alberta’s sacred cow, that $12-billion fund (approaching $11 billion now that the markets are atrophying).
To sum up Nelson’s initiative in brief, the Sustainability Fund sets aside money in years when resource revenue is particularly good and draws from the same account when resource revenue falls below average levels.
Even the ever-grumpy Canadian Taxpayers’ Federation has had nothing but good things to say about it. John Carpay, the Alberta Director of the federation, issued an uncharacteristically glowing press release. (At least, it started on a positive note. He spent most of the latter part moaning that the real problem is too much government.)
Ken Nicol, the leader of the Alberta Liberals, naturally likes the Sustainability Fund, too, since it was his idea. Nicol’s concern, however, focuses on his fear that our Conservative government will use it as a $2.5-billion slush fund when election time rolls around.
While these two critical remarks might have credence as far as they go, they have nothing to do with the Sustainability Fund itself. In fact, they amount to the age-old feint known as changing the subject.
The subject here is the fund and its utilization. Is it going to smooth out the boom-and-bust nature of this economy we have in Alberta? Any other question is simply a diversion.
I could hardly believe my ears, but some of the ignorant callers on Dave Rutherford’s radio talk show on QR77 last week carried on about how what they really wanted was a tax cut, not a Sustainability Fund. These people are a looney fringe, I like to hope.
Seldom has there been such an obviously good idea in this province. That’s not to say that there might not be better ways to tweak it and improve it, but no mainstream critics have taken that approach.
As I see it, a fair criticism of the Sustainability Fund is that it might be too smooth. It might flatten government expenditures when gentle ebbing and flowing might serve us better. I agree that the mass cancellation of road and school projects last year was a shame. The exact opposite should have happened. It was a perfect time to cut some deals with contractors.
Think about it. When resource revenue is high and this province is flying, there are increased pressures in the construction trades and job market in general. Why should the provincial government compete for those jobs and woo already-busy contractors at such inflationary times? It’s at such times that we can become locked into unrealistically expensive contracts. But when times get tough, the job market softens and the contractors contract. Such times are ideal for locking builders into fair-priced deals.
Having a formula that gradually ramps down spending in good times and gradually ramps it up in slow times strikes me as more sensible than simply controlling income, as the Sustainability Fund does. We should be saving the bulk of our money not simply for when revenue is below average, but when expenditures work best.
If we purposefully inject extra capital into our infrastructure needs when the infrastructure companies are suffering, then we can get a solid bang for our buck. Instead of paying workers to do nothing (via employment insurance, an admittedly federal expense) when times get tough, we can pay them to work.
I think that having a Sustainability Fund, therefore, makes perfect sense. Only it should be more than that. It should be an opportunistic fund.
Today’s infrastructure deficits are the perfect opportunity; holding back on some spending now means that we will have some projects left to undertake when times get grim, unemployment grows and costs decrease.
Now that’s a constructive idea we should be hearing from Carpay, Nicol and other smart people who care about this province.
