While one would think that this past week's news of a record provincial deficit would revive questions about the propriety of the pay raises the Alberta cabinet gave itself last year, the response we've seen instead from some quarters is a call to diversify the provincial economy. This suggestion avoids the fact that it is, in fact, a lack of diversity in government revenue sources that, combined with an inability or unwillingness to prudently manage revenue when it is abundant, is driving the deficit. A government program to diversify Alberta's economy into, say, banana growing would not be sound policy; if we have a comparative advantage in a particular area, basic economics argues that we should continue to exploit it. Instead of drawing revenue from a diversified source and taxing the economy at the broadest, least distortionary level (with, say, a provincial VAT), the Stelmach government has done the opposite and tried to increase royalties, increasing dependence on the most cyclical revenue source of all. The province has additionally kept general business taxes, which are also very cyclical, relatively high. This when business is ahead of both government and households in terms of propensity to invest.
A Macleans story says that according to ENMAX chairman Thompson MacDonald, the Wildrose Alliance is "too far to the right to appeal to disgruntled Tories." While this may indeed be the perception, the reality is that Alberta has the most fiscally liberal government in North America. While there are others who sport bigger deficits, I should hope that by now it's become obvious that whether or not a government is in deficit is a poor metric of its fiscal conservatism. The proper standard is its level of spending. Another jurisdiction with a higher income tax rate is more conservative if that jurisdiction does not enjoy windfall royalty revenue such that its spending per person is lower. What matters are the decisions that are taken in the context of scarcity. Are calls to get provincial finances in order truly "too far to the right" for Alberta? With respect to this question, I might also refer to Link Byfield's observations:
On actual policy there is almost no difference amongst all three leadership candidates -- nor can there be, because like the Reform Party of yore, policy is controlled by members, not the leader. But policy alone will not get the Wildrose Alliance elected. We will succeed (or not) on the credibility of our leader and on the caliber of candidates she can recruit. That's why I and most of the social conservatives I know are backing Danielle Smith.In other words, how can Thompson MacDonald know that "the Wild rose Alliance isn’t going to change [the] equation" in the future?
The Hinman campaign has commissioned Dycap Research to poll Calgary Glenmore and has found that the Wildrose Alliance is running at 19% in the riding. Given that Ipsos announced on August 26 that the PCs were at 43% Calgary wide, with the Liberals at 23%, the Wildrose Alliance at 11%, and New Democrats at 5%, one might be inclined to think that 19% in Glenmore is too high an estimate. After all, the party drew 8% in Glenmore in the 2008 provincial election and the Alberta Alliance pulled in less than 5% in 2004. But 15% is within the realm of reason and 19% wouldn't be very far off the margin of error. The same Dycap poll revealed a drop of 12% in PC support since June, meaning that the recorded 7% gain for the Wildrose Alliance over the same time period is entirely plausible. Wildroser Danielle Smith has received a lot of media attention these past two months, and, as Lorne Gunther noted in the Edmonton Journal on August 16, "Smith has a deeper, subtler and quicker grasp of policy alternatives than has been exhibited by the entire Tory cabinet, combined." The PCs will take Calgary Glenmore again (they reeled in more than 50% of the vote last year), but if they do so this time with less than 35% and the Wildrose Alliance gets 15% or more (tripling the Alberta Alliance share of 5 years ago and then some), it will suggest that the WAP will be a real player in the next province wide campaign. 15% is within striking distance of 20%, and 35% support has been known to slump to less than 30%.