The Vancouver Scrum

The facts about Ralph's World

Conventional wisdom has it that Alberta Premier Ralph Klein is the king daddy the Canadian New Right. Klein is porttrayed as the guy who slashed taxes and spending, slimmed down government and generally fulfilled the deepest wishes of groups like the National Citizens' Coailition, the Fraser Institute, or the Canadian Taxpayers Federation.

In the latest National Post Business magazine, Andrew Nikiforuk deconstructs the myths about Klein and his programs. Nikiforuk is that rarest of species: a journalist in Alberta with a backbone, one who is willing to question Albertan conventional wisdom.

My personal favourite myth is that Klein's a tightwad with tax dollars. Klein cut spending when he assumed office in 1992, but since then, Alberta's program spending has gone back to being the highest in the nation (PDF). The province's total spending is the third-highest in Canada, behind Prince Edward Island, and just behind that of Quebec, a province which is known for its overarching government that includes such things as the Department of Ensuring that Margarine is Not Coloured Yellow. Scrap that myth, eh.

So how can Alberta spend like that and yet have very low personal taxes, and no sales tax? Simple: Alberta is in a fiscal fantasyland that other provinces can only dream of. Oil and gas royalties pump up the federal coffers, sometimes amounting to as high as $7-billion in a year! Corporate expansion has increased corporate tax income by nearly a billion dollars annually since 1992, which allows the government to lighten its load. This allows Alberta to have low taxes and well-funded public services. There's also the small matter of user fees, which generate plenty of revenues. Alberta, along with B.C., is the only province to have monthly health premiums, which are the same every month, whether one earns $30,000 a year or $300,000. It's a head tax, surely the most unfair and regressive form of taxation out there.

For other provinces to try to emulate Alberta's tax rates, they have to slash and burn like Alberta never really had to. Ontario cut spending to the bone in order to cut taxes to Alberta's level; now, the Ernie Eves government is backing away in response to public pressure. (Walkerton didn't do wonders for the small-government boosters in Ontario, either.) User fees and hidden costs are also the rule. Sure, the tax rates are lower, but the government will extract itsd money one way or another.

British Columbia is trying to have an Alberta-style tax regime without having Alberta's resource revenue. Now, the provincial government is running into that nasty old reality: B.C. isn't Alberta, and what worked there may not work here. The provincial Liberals claimed that the previous government were free-spenders, an impression reinforced by the fast-ferry boondoggle and the Skeena Cellulose bailout -- a bailout of a pulp mill that was only margianlly viable. The truth is that the last NDP government budget called for the fourth-lowest per-capita spending of any Canadian province, and that's according to the Canadian Taxpayers Federation, a group that could hardly be called a friend of the previous government. Indeed, the CTF's former B.C. mouthpiece, Mark Milke, wrote a book savaging the NDP regimes in B.C., although the criticism was more over ideology than anything: Milke is a proud neo-conservative, and hasn't seen a government that he finds sufficiently stingy.

Ralph's world, eh? Maybe it's more of a fantasy world than anything else...