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Austerity, deep cuts on horizon in Alberta

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Alberta Finance Minister Travis Toews at Tuesday's first-quarter update news conference. Photo: Screenshot of Government of Alberta video

The United Conservative Party government led by Jason Kenney wants deep cuts, and, by God, it's going to have them.

That includes tax cuts, which will drive the province's books deeper into the red, and cuts to services to help pay for the tax breaks.

If the facts, such as they are known, suggest this program of austerity and pain is neither needed nor economically helpful, then let the facts be damned.

This was the message underlying this week's peculiar first quarter fiscal update by Finance Minister Travis Toews.

However, in the UCP's defence, the party did campaign on this and won the support of a clear majority of Albertans. So no one can accuse the UCP of having a hidden agenda, exactly, although the unpleasant details of that agenda will have to remain under cover until after the October 21 federal election. That way, they won't spook Canadian voters in parts of the country less instinctively Conservative than Alberta enough to damage Kenney's prime ministerial ambitions, which depend on federal Conservative Leader Andrew Scheer losing, but not too badly.

Still, it's troubling that the UCP government is basing its claims that things are so tough brutal measures are required to set them right on a report University of Calgary economist Trevor Tombe yesterday called "the lightest quarterly update I've ever seen."

Leastways, it would be troubling were Premier Kenney's relationship to the truth not generally understood to be a casual one.

"Nothing new presented at all, just repeating what we already know about the path of Alberta's debt levels under current policy," Tombe said in another of a series of tweets he posted on the topic.

Indeed, on the face of it, the government's two-page report -- which looks a bit as if its first draft was scratched out on a couple of napkins in a Grande Prairie bar -- suggests things are going almost exactly as the NDP government of Rachel Notley said they were supposed to go in its promised path to balance.

So much for Kenney's notorious claim in July that "the NDP massively overstated revenues." The premier went on in his interview with a Postmedia stenographer to say the NDP "were dishonest with Albertans and they fudged the numbers. They lied to Albertans about the economy and the revenues."

The few facts included in Toews's update suggest, unsurprisingly, that Kenney's bombastic rhetoric was nothing but unadulterated Mundare kielbasa.

Total revenues? "Virtually identical," in the words of the government's own news release. Total expenses? Lower. Total capital expenses? Lower. Resource revenue? Up a little. Income tax revenue? Also up. Readers will get the idea. If they want the actual numbers, they're neatly summarized in a chart in the update.

The point is, they're pretty much exactly where the NDP said they'd be. I'll leave it to readers to conclude who is actually doing the fudging.

Accordingly, having in nothing in what he was required to report to justify his government's austerity and tax-cutting plans, Toews emphasized the size of the provincial debt -- never mind that the province also has by far the lowest debt-to-GDP rate in Canada, less than half that of the next lowest jurisdiction, British Columbia.

Toews also took pains yesterday to note than the government still believes its promised economic voodoo will work, and the tax cut snake oil will deliver bigger revenues.

Never mind this strategy fails everywhere it's tried. It failed in Kansas, in Oklahoma, in Arizona, and Kentucky. It failed in Saskatchewan, and in British Columbia too. It failed nationwide, throughout the United States.

As economist Paul Krugman pointed out in a New York Times column last January about the claims made by the U.S. Republican Party about the supposed benefits of big tax cuts for corporations and the wealthy (which are the same as Kenney's ideas, presumably because that's where he gets them), they rest "on research by … well, nobody. There isn't any body of serious work supporting GOP tax ideas, because the evidence is overwhelmingly against those ideas."

Nevertheless, Toews told the media yesterday: "We're committed to delivering this corporate tax reduction in the timeframe we've proposed. We'll be interested to monitor the results but we will implement this plan regardless." (Emphasis added.)

Now, why would they do that?

Well, that's the trick folks. As Krugman explained: Why do conservatives "adhere to a tax theory that has no support from nonpartisan economists and is refuted by all available data?" His answer: "Well, ask who benefits from low taxes on the rich, and it's obvious."

In other words, it's a con. It's always a disaster. But brace yourselves, fellow Albertans. You voted for it, and now you're going to get it.

You just won't know the details till October.

David Climenhaga, author of the Alberta Diary blog, is a journalist, author, journalism teacher, poet and trade union communicator who has worked in senior writing and editing positions with The Globe and Mail and the Calgary Herald. This post also appears on David Climenhaga's blog, AlbertaPolitics.ca

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