14:20 Feb 13, 2015
On February 11th Robin Campbell, Minister of Finance, read a speech to the effect that we need a sales tax and the next day Mr. Prentice announced his desire to make big budget cuts. What this contradiction means is that they're planning on making headline noises about budget cuts and their deep personal commitments to avoiding a sales tax, while quietly raising every other tax and fee in the province to ridiculous new heights.
I have no idea, of course, what Mr. Prentice really thinks, but the bureaucrats are certainly pushing hard for more taxes -and understandably so: they are, after all, the people whose power base is most directly affected by budget cuts. To them the business of government is more government, and to them that makes perfect sense because that's who they think they work for and it's certainly who pays them. In reality, however, they're simply wrong: the business of government is service, not government - and that means we have to evaluate government activities in terms of their impacts on Albertans, not their impact on the government's budget.
Most people agree that we need to cut the things that don't work - but there's no widely accepted list of programs that don't work. To make one, what we need to do is forget about measuring these things in terms of the government's budget and measure, instead, according to each program's impact on our budgets. That works because every fee, every fine, every tax imposed by any level of government eventually comes out of the same pockets, and we have a right to expect that the governments we fund to do things for us provide fair value for the money.
Thus reducing provincial costs by downloading the service involved to municipal government doesn't do anyone any good unless the municipality is markedly more efficient and those savings get passed on - something that never happens. Similarly, no new user fee, whether for parks, garbage, roads, or anything else, has ever led to general tax savings or an overall reduction in what government takes from the people.
Today's Alberta wide ticketing extravangza illustrates government's financial inefficiency at its absolute worst. If you get a $140 ticket from a highway sheriff, you'll only be contributing an estimated $38 dollars net to general revenues (the rest pays for the ticketing and collection systems) but, because your (usually Ontario based) insurer will see those demerits as worth another couple of hundred bucks on your annual bill, that Sherriff's $38 general revenue contribution may cost you, the taxpayer, about $320 - and that's just in the first year those demerits appear on your license.
Similarly, there are some programs where little government money is in use, but government action or inaction has led to a situation in which Albertans pockets are being fiercely fleeced - wind power generation at something over 45 cents per kilowatt hour delivered in Calgary versus something under 6.5 cents for coal comes to mind as an example.
Notice, however, that the same logic says there is nothing wrong with growing government's budget if the net result is a decrease in total taxpayer cost for the services involved - some examples worth exploring right now, for example, include re-inventing AGT as a wide open common carrier, creating an apolitical Alberta version of ICBC, or bringing both clarity and honest dealing to power costs through creation of a single, Alberta wide, electrical generation and distribution authority with a strong lowest cost mandate - meaning that the billion dollar transmission lines being pushed across southern Alberta to serve windmills would be canned, the windmills themselves mostly scrapped, and new high efficiency coal or nuclear generation brought on line.
The key phrase to remember here is that there is only one taxpayer. From that taxpayer's perspective it doesn't matter whose hand dips into his pocket or even how much is taken out: what matters is what he gets for his money - and therefore that the real challenge facing Prentice et al isn't how to get away with raising taxes, but to figure out which programs don't leave that taxpayer better off and should, therefore, be gently but expeditously managed to extinction.