Ten wishes for Alberta’s new Finance Minister

January 18, 2010

By Mark Milke
Director of Research
Frontier Centre for Public Policy

Milke_Mark
Mark Milke

CALGARY, AB, Jan. 18, 2010/ — Ted Morton should be congratulated. To jump from academia to running the provincial Finance ministry in a few short years is no small accomplishment. But Morton faces his toughest challenge: a budget with $37 billion in expenses and $32.6 billion in revenues. Closing that gap will be a feat but therein lies the proverbial opportunity, and he has others. Here’s my wish list for the new Finance Minister.

Wish #1: Get the budget back into balance soon and then pay down the new debt. Across Canada, the baby boom generation has had an unfortunate tendency to rack up deficits and rarely pay down the accumulated debt in good times. Alberta under Ralph Klein (with Jim Dinning and then Stockwell Day in Finance) was the laudable exception. Paying back debt quickly is only fair to the younger generation; it’s also smart policy. Balanced budgets preserve flexibility in an uncertain world economy.

Wish #2: When the budget is in balance, legislate at least 30 per cent of resource revenues be deposited into the Alberta Heritage and Savings Trust Fund every year.

Wish #3: Work not only with the new health minister, Gene Zwozdesky, to ensure health care dollars follow patients (as opposed to global budgeting for hospitals), but consult with every minister to see where this principle can be applied to all government services.

For example, subsidizing shelter for poorer Albertans makes sense; having government build and own housing doesn’t. It only creates government-owned stock that declines over time and needs massive public subsidies for upgrades. Instead, subsidize needy Albertans directly with housing vouchers which can help pay the rent at a place of their choosing.

Wish #4: Sell Alberta Treasury Branches to Albertans in a public share offering and deposit the proceeds into the Heritage Fund. Governments shouldn’t be in the bank business. They only need to smartly regulate banks, which Canada has long done.

Wish #5: Abandon any notion of an Alberta pension plan, either a province-specific one or a pullout from the Canada Pension Plan. It would be an unnecessary duplication of the CPP. I know this is a favourite of firewall folks who point to Quebec as a model, but it’s always been a poor policy idea. (Quebec is the last place to look for sensible fiscal reforms.) Instead, lobby the federal Conservatives to increase contribution limits to RRSPs and Tax Free Savings Accounts.

Wish #6: While we’re on pensions, change Alberta’s public sector pension plans going forward from defined benefits to defined contributions. Defined benefit plans lock in obligations future generations may not be able to afford: see Detroit’s automakers who ended up in trouble with just such expensive guarantees. Defined benefit plans in the public sector create massive obligations for taxpayers, and frankly, are also risky for civil servants. (Don’t think for a moment if Greece or Japan default on their debt civil servant pensions won’t be cut.)

Wish #7: Work with Municipal Affairs to mandate competitive tendering as the rule not the exception among Alberta cities. New Zealand does this and their cities operate much more efficiently and effectively.

Wish #8: Set up health care savings accounts, something recommended in the Mazankowski report on health. This is the health care equivalent of the RRSP. Unlike pensions, there is no national model so Alberta might as well start one, though it would be preferable to have a Canada-wide model eventually.

Wish #9: Team up with B.C. and Ontario to press Ottawa to give up the GST in exchange for ending all federal transfers to the provinces.

This is a long-term goal, but transfers between governments blur the lines of accountability. They are a particularly bad deal for taxpayers in the three provinces just mentioned, where our federal tax dollars subsidize poor policy in Manitoba, Quebec and most of the Atlantic provinces.

Wish #10: Rumour has it you’re a fan of property rights and know something about constitutional matters. Work with your colleagues and the federal Parliament to pass legislation to entrench property rights protection for Albertans, as can be done per Section 45 of the Constitution. Even if you never get to the other nine wishes, this would be your greatest legacy.

Channels: The Calgary Herald, January 17, the Calgary Beacon, January 19, Slave Lake Scope, February 1, Red Deer Express, February 3, the Grande Cache Mountaineer, February 12, 2010

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