Prentice says Albertans must ‘look in the mirror’ for the province’s financial crunch

Chris Varcoe, Calgary Herald

March 5, 2015
Last Updated: March 5, 2015 8:27 AM MST

Alberta Premier Jim Prentice speaks with the media following a luncheon speech to the Rotary Club at the Palliser Hotel on Tuesday March 3, 2015.

Gavin Young / Calgary Herald

Premier Jim Prentice says Albertans should “look in the mirror” when it comes to the financial woes now squeezing the province — and defends his decision to reject corporate tax hikes while his government eyes higher levies and deep spending cuts.

Opposition critics, however, say the Tory premier is trying to make all Albertans scapegoats for years of financial mismanagement by the long-serving Progressive Conservative government.

Speaking on a CBC radio program Wednesday, Prentice continued to warn about the tough medicine that awaits Albertans in this month’s provincial budget. In recent weeks, the government has been raising the prospect of spending reductions and higher taxes to make up for a revenue shortfall caused by low commodity prices.

“We all want to blame somebody for the circumstances that we are in,” Prentice said. “But the bottom line is we’ve had the highest cost and the best public services in the country, and we haven’t built, basically, a revenue model that sustains them.”

The government has said it’s facing a potential $7-billion revenue hole this year triggered by the collapse of crude prices from $100 US a barrel last summer to $51 a barrel on Wednesday, constraining energy royalties.

The province is considering a range of options to deal with the shortfall, including altering the personal income tax system, re-introducing health premiums, hiking the gasoline pump levy — the lowest in the country at nine cents per litre — and increasing taxes on liquor and cigarettes.

Finance Minister Robin Campbell has also indicated spending will be chopped by $2 billion annually, an overall five per cent cut from last year’s levels.

Prentice said the government is busy preparing a 10-year financial plan and will take steps to address the broader issue of public services being funded by volatile oil prices.

“In terms of who is responsible, we all need only look in the mirror, right. Basically all of us have had the best of everything and have not had to pay for what it costs,” he added.

“Collectively we got into this as Albertans and collectively we’re going to get out of it and everybody is going to have to shoulder some share of the responsibility.”

Wildrose critic Drew Barnes said he’s amazed the premier would blame all Albertans for the fiscal crisis since the Progressive Conservatives have been in power uninterrupted since 1971.

He noted that just a decade ago, the province had $17 billion in its rainy day contingency fund and that has since dwindled to around $6 billion.

“After 43 years of being in power and having control over the provincial chequebook, how could it be anybody else’s responsibility but the PC government,” said the Wildrose MLA for Cypress-Medicine Hat.

Barnes said there would be no need to raise any taxes if the government was committed to cutting spending and rooting out waste.

NDP critic Brian Mason said the PC government gave up billions of dollars in revenues by chopping corporate taxes by about a third a decade ago and by moving away from a progressive income tax system to a 10 per cent flat tax.

“I’m appalled that he would talk to Albertans like that, when it’s his government that’s made all of these key decisions all along,” said Mason.

“It’s a transparent effort to avoid accountability — and to blame the very people who are going to be hurt by his government’s incompetence is breathtaking.”

Mason said the province must look at hiking corporate taxes, something Liberal MLA Kent Hehr said should be on the table as the province scrambles to find additional revenue.

Hehr said the province’s 10-per-cent tax on businesses could be raised modestly and still keep the province competitive.

“If everyone is going to share the pain, our corporate sector should also be part of it,” said Hehr, who also disagreed with the premier that Albertans have the best public services in the country.

At 10 per cent, Alberta has the lowest corporate tax in Canada. British Columbia is next at 11 per cent, with Nova Scotia and P.E.I. on the other end at 16 per cent.

Hiking the corporate tax rate to 12 per cent would bring in an estimated $1 billion, but Prentice said it would lead to companies relocating jobs and shifting head offices to other provinces.

“We are hanging on to every single job that we can in Alberta right now — that’s a focal point of the government,” he said.

Political analyst David Taras said it appears Prentice’s political honeymoon is ending as public unease grows over issues such as cutting the auditor general’s funding and raising taxes.

Pointing fingers at the public is unlikely to work as the premier strives to build consensus for the tough decisions ahead, Taras said. The premier’s comments on Albertans having the best public services also fall short, given the troubles within the education and medical systems, said the Mount Royal University professor.

“We don’t have the best services in the country, that’s the whole point,” Taras said.

With files from The Canadian Press

[email protected]