By Daniel Pagan
In the ’80s, after the oil crash, a car bumper sticker with the tagline pleading with God for a second opportunity and promising “not to piss it away” gained popularity in post-National Energy Program Alberta. People who had their house foreclosed wished they had saved their money for a rainy day instead of quickly spending it all. But all of that was forgotten when the price of oil and gas again roared though the roof and Ralph Klein killed off the provincial debt. However, in light of Alberta Finance Minister Iris Evans’ announcement about Alberta’s $1.4 billion deficit at the end of 2008-09, we may need to sweep the dust off those bumper stickers. Last summer, Alberta was projecting a budget surplus of $8.5 billion. Thanks to the irresponsibility of the Albertan government and the voters, we squandered another oil boom.
It is just a technical deficit, since the Albertan government is planning to use cash from the Heritage Savings Trust Fund to pay it off. However, that isn’t too helpful as the province stopped transferring natural resource revenues into the fund in 1987. Also, it could commit the government to irresponsible financial decisions and the temptation of breaking the piggy bank. The government has a bad habit of raiding the fund for money for big projects and forgetting to save regularly. In 2008, nothing was committed to the fund, while $4 billion went to regional transit projects and underground carbon storage.
Alberta is putting no additional money in the Heritage Fund and has a deficit to deal with. There are no signs of the economy getting better in 2009, so what will the Alberta government do when the Heritage Fund empties out?
The world’s third-largest oil exporter, Norway, has put the equivalent of $64,808 per person or 40 per cent of its natural resource revenue into its national savings account. This ensures the country has something to fall back on when the oil wells in the Norwegian Sea run dry. Close to Alberta, Alaska has saved the equivalent of $42,836 per person from its oil royalties in its Permanent Fund. The big tragedy is instead of learning from those two examples, we waited until it was too late to do anything, when the value of the Heritage Savings Trust Fund dropped from $17 billion to $15 billion last year.
Like fraternity students who drank away their money, Ed Stelmach and the Progressive Conservatives have squandered Alberta’s good fortune. And like recovering from a hangover after a big party, there is a sense of melancholy. The good times are over and Alberta is stuck with the bill. Alberta voters need to take a long, hard look at themselves in the mirror. After all, the Progressive Conservatives won in a landslide with 52.7 per cent of the popular vote last March. Conservative MLAs had a lot of opportunities to prevent a deficit from developing and to fix the budget, especially after Klein killed off the debt. The voters must hold the governing party responsible and accountable. The question now is if we learned our lessons for the next time the price of oil goes up.