(03-12-2016 01:13 PM)Ghost Tiger Wrote: (03-12-2016 12:54 PM)DjembaDjemba Wrote: The BC way to approach resources may have been the correct one after all. Time will tell if they'll be vindicated.
Can you elaborate a bit on your perspective on the BC way? Diversification? I'm genuinely curious about your insight here.
This is a tough one. Governments can't use a heavy hand to attempt diversification, all that does is punish productive industries. But policy-makers can tip the scales just ever so slightly in the direction they're looking to move the jurisdiction in.
For example; Alberta has relatively low taxes because the government uses royalties from resources to directly supplant the budget. Thus, oil investment is encouraged (this is a good thing). Now what can occur is a real phenomenon, over investment (Think of the Chinese construction industry, ghost cities etc), too much growth too fast. With growth moving that fast, any slowdown can be pretty catastrophic.
The government gave us (and I'm part of the problem) the lowest taxes in the country, the best funded services, and endless promises that the good times will keep rolling on. The government kept cutting taxes, lower, and lower, while abandoning the heritage fund altogether, and essentially balancing the budget on a single commodity. That's a vary short sighted policy. But a very good one for winning votes in the short term.
BC and Saskatchewan both took a different approach. Saskatchewan held the line on taxes. When it began increasing its drilling activity, it used the windfall to invest in infrastructure and save, not slash taxes and pump cash into services. BC learned its lesson from the lumber industry, and also held the line on taxes and budgets. Up or down, BC has provided balances budgets longer than any province in the last decade (someone tell Justin Trudeau that balanced budgets are good even if they can cause secular stagnation, jurisdictions that balance their budgets even if unpopular are always vindicated later)
I think Alberta is facing three massive obstacles going forward:
1- The
spending problem: Services are astronomically bloated. This is the spending problem that the Wildrose correctly identified. Hospitals, schools, and cities all have massive bureaucracies of secretaries and support staff that don't seem to add much value. In fact they're a detriment to the overall smooth operations of the system, they're essentially clogging up the pipes. And they're incredibly expensive to maintain. I'm willing to bet many are tenured boomers.
2- The
revenue problem - the government of Alberta simply isn't collecting enough taxes to cover it's obligations, even if we cut services and reduce the bloating we still need tax increases. It's an unpleasant situation! I hate taxes. But they're unfortunately a necessary evil.
3- The winding down of the oil industry - Alberta now might have hundreds of thousands of blue collar non-skilled workers out of a job, and they need to be retrained, or they're bringing out the pitchforks. I bet a good chunk don't have the savings necessary to go back to school. Either the government ponies up, or suffers the consequences of an angry electorate.
So back to diversification, I don't believe in government whipping us over the head with a shovel until we're all the same height. But we can get some policies that encourage a more even investment. That of course would require long term planning, something we're lacking the age of fast food voting.