Over the past few weeks Premier Prentice has been hard at work setting the stage for an eventual plan to deal with oil south of $40 per barrel. Lamentably indications are the same well-worn Conservative refrains are being rehearsed — we are all in this together; living beyond our means; we have a spending problem; public sector wages are out of line; our social programs are unaffordable.
The evidence suggests the premier is wrong on all counts. We do not have so much a spending problem as a revenue problem and evidently we are not all in this together. Some have done extremely well in the boom times many more are struggling to survive with what little trickles down. Public sector wages are what we might expect in the wealthiest economy in Canada.
By any measure the wealth generated from oil and gas has been enormous. According to the Conference Board of Canada our per capita income in 2013 was larger than that of the United States and 22 per cent larger than that of Norway.
In his book Follow the Money Kevin Taft reported that between 1989 and 2008 Alberta’s economy on a per capita basis (GDP) went to a whopping 85 per cent larger than the rest of Canada from 25 per cent while provincial government spending was only slightly more per capita than the Canadian average.
Meanwhile over that period spending on health education housing social services — what Taft calls human services — was never more than 10 per cent above the Canadian average.
In 2013 provincial GDP was still 85 per cent greater than the rest of Canada. Arguably Alberta has been the most frugal of all provinces in comparison to our wealth.
Then there is the sad story of the Alberta Heritage Trust Fund. Norway Abu Dhabi and Kuwait have amassed Trust Funds of US $900 billion $773 billion and $737 billion respectively. Alberta at US $16.6 billion comes in just behind East Timor’s US $18 billion fund and is only slightly larger than when it was started in 1976.
With such a record you might ask: where did all the money go?
There is certainly a case to be made that many Albertans are big personal spenders. From 1989 to 2013 personal income was up a healthy 68 per cent and is consistently 20 to 25 per cent ahead of the Canadian average. Many Albertans especially those on the high side of the average income have traded quality health education and social support for the less fortunate in exchange for big cars big homes and big spending whether they realize it or not.
But to really answer the question you need to examine corporate profits. According to Taft from 1989 to 2008 corporate income per capita rose a staggering 400 per cent. According to a 2007 TD Bank report the share of wealth generated in Alberta that was taken by corporations was double the rest of Canada.
Corporations started taking a much bigger chunk of a much bigger pie. It is not too strong a statement to suggest we have been subjected to a government-enabled corporate fleecing.
So when Premier Prentice is quoted in the Calgary Sun saying things like “everyone in the private sector is experiencing this” and “it comes down to wages” and “a lack of discipline” he is dead wrong. By almost any comparison with other provinces and other nations our taxes are too low and pander to corporations and the wealthy.
With this track record it should come as no surprise that Alberta is the most inequitable province in the country. Between 2006 and 2012 the share of total income for the top 10 per cent of earners in Canada actually decreased to 39.7 per cent. In Alberta the share for the top 10 per cent was not only the highest in the country at 50.4 per cent but had increased since 2006.
Alberta has the dubious distinction of having more unequal distribution of income than the United States. In contrast Norway is second only to Denmark in terms of income equality among OECD (Organization for Economic Co-operation and Development) countries according to Conference Board of Canada.
What is the on-the-ground manifestation of unequal income distribution? According to Sustainable Calgary’s State of Our City Report (an organization I co-founded) more Calgarians than ever before are using food banks a single parent of two has to work over 80 hours a week at minimum wage just to reach the poverty line and the ratio of house-price-to-income has ballooned. We are not all in this together Mr. Prentice.
A fair sufficient and sustainable tax regime will get us a long way toward a solution for our predicament. In the words of economist Robert Reich: “Simple fairness requires three things: more tax brackets at the top higher rates in each bracket and the treatment of all sources of income (capital gains included) exactly the same.”
More on the solutions in my next column.
Noel Keough is a co-founder of Sustainable Calgary and assistant professor of Sustainable Design at the University of Calgary Faculty of Environmental Design. For more details on the cost estimates check out the online version of the article.
