Alberta treasury to test cost of election pledges.

This is from the Calgary Herald.
Most provinces fund the health care system through general tax revenues. If Alberta cannot afford to do that then the obvious solution is to increase taxes to do so. At least paying that way means that people pay according to income rather than set premiums. Of course raising taxes is anathema to Conservatives. This is from the Calgary Herald.


Saturday » March 15 » 2008

Treasury to test cost of election pledges

Jason Fekete
Calgary Herald


Saturday, March 15, 2008



Premier Ed Stelmach said Friday he'll know whether the provincial government can immediately afford his party's campaign promises when the Treasury Board meets next week, but hinted health-care premiums could be phased out sooner than originally envisioned.

Speaking in Calgary, Stelmach didn't dispute the economic assessment of new Finance Minister Iris Evans, who said Thursday that volatile financial times could force the government to revise its budget and possibly delay implementing some of the billions in election commitments.

Rather, the premier noted he'll meet Tuesday with Treasury Board members to review the province's revenues and determine what's financially feasible in the short term.

"We'll have another look at our revenue stream projections, and that's part of Tuesday's meeting," Stelmach said at McDougall Centre.

"Things have changed a bit. Oil's definitely up and natural gas is up. I just want to look further down the road -- three, four years down the road, just to get a feel."

The Tory government's key campaign promise, and one of the most expensive to implement, is to phase out health-care premiums over four years.

The premiums generate about $920 million annually for provincial coffers, but cost Alberta families $1,056 and individuals $528 each year.

Stelmach said the lofty commodity prices and strong revenues -- a surplus of $4.2 billion is projected this year -- could mean that more than one-quarter of the tax will be axed in this spring's budget.

"That's one of the purposes of Tuesday's meeting, is to look at the revenue projections," the premier added. "If there's a way of accelerating (eliminating premiums), fine. If not . . . we're going to be financially responsible."

Evans is expected to deliver the budget either in late April or early May.

Implementing the Progressive Conservative campaign platform -- which promises other tax breaks, new day care spaces, and more doctors and nurses -- will cost the government

$1.6 billion in the first year and ramp up to $2.5 billion by 2012.

Government finances will, however, be buoyed by oil prices hovering around a record $110 US per barrel, when last spring's budget pegged the average price throughout the year at $58 (it was revised to about $80 in the latest fiscal update).

Every one-dollar increase in oil prices would produce an additional $139 million for the provincial vault over the course of an entire year, although a high-flying Canadian dollar is offsetting much of the gains.

Jack Mintz, chairman of a provincial committee that recently examined how the province should save its wealth, said the finance minister's comments on Thursday were an attempt to "dampen expectations" heading into the budget.

And there could be good reason for it, as the U.S. recession could trim the demand for oil and natural gas, thereby impacting prices and Alberta government revenues. Mintz noted the PC campaign platform, like those of most of the other parties, wasn't grounded in much fiscal "reality."

"There was a need for a financial reality check. The minister is now introducing that financial reality check," said Mintz, who's also the head of the policy studies school at the University of Calgary.

Mintz's report on savings was presented to government a few months ago and he expects Evans will soon make it public. He's argued the province isn't properly managing its savings and must sock away more cash for the future -- something all the more germane considering the uncertain economic times.

Scott Hennig, Alberta director of the Canadian Taxpayers Federation, said the Stelmach government has reason to worry about whether it can afford all of its campaign pledges.

Government revenues are projected to remain relatively stagnant while spending continues to increase, he said, which could produce a razor-thin surplus next year and possible deficit down the road unless expenditures are brought under control.

"We're going to hit a fiscal wall here in the next couple of years," Hennig said. "It's going to be what normal governments do -- prioritize. They haven't had to prioritize in recent years; they've said yes to everything."

However, Alberta Liberal Leader Kevin Taft argued after the finance minister's comments Thursday the provincial treasury is far from broke.

In fact, the Stelmach government is spending far more than any other province on a per capita basis, which should be -- but isn't -- delivering what Albertans need.

"They're just not managing it very well," Taft said.

jfekete@theherald.canwest.com

© The Calgary Herald 2008








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