David Staples: Alberta needs to swallow nasty medicine to cure COVID crash

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A huge part of the reason why we spend so much more on health care and education than do Ontario, B.C. and Quebec is that we pay our doctors, teachers and nurses higher wages. Toews is going to have to make a strong argument that we all must share the pain, that we can’t expect to raise taxes on private sector workers who are already earning less, working less, or working not at all, if the end goal is only to prop up Alberta’s Canada-leading public sector pay.

No one likes wage freezes or rollbacks, but individual nurses, teachers, doctors and government workers can be sold on helping to solve our collective fiscal mess.

To make that case, it will help if the Kenney government also looks at the revenue side of the equation, but that notion was missing from Toews’ public messaging. As University of Calgary economist Trevor Tombe noted on Twitter, there was no recognition from Toews of our main fiscal challenge, that of our ongoing over-reliance on resource revenues.

We need to explore how we can increase revenues. As Tombe put it: “Alberta’s debt has increased significantly in 2020, but the sky is not falling. The province’s balance sheet remains strong, despite the large COVID shock. There’s space to take time to gradually and sensibly reform the province’s fiscal policy.”

The options are to balance the budget later than planned, perhaps around 2026, either with a modest increase in revenues or with an ongoing spending freeze, Tombe said. “It’s defensible for the government to bring spending in line with other large provinces, but even if we do so by 2022-23, we’ll still have a large deficit that year. ”

We don’t necessarily need a provincial sales tax to balance the budget, Tombe said, but we could consider higher gas, payroll or personal income taxes, or taking our share of the federal carbon tax.

Of course, public sector wage freezes and rollbacks aren’t going to be popular, nor will new fees or taxes.

But is there any other reasonable and equitable way forward?

To cure ourselves of the COVID economic crash, we’re going to have to swallow some nasty medicine, but at least we will all have to swallow it.

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