Thursday, March 14, 2013

Conservative Snake Oil

For thirty years, neo-conservatives have been selling a myth. From Ronald Reagan, through George W. Bush to Stephen Harper, they have pitched the idea that they know how to manage government finances. Berating the "tax and spend" heresy of a previous generation, they have claimed that they will lead their fellow citizens to the Promised Land.

The problem is that facts invariably prove them wrong. The latest example of conservative bunk is the recently released Alberta budget. Alberta -- the  Land of Milk and Honey -- will be running a deficit this year.

It's not all Alison Redford's fault. Albertans have been raiding the Heritage Fund for decades. Frances Russell writes:

Alberta has deposited just 5.4 per cent of its resource revenues in the fund since its inception, a fact that has gone largely unnoticed by the province’s population. Almost all the money was spent helping successive Conservative governments party hearty on above-Canadian-average levels of public services while boasting long and loud about Alberta’s status as the nation’s lowest-tax jurisdiction. Albertans not only don’t pay a sales tax but also enjoy a flat income tax, the latter another gift from the ebullient [Ralph] Klein and his provincial treasurer, former Canadian Alliance leader Stockwell Day.

That's certainly not what the late Peter Lougheed intended when he established the fund. Its purpose was to “provide prudent stewardship of the savings from Alberta’s non-renewable resources by providing the greatest financial returns on those savings for current and future generations of Albertans."  But those who followed Lougheed disregarded that mission.

According to a report recently released by the Fraser Institute:

From 1977 to 2011, the Alberta Heritage Fund’s cumulative net income was $31.3 billion. But the amount transferred out of the fund was $29.6 billion — “meaning virtually nothing was set aside for inflation-proofing to keep the principal intact in real terms,” the report’s authors say. “Despite Alberta’s tremendous natural resource endowment, the Fund equity (valued at cost) as of 2011 was a mere $14.2 billion.”

That's not what the Norwegians, those pie eyed and socialists, did. They banked their oil revenues:

The Norwegian Ministry of Finance forecasts that the fund will reach NOK 4.3 trillion ($717 billion) by the end of 2014 and NOK 6 trillion ($1 trillion) by the end of 2019.[4] In a parliamentary white paper in April 2011 the Norwegian Ministry of Finance forecast that the 2030 value of the fund would be NOK 7.4 trillion ($1.3 trillion). A worst-case scenario for the fund value in 2030 was forecast at NOK 2.7 trillion ($455 billion) and a best case scenario at NOK 19.6 trillion ($3.3 trillion).[5]  

It's truly amazing that conservatives are still selling this snake oil. But what is more amazing is that so many people are still buying it.


Lorne said...

What little travelling I have done, Owen, has amply demonstrated to me that we in North america live in a bubble in which the American and ultra-conservative ethos holds sway to the exclusion of all other viewpoints. There are other and perhaps better ways of doing things, as your post suggests, but we seem to regard the North American perspective of low taxation rates and working until we drop as the only legitimate one.

No doubt, this is in part due to the corporate agenda conventional media promulgates, but it really doesn't excuse us, given the wealth of information and alternatives available to us via the Internet.

End of rant.

Owen Gray said...

What you call a "rant," Lorne, comes from a willingness to look beyond your own backyard.

Most citizens don't have the opportunity to travel very far.
And that helps the privileged to remain privileged.

thwap said...

The Norwegians don't just bank their revenues more intelligently. They're also better at extracting revenue from their patrimony.

Owen Gray said...

Thanks for the link, thwap. Remember when Petro Canada was supposed to give Canadians an equity stake in the oil business?

But Mr. Mulroney decided that was a bad idea.

Perhaps, if Canadians still had an equity stake in the business, the land around For McMurray wouldn't be a wasteland.

John B. said...

I think the Petro Canada project had its merits, but I recall from experience that their facilities in my province seemed to be among the worst run with regard to workplace safety and environmental stewardship.

Owen Gray said...

I have to admit that I'm in no position to comment on the company's management, John. If a company is filled with political hacks -- like some of our senators -- there will be problems.

But there was a time when government sought to give citizens a share of a company's equity. Bill Davis did the same thing with Suncor.

It would appear that the Norwegians did things better than we did.

Anonymous said...

The Norwegians also have no respect for the eco systems at the tar sands either. They illegally diverted a river, to their tar sands project. Norway just helped themselves, to lakes and other bodies of water. We don't want those underhanded sneaking Norwegians in our country. They should have been kicked out of Canada for that. However, the proper palms of hands were greased. Who knows what other illegal operations, the Norwegians are inflicting on Canada.

We also have to contend with, Norway's dirty diseased fish farms, killing off the wild Salmon in BC.

If I had my druthers? All Norwegians would be kicked out of this country....along with the Chinese.

Owen Gray said...

I'm not aware of a lot of Norwegian involvement in the Canadian economy, Anon.

Do you have a source for this information?