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. 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).
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.