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    Follow the Money: Where is Alberta's Wealth Going?
    Follow the Money: Where is Alberta's Wealth Going?
    Follow the Money: Where is Alberta's Wealth Going?
    Ebook224 pages1 hour

    Follow the Money: Where is Alberta's Wealth Going?

    By Kevin Taft, Mel McMillan and Junaid Jahangir

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    About this ebook

    Alberta’s most insightful political commentator is back with another essential book. Kevin Taft, together with economists Mel McMillan and Junaid Jahangir, follows the money to uncover why Alberta — one of the richest places on earth — still talks poor when it comes to public services.

    Do we really spend more than we can afford, more than we can sustain, on health care? On education? Why doesn’t Alberta have enough hospital beds? Why have our schools faced teacher layoffs? Why are our city streets potholed, and why are rising numbers of Alberta children living in poverty? Where is all our wealth going?Follow the Money uncovers the truth behind the government’s austerity slogans and cutbacks. The hard-hitting evidence of Follow the Money challenges Albertans to rethink the past and remake the future.

    LanguageEnglish
    PublisherBrush Education
    Release dateJan 18, 2012
    ISBN9781550594362
    Follow the Money: Where is Alberta's Wealth Going?
    Author

    Kevin Taft

    Kevin Taft, PhD, has spent most of his career working on public policy in government, in the non-profit sector, and in private practice. He served three terms as an MLA in the Alberta legislature, including almost five years as Leader of the Opposition. He has a PhD in business.

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      Book preview

      Follow the Money - Kevin Taft

      Copyright © 2012 Kevin Taft.

      5 4 3 2 1

      All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form by any means, without the prior written permission of Detselig Publishing or, in the case of photocopying or other reprographic copying, a license from Access Copyright (Canadian Copyright Licensing Agency) 1 Yonge Street, Suite 1900, Toronto ON, M5E 1E5, fax 416-868-1621.

      Published by

      Detselig Enterprises Ltd.

      a Brush Inc. company

      210 1220 Kensington Road NW

      Calgary, Alberta T2N 3P5

      www.temerondetselig.com

      sales@temerondetselig.com

      Cover and design by Dragich Design.

      eBook conversion by Duncan Turner.

      ISBN 978-1-55059-436-2

      Library and Archives Canada Cataloguing in Publication

      Taft, Kevin, 1955–

      Follow the money [electronic resource] : where is Alberta's wealth going? / Kevin Taft with Mel McMillan and Junaid Jahangir.

      Electronic monograph in HTML format.

      Issued also in print format.

      ISBN 978-1-55059-436-2

      1. Alberta—Appropriations and expenditures. 2. Government spending policy—Alberta. 3. Expenditures, Public—Alberta. I. McMillan, Melville L. II. Jahangir, Junaid III. Title.

      HJ7664.A4T34 2012    336.3'9097123    C2012-900466-9

      Author’s Acknowledgements and Disclaimer

      This project would not have been possible without the wise counsel of Professor Mel McMillan and the unrelenting number crunching of Junaid Jahangir, Ph.D. Many other people helped out too, some of them immeasurably. To all I offer a hearty thanks. Any errors or mistakes are my responsibility alone. I received no payments to produce this work, and no royalties will be collected.

      — Kevin Taft

      Publisher’s Acknowledgements

      The Follow the Money project is founded on the independent research of Kevin Taft, Melville McMillan and Junaid Jahangir. The project has been carried out in partnership with the Alberta Federation of Labour, Public Interest Alberta and the United Nurses of Alberta. The publisher gratefully acknowledges their assistance.

      Contents

      1 | Where Is the Wealth Going?

      2 | The Stunning Wealth at Stake

      3 | The Big Picture Evidence on Government Spending

      4 | Fact: A Shrinking Share of Wealth for Public Services

      5 | Numbers as Evidence

      6 | The Prime Suspect: Health Care

      7 | A Diagnosis of Chronic Crisis

      8 | Education by the Numbers

      9 | Tracking Public Money for Housing and Social Services

      10 | It’s Time for a Human Services Index

      11 | Tracking Transportation and Other Spending

      12 | Tracking Money into Savings Funds

      13 | Tracking Personal Incomes

      14 | The Answer Tracked Down

      15 | Hard Truths

      16 | A Future to Build

      Afterword: Dominion and Destiny

      Facts Found on the Money Trail

      Data Tables and Supplementary Information

      List of Graphs

      Graph 1 | GDP per capita (2009$)

      Graph 2 | Government debt per capita (2009$)

      Graph 3 | Total government expenditure per capita (2009$)

      Graph 4 | Total government expenditure as a percentage of GDP (2009$)

      Graph 5 | Health-care expenditure per capita (2009$)

      Graph 6 | Health-care expenditure as a percentage of GDP (2009$)

      Graph 7 | K-12 and post-secondary expenditure per capita (2009$)

      Graph 8 | Housing expenditure per capita (2009$)

      Graph 9 | Social-services expenditure per capita (2009$)

      Graph 10 | Human services index per capita (2009$)

      Graph 11 | Transportation and communication expenditure per capita (2009$)

      Graph 12 | Total government revenue per capita (2009$)

      Graph 13 | Value of the Heritage Fund per capita (2009$)

      Graph 14 | Alberta personal income and income tax per capita (2009$)

      Graph 15 | Alberta corporate income and income tax per capita (2009$)

      1

      Where Is the Wealth Going?

      As I geared up for the fall sitting of Alberta’s legislative assembly in October 2009, the stream of papers and issues that ceaselessly flows through a politician’s life was reaching flood levels. I had annual reports, auditor-general reports, committee reports and special reports to read. Constituency concerns, media clippings, phone messages and letters all competed for my attention.

      On October 22, a day otherwise like most, I sat down to check my email before going to bed. It’s a nightly chore, and if I slack off I regret it. My email inbox, like those of many people, can pile up very quickly.

      I had intended to do a brief skim — make a few quick replies, flag anything that needed more serious follow-up. Then I spotted an email from Mel McMillan.

      A message from Mel

      Mel McMillan is an economics professor at the University of Alberta, and a former chair of that department. He specializes in public economics — the study of government policy and its role in the economy — and often makes astute and surprising observations about our provincial government. He has a knack for navigating his way through mountains of numbers and statistics, and for bringing us mere mortals along for the journey. He is scrupulous about avoiding ideology and spin.

      Mel had released a study earlier that day, and he emailed me, knowing I would be interested in its findings. He attached the report as a PDF. Published by the Parkland Institute at the University of Alberta, it was titled Breaking the Myth: Alberta’s spending is mediocre at best.

      I started reading it. It was getting late, but I kept reading it. Mel had plunged into an issue that had been troubling me for over a year.

      In the wake of the 2008 world economic crisis and the collapse of oil and natural gas prices, Alberta had tightened its fiscal belt. The message from the government was clear: Alberta had overspent throughout the energy boom, and the good times were now over.

      We were at the all-you-can-eat buffet for ten years and Albertans were lined up with us, admonished Lloyd Snelgrove, then president of the Treasury Board. [1]

      Messages like this had been so unrelenting that they became accepted as fact. The rhetoric of government overspending seeped into the media, and to both sides of the legislature. It even made its way — I’ll admit it — into some of my own speeches. I should have been more careful.

      There are always voices claiming that governments spend too much, no matter what the situation. Every once in a while, those voices are joined by enough others to form a chorus that drowns out broader debate and overpowers the hard evidence.

      In politics, perception is reality, and the perception was created that government spending was out of control. That became the reality for political decision-making. But what did the hard evidence say?

      As the months had been passing by, I had noticed a discrepancy, and it increasingly bothered me. I just couldn’t recall any all-you-can-eat fiscal buffet for Alberta’s public services.

      There is no doubt that Alberta’s government had increased its spending for several years, but a lot of that was just scrambling to keep up with the oil and gas boom. Hundreds of thousands of people moved to Alberta, but — as Ralph Klein once remarked — they didn’t bring their schools, roads or hospitals with them. So, public funds were channelled to some impressive new buildings and highways. But these funds often failed to keep up with overheated construction costs and operating expenses.

      Spending was up in contrast to the slash-and-burn budgetary habits of the 1990s. But we hadn’t exactly been indulging in an orgy of excess. If anything, Alberta’s public services had come out of the boom with very little to show for it.

      I tend to give priority to evidence I can actually see, and I had been watching public services in Alberta closely for many years. From Grande Prairie to Medicine Hat, I hadn’t seen very many new hospitals. The few new health-care facilities I did see couldn’t function properly because they were short of nurses and doctors — for example, the Sheldon Chumir Health Centre in Calgary and the East Edmonton Health Care Centre. There were some nice new highways, but a lot of the roads I drove on were breaking down. My kids’ tuitions fees climbed ever higher. Alberta was the only province that didn’t fund programs to feed its hungry schoolchildren. My constituency office struggled to help severely handicapped adults survive from month to month on meagre provincial allowances.

      As I clicked through Mel’s report, it became clear that he had confirmed my misgivings. Alberta’s spending wasn’t out of line with the rest of the country. Despite soaring energy prices and a booming economy, we spent about the same, per capita, as any other province.

      In other words, our government’s loud rhetoric about over-indulging its citizens was overblown. They may have intentionally made up their story, or they may have actually believed it themselves. Either way, it wasn’t true.

      Making numbers talk

      Mel McMillan took his data from existing sources, and then used it to draw clear comparisons.

      It sounds simple enough, but it’s a rare talent. Most of us have neither the time nor the expertise to dig into the raw numbers, and to sort them into something comprehensible. But the raw numbers are out there, and — as Mel demonstrated — the picture they paint doesn’t always match up with what we have been told.

      Mel’s study was so small he called it a fact sheet instead of a report. Whatever he called it, it was tantalizing. His approach could hardly have been more straightforward.

      Using data from Statistics Canada, he divided each province’s spending by the number of people who lived there. This provided

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