“This is really about bribing people with their own money.” – Prof. Duane Bratt
By Markham Hislop
Liberal Leader Raj Sherman: “DaniBucks are no different than RalphBucks were. They’re buying votes, not investing in our future. She’s going to kick off a whole lot of shopping with those cheques; there will be a lot of iPads sold. But all that money could be going instead into a health care system that works and the world’s finest, least expensive education and post-secondary education systems.”
Danielle Smith is promising to take a page out of Sarah Palin’s Alaska policy playbook. Actually, I’m just kidding about Sarah Palin. I couldn’t write a column that mentioned Alaska without including her. But the policy stuff is true.
The Wildrose leader announced today that her party will implement an Alberta Energy Dividend, which will send “20 per cent of budget surpluses generated by oil and gas royalties directly to Albertans.” Smith estimates each Albertan will receive a $300 cheque during those years when the provincial government is running a cash surplus.
As a bonus, the bonuses will be tax-free.
Policy analyst Steve Lafleur says the Wildrose proposal sounds an awful lot like the Permanent Fund Dividend. On average Alaskans receive between $600 and $1,500 from the Alaska Permanent Fund, which was set up in 1976 to keep a portion of state oil and gas royalties away from the greedy clutches of politicians. The fund has since grown to $38 billion.
Sounds like a pretty good deal, doesn’t it? Just like the Ralph Bucks (sorry, the Prosperity Bonus) of 2005, when every man, woman and child in Alberta was given $400 and iPod and designer jeans sales soared through the roof.
But is it the best model for investing and spending Alberta’s royalty riches? Alaska isn’t the only jurisdiction that set aside resource royalties.
The big boy on the block is Norway, whose oil fund is now valued at $538 billion, the largest in the world. The Norwegian government passed a law limiting transfers from the fund to a maximum of four per cent of the fund’s value. Based on the current value, the government will receive $21.5 billion this year.
Given that past Alberta governments have regularly dipped into the Heritage Fund, which now stands at $15.4 billion, this is an important question.
Do Albertans want the more immediate gratification of an energy dividend or do they want to forgo their cheque and invest royalty revenues so future generations can access a significantly larger fund? Danielle Smith has made it clear where her party stands.
“Instead of squandering surplus funds on pet projects and more government waste, the Alberta Energy Dividend will ensure Albertans benefit directly from the wealth our energy sector generates,” said Smith. “Wildrose believes that Albertans can spend their own money better than government. That is precisely why we’ve got a plan to put more money back in their pockets instead of government coffers.”
Danielle Smith is saying Albertans can both build the Heritage Fund and pay dividends, but Mount Royal University’s Duane Bratt is skeptical she can accomplish the feat. He says Wildrose’s election promises just don’t add up.
Only one week into the campaign and the upstart party that is leading in some public opinion polls has promised to increase the Heritage Fund to $200 billion in 20 years; provide a $500 culture, arts and sports tax credit; scrap mandatory school fees, estimated to be $100 per student; a child tax credit worth $200 annually per child; introduce a balanced budget and tax savings act while significantly increasing spending on health and education.
“I don’t know how the math is going to work…At the time they were very critical of the government’s energy price projections. For this to occur, there are going have to be substantial price increases (in the price of oil),” said Bratt, who is chair of the department of policy studies.
“Maybe people will buy into a chicken in every pot idea, but if your numbers aren’t credible…”
The Wildrose press release says the energy dividend is “both affordable and prudent, because it recognizes that government must live within its means, and make balancing the budget a top priority. By ensuring that dividends are only paid out in years when the government posts a surplus, the dividend remains affordable in the long-term.”
Like Bratt, I’m skeptical. This sounds a lot like Republican supply side “voodoo economics” of cutting taxes and increasing government revenue. And we know how that turned out, don’t we?
I leave the last word to Bratt: “There’s an old saying that campaigns are about bribing people with their own money. This is really about bribing people with their own money.”