14 STETTLER INDEPENDENT
Wednesday, October 28, 2015
Don’t blame oil prices for Alberta deficit
Netanyahu and the truth
Alberta’s fiscal woes are the result of uncontrolled spending over the past decade BY STEVE LAFLEUR AND CHARLES LAMMAM TROY MEDIA COLUMNISTS Alberta’s budget, to be unveiled on Oct. 27, will contain the province’s seventh deficit in the last eight years, most recently projected at $5.9 billion. A popular narrative blames declining oil prices for the government’s deteriorating financial situation. However, as a recent Fraser Institute study found, Alberta’s fiscal woes are primarily driven by successive governments not controlling the rapid growth in spending over the past decade. For further evidence of the tenuous link between Alberta’s budget balance and the price of oil, consider the following analysis. There are three distinct periods worth noting. From 1990/91 to 1993/94, Alberta recorded four consecutive large deficits. After implementing a series of fiscal reforms, the provincial government was able to run surpluses in 14 consecutive years starting in 1994/95 up to 2007/08. Since then, the province has been
in deficit with the exception of a small operating surplus in 2014/15. If the narrative about oil prices driving deficits was true, we would expect the province to run deficits in years with relatively low oil prices and surpluses in years with relatively high oil prices. But that relationship simply does not hold. Alberta has run surpluses when oil was close to US$20 per barrel (all prices in 2015 U.S. dollars) and has run deficits when oil reached nearly US$110 per barrel. To further illustrate the lack of a relationship between oil prices and Alberta’s fiscal balance, consider the averages over the three periods delineated above. From 1990/91 to 1993/94, Alberta ran deficits averaging -3 per cent of GDP while the price of oil averaged approximately US$37 per barrel. In the next major period from 1994/95 to 2007/08, Alberta recorded surpluses averaging +2.2 per cent of GDP with oil at an average of roughly US$43 per barrel. In the final period from 2008/09 to 2015/16, the
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province averaged a deficit of -0.5 per cent of GDP, despite oil prices averaging a whopping US$88 per barrel. All this suggests that oil prices alone are not a good predictor of Alberta’s fiscal balance. The province has been able to balance its books in times when oil prices (after adjusting for inflation) were lower than what they are today. While oil prices are currently below their historic highs, the core problem is that successive governments spent as though high resource prices (and thus revenues) would last forever. Between 2004/05 and 2014/15, the provincial government increased program spending by 98.3 per cent - nearly double the growth rate necessary to keep pace with increasing overall prices (inflation) and a growing population, which collectively grew by 52.1 per cent over the period. Program spending also outpaced the rate of provincial economic growth (88.6 per cent). Had governments restrained spending growth since 2004/05 to the rate of inflation plus population growth, Alberta could expect a $4.4 billion surplus this year rather than a $5.9 billion deficit. That’s a $10.3 billion difference. Put simply, Alberta’s deficit is mainly due to past spending choices, not declining oil prices. The key lesson for governments is to spend prudently in good times in order to be prepared for the bad times. Steve Lafleur is a senior policy analyst and Charles Lammam is the director of fiscal studies at the Fraser Institute
“I can’t stand him. He’s a liar,” thenFrench president Nicolas Sarkozy told US President Barack Obama four years ago, in a conversation about Israeli Prime Minister Binyamin Netanyahu. Obama replied: “You’re fed up with him? I have to deal with him every day.” It was a private conversation, but we know about it because it was accidentally broadcast to journalists. Politicians may deliberately mislead people, omit vital facts, spin the truth a dozen different ways to serve their purposes of the moment, but they usually avoid outright lies. It’s just too embarrassing to be caught in a lie. And other politicians generally accept that some of their colleagues shade the truth to fit their own agenda as one of the regrettable realities of their trade. They all swim in the sea. What drove Sarkozy and Obama to talk about Netanyahu like that was the sheer brazen effrontery of his lies – and he was at it again last week. In public, this time. Speaking to the the 37th World Zionist Congress in Jerusalem, Netanyahu declared that Hitler decided to exterminate the Jews on the advice of a Palestinian, Haj Amin al-Husseini, the grand mufti (senior Islamic cleric) of Jerusalem. Husseini met Hitler in Berlin in November 1941, he said (although there is no record of the meeting), and that was why the Holocaust happened. “Hitler didn’t want to exterminate the Jews at the time, he wanted to expel the Jews. And Haj Amin al-Husseini went to Hitler and said: ‘If you expel them, they’ll all come here [to Palestine].’” According to Netanyahu, Hitler then asked: “What should I do with them?” and the mufti replied: “Burn them.” So, you see, it was the Palestinians, driven by a vicious and unreasoning hatred of the Jews, who really thought up the Holocaust, and Adolf Hitler was merely a tool in their hands. Historians instantly denounced this travesty of the historical record, and the greatest outrage was expressed by Jews who felt that Netanyahu had given a great gift to the Holocaust deniers. Germany’s Chancellor Angela Merkel was so appalled that she effectively called Netanyahu a liar to his face. Standing beside him in Berlin, she said: “We don’t see any reason to change our view of history, particularly on this issue. We abide by our responsibility, in Germany, for the Holocaust.” Yet Netanyahu continued to insist that it was Husseini who first suggested genocide to Hitler. Experienced journalists know that the most useful question to ask yourself when confronted with an implausible story is not: “Is this bastard lying STETTLER INDEPENDENT to me?” It is: “WHY is this bastard lying • Fax: 403-742-8050 to me?” So
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why did Netanyahu say that? In particular, why now? Because he needs to show that his policy of creating and expanding Jewish settlements in the West Bank, the one-sixth of former Palestine that still has a Palestinian majority, is not responsible for the recent rash of violent attacks on Israeli Jews by young Palestinians. It is getting quite serious, though it is not yet a “third intifada”. Ten Jews have been murdered in the streets by Palestinians in the past month. About fifty Palestinians have been killed, including most of the killers and would-be killers. The fear and suspicion have grown so intense that in two cases of mistaken identity Jews have killed or wounded other Jews. There appears to be no central direction behind the attacks. Most observers believe that the phenomenon is mainly driven by the despair of young Palestinians who see their land slipping away and don’t believe that Netanyahu will ever let the Palestinians have their own state in the occupied territories. That would put the blame for the outbreak squarely on Netanyahu’s policies, which he cannot accept. So he is trying to prove that Palestinians just naturally hate Jews: “My intention was…to show that the forefathers of the Palestinian nation – without a country and without the so-called ‘occupation,’ without land and without settlements – even then aspired to systematic incitement to exterminate the Jews.” That is Netanyahu’s explanation for the current attacks: incitement by Palestinian leader Mahmoud Abbas, whom he blames for the rumours about Israel’s intention to expand Jewish access to the Haram al-Sharif, the area around Jerusalem’s al-Aqsa mosque. It is Islam’s third most sacred site, but it is also sacred to Jews as Temple Mount, and these rumours certainly played a role in stimulating the attacks. There is no evidence that Abbas was behind the rumours, however, and it’s unlikely that he would have encouraged them: what these attacks are actually showing is his own people’s loss of faith in his ability to get a Palestinian state. Nor is Saturday’s agreement in Amman between US Secretary of State John Kerry, Mahmoud Abbas and Jordan’s King Hussein to guarantee the current rules for access to the holy site likely to quell the violence. The rumours were a trigger for the violence, but the gun is always loaded. The Palestinian revolts in 1929 and 1936, which were indeed incited by Grand Mufti Husseini, were already about the Jewish colonisation of Palestine. It was always about the land, and it still is today. Netanyahu knows that very well. It is the real motive behind his own policies. He just can’t afford to admit it. Gwynne Dyer is an independent journalist whose articles are published in 45 countries.