The Alberta Teachers’ Association

Kim Dewar

Kevin Taft was the keynote speaker at the ATA’s Political Engagement Seminar, March 16.

Province cries the blues but is unimaginably wealthy, says Kevin Taft

"If Alberta really is rich, why are we talking about ­cutbacks and deficits?"

That was a question that MLA and former liberal Leader Kevin Taft asked delegates attending the Association’s Political Engagement Seminar on March 16. Taft’s keynote speech to a packed house addressed the findings in his book, Follow the Money—Where Is Alberta’s Wealth Going?, which was co-written with economists Mel McMillan and Junaid Jahangir.

Just how rich is Alberta? According to Taft, extremely. Using the most conservative of estimates, Taft and his co-researchers estimated that each Albertan "owns" 51,900 barrels of oil. He explained that the price of oil quoted on the TSX (around $105 a barrel at the time of this writing) is the price for T­exas crude. Alberta’s oil is discounted from that price, so the current price does not apply. Rather, let’s use the figure of $5.00 per barrel. Even at that price (discounted to the point of absurdity), Taft says, Alberta’s oil reserves would be worth $890 billion. Of course, that oil is still in the ground—it needs to be pumped out, upgraded and refined, and it can’t be sold all at once, but it’s still a huge resource.

Taft says the central question then becomes: Given that Alberta is rich, why do we talk about cutbacks and deficits? We know that even the rich make bad economic decisions and throw their money away. We’ve heard stories about people who won big lotteries then filed for bankruptcy a few years later. Is Alberta like those lottery winners who foolishly blew their loot? Does the province really need to rein in spending on areas such as health and education? No, says Taft.

Pundits often compare Alberta with the rest of Canada when explaining how well our education system is funded. But the comparison is flawed because critics erroneously compare provinces’ tax regimes. In Ontario, for example, school taxes are collected locally and do not turn up in government accounts. In Alberta, taxes are included in the provincial funding model. This difference gives the appearance that Alberta spends much more on education than does Ontario. However, once you consolidate the taxes, Alberta’s spending on education is comparable to that of other provinces (even provinces whose gross domestic product is considerably lower than Alberta’s).

Taft summed up his presentation by showing that Alberta’s disproportionately large wealth isn’t going to education or healthcare. And it isn’t being invested in the Heritage Fund or going to roads or other public infrastructure. The numbers for the years 1989 to 2009 speak for themselves—over that 20-year period, education funding increased by 2 per cent, healthcare and postsecondary spending each rose by about 28 per cent (or 1.2 percent per year) and corporate profits went up by 317 per cent.

As Taft writes, "Follow the money long enough and you will find where it’s going."