Let's face it - Alberta has a problem, a revenue problem

It's time for a grown-up conversation about how to fix the province's broken revenue system

EDMONTON, June 28 /CNW/ - The Alberta government's revenue model is broken and the time has come to talk about how to fix it, says Alberta Federation of Labour (AFL) president Gil McGowan. Yes, that means we need to talk about taxes.

"Nationally and internationally, politicians, economists and commentators recognize that governments must pay for services and avoid deficits not only by cutting spending, but by increasing revenue," says McGowan.

"Here in Alberta, all we hear are shrill, kneejerk calls for more and more tax cuts, without any acknowledgement of what that will mean for vital public services, including our hospitals, nursing homes, schools and universities."

In a report released today, the AFL says Albertans have made it clear time and time again that they want good public services and programs. Education and health care are their priorities, while tax cuts are low on their list of desires.

The report - Which Way Will We Pay? It's time for a grown-up conversation about Alberta's revenue problem and how we fund vital public services - shatters the myth that Alberta spending on services is out of control.

"Spending on public services as a percentage of GDP stands at about 12 per cent, down dramatically since the early 1990s, when we spent over 20 per cent of GDP. No other province spends a smaller proportion of its GDP on public services than Alberta - indeed the average for other provinces remains in the 22-per-cent range," says McGowan.

The result is that, despite being Canada's wealthiest jurisdiction, Alberta has mediocre or sub-standard services. Even those service levels are at risk because our revenue is both inadequate and volatile, due to an over-reliance on fluctuating income from the oilpatch.

That problem can be easily and quickly addressed by reforming our revenue system, says McGowan. For example, Alberta's flat-tax structure on income taxes is costing about $5.5 billion per year. Making Alberta's overall tax system comparable with other provinces could bring in an extra $10 billion to $18 billion per year.

"From this evidence, it's clear that Alberta's doesn't have a spending problem, it has a revenue problem," says McGowan. "As Canada's wealthiest province, we shouldn't be cutting services and sacrificing our future. We can afford to do better. The so-called spending crisis is really a result of bad political choices."

In order to kick-start a provincial conversation on government revenue, the AFL today invited three leading Canadian economists to a public panel discussion at The Fairmont Palliser hotel in Calgary.

Roger Gibbins, president and CEO of the Canada West Foundation; Todd Hirsch, senior economist with ATB Financial; and Erin Weir, an economist with the United Steelworkers union's Canadian national office joined McGowan to discuss how Alberta can generate the revenue it needs to pay for public services and avoid deficits.

A copy of the report Which Way Will We Pay? It's time for a grown-up conversation about Alberta's revenue problem and how we fund vital public services is available for download at www.afl.org

For further information: Media Contacts: Gil McGowan, President, Alberta Federation of Labour, 780-218-9888; Dr. Roger Gibbins, President and CEO, Canada West Foundation, 403-264-9535; Todd Hirsch, Senior Economist, ATB Financial, 403-815-2277; Erin Weir, United Steelworkers, 416-544-6005