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Taxpayers have a right to know where their tax dollars are spent. While the province is now a leader in Canada on expense disclosure for politicians and senior staff, Alberta lags far behind many other provinces in another area.

Alberta is one of the only provinces in Canada without a “sunshine list” of government employees. A “sunshine list” provides taxpayers with a breakdown of the salaries, benefits and pensions of government employees over a certain income level.

This plays a vital accountability role in British Columbia, Saskatchewan, Manitoba, Ontario and Nova Scotia.

There are currently more than 29,000 full-time bureaucrats in the core public service (excluding the education and health care systems) making $3 billion in wages, salaries and benefits. This means that the average bureaucrat in Alberta costs taxpayers $102,000 a year.

Ontario’s sunshine list law requires the public disclosure of the names and salaries of those government employees who earn over $100,000.

While knowing that the average bureaucrat in Alberta costs taxpayers a whopping $102,000 per year might make for an interesting fact, it does little in the way of accountability.

A year ago, an Albertan wanting to know how much his or her MLA currently made had to rely on calculations by the Canadian Taxpayers Federation and the media, based on a complicated pay grid. To their credit, the government has since then made significant improvements in transparency surrounding MLA pay.

Yet, the vast majority of the bureaucracy remains a black hole of transparency. Albertans have no way of knowing what the tens of thousands of government employees are making.

In Ontario for example, the sunshine list showed a Toronto Police cadet earning more than $100,000 – while in training. Several Toronto Transit Commission (TTC) toll booth attendees made this list, as did more than 1,400 TTC employees. No offense to bus drivers, but that’s a lot.

The list also showed many government employees making more than $500,000 and two government employees making more than $1 million annually.

Thanks to its sunshine list, British Columbians know that former BC Ferries CEO David Hahn made more than $1 million in addition to his pension. Hahn is generally considered as having been a disaster for BC Ferries, taking it from a $50 million annual surplus, to a $20 million deficit.

More importantly, sunshine lists also allow taxpayers to track general trends in government employee compensation. In Ontario for example, the number of employees making more than $100,000 a year increased to 88,412, or 11 per cent in just the past year. Since 2009, the list has grown by 39 per cent. This might strike some as a sure sign that upper management and toll-booth attendants might be getting a little too numerous.

On the other side of the coin, BC’s sunshine list showed that places like the City of Penticton were getting payroll costs under control.

For better, and for worse, a similar weathervane is badly needed in Alberta. With payroll costs making up a significant portion of government spending, we can’t continue to keep information on the highest paid in the dark. It’s time to let the sun shine in.

The following OpEd was published in the Calgary Sun and Edmonton Sun

The Alberta government is seriously considering a none-too-sober pitch to raise beer taxes. Specifically, the proposal is to raise taxes on beer brewed outside of Alberta by small and medium sized brewers.

This would have the effect of not only raising the price of beer, but reducing the enviable selection available to Alberta consumers.

Beyond the GST and business taxes paid by breweries, suds sold in Alberta are slapped with an additional federal beer mark-up (tax) of 11.1 cents per can, and a provincial beer mark-up (tax) of 34.8 cents per can. In other words, most cans of beer sold in Alberta have an extra 45.9 cents of tax added on, which works out to $5.50 of tax on a 12-pack of beer, plus the GST.

However, breweries that have smaller worldwide production levels are eligible for small-brewer tax rates. These rates work out to between 8.9 cents and 23.9 cents per can, or between $1.07 and $2.87 in beer tax on a 12-pack. These rates work out to between 8.2 cents and 23.6 cents per can, or between $0.98 and $2.83 in beer tax on a 12-pack.

Eleven of Alberta’s small and micro-brewers along with the three major Canadian (although now mostly foreign-owned) breweries, are trying to convince the government to eliminate the small brewer tax rate for those small and medium sized breweries who don’t brew their beer in Alberta.

Considering there are 136 small and medium sized breweries from around the world that sell their products in Alberta, the change could be significant.

For some reason, the big and very small brewers have set their target on Minhaus brewery, a Calgary-owned company that brews most of their value-priced beer in Wisconsin. However, if this change is approved by the province, beers like Steam Whistle pilsner, Mill Street’s organic lager (both brewed in Ontario), or Scotland’s Innis & Gunn, along with hundreds and hundreds of other beers brewed all over Canada and the world, would see their prices jump by between $2.47 and $3.32 per case.

Being interviewed on CTV’s Alberta Primetime a few weeks ago, Kevin Wood, owner of Red Deer’s Drummond Brewing (one of the small 11 requesting the tax hike) said, “The current mark-up [tax] is competitive, but it is competitive for everybody.” He said it as though that were a bad thing.

Mr. Wood went on to explain how liquor stores in Saskatchewan, all of which are owned and run by the government, won’t stock his beer in their stores. This is unfortunate for both Drummond Brewery and for the residents of Saskatchewan.

Thanks to liquor privatization in Alberta in the early 90s, Albertans now enjoy more selection of different beer, wine and liquor products than any other jurisdiction in Canada. This is a good thing.

However, following Saskatchewan’s protectionist practice of freezing out craft beer from elsewhere in Canada and the world, would be foolish.

Both the players trying to elbow their competition out of the market place and Deputy Premier Lukaszuk, have called the small brewer tax rate a “subsidy” for out of province breweries. This couldn’t be further from the truth.

This lower beer tax rate is much like the Alberta small business tax rate, ensuring that mom-and-pop shops don’t pay the full corporate tax rate.

The beer tax is an industry specific tax that few other industries have levied against them. If some in Alberta’s brewing industry feel that they are not competitive enough, the answer isn’t to raise taxes on their competitors – it’s to lower taxes on all brewers, equally.

One move might be to follow the federal government’s lead and create additional lower tax rates for brewpubs and very small local brewers. The federal government’s first tax rate doesn’t come into effect until the brewer produces 71,000 cases of beer in a year, in Alberta it’s ten times as high. Alternatively, if the top tax rate is too high for the big brewers to compete with smaller value-brands, lower the top rate.

During the Alberta Primetime interview, Jim Pettinger of the Alberta Small Brewers Association, lamented that “Alberta has made it extraordinarily easy to sell beer in this province.”

We’ll drink to that.

Back in 1991, Provincial Treasurer Dick Johnston declared to the world: “The 1991 budget delivers on all our commitments to Albertans. Mr. Speaker, this is a balanced budget.”

Unfortunately it wasn’t true. The truth was that the Alberta government had fudged the numbers in the provincial budget and ended up running a $2.6 billion deficit – the second largest under Don Getty’s watch.

This game of jiggery-pokery wasn’t appreciated by Albertans and they rightfully demanded the government open up their books and tell Albertans on a regular basis what was going on with the provincial budget.

This did not fall on deaf ears. When Ralph Klein took over as premier in 1992, one of his tasks to his new provincial treasurer, Jim Dinning, was to restore confidence in Alberta’s books.

From that, first Bill 67 was passed in 1992 and Bill 40, the Government Accountability Act, was passed in 1995. The former required the government to update Albertans every quarter as to how the provincial budget was faring, the latter enshrined in law what information government had to include in provincial budgets and annual reports.

The Government Accountability Act was landmark legislation that codified a high standard of transparency and accountability in the provincial budget making process. In fact, former treasurer Jim Dinning declared in 1995 that the support he had received from his fellow MLAs as he pitched the Government Accountability Act “was one of the highlights of my career in public service.

And while the two acts were eventually merged, the nuts and bolts remained intact for the past 18 years.

That was until Finance Minister Doug Horner introduced Bill 12.

Bill 12 will repeal the Fiscal Responsibility Act and Government Accountability Act, replacing them with the Financial Management Act.

Repealing the Fiscal Responsibility Act will legalize deficits. The government has been amending that legislation nearly every year to allow them to run deficits, so it’s already not worth the paper it’s printed on. However, repealing the Government Accountability Act and replacing it with significantly watered-down legislation will allow the government to keep vital information from Albertans.

Specifically, once Bill 12 is passed it will mean that the government won’t have to provide Albertans with provincial revenue sources by category, expenses by ministry, a breakdown of liabilities and assets, borrowing (debt) requirements, and the details of capital spending by ministry.

In place of specific items that currently must be included in the government’s consolidated fiscal plan, Bill 12 only requires that there be revenues and expenditures for “an operational plan, a savings plan, a capital plan,” and a list of the major economic assumptions.

In theory, the government could present its entire budget on the back of a napkin.

To be fair, it’s highly doubtful that the government would take their highly detailed budgets and replace them with a single sheet of parchment, but might they remove information they find embarrassing if it’s no longer required by law?

That’s precisely what Finance Minister Doug Horner has done since last August when it comes to the quarterly budget updates – in violation of the current law.

Horner removed the provincial balance sheet (showing assets and liabilities) and grouped all revenues and expenditures into larger, less-specific categories when he tabled the first quarter budget update last August.

Bill 12 also amends the quarterly budget update requirements to no longer require the government provide information on the accuracy of the budget, but rather short three-month snapshots.

In a twisted way, it’s a bit satisfying to see minister Horner confirm the Canadian Taxpayers Federation’s claim that he was in violation of the law by amending it to meet his current practices.

Premier Redford and Finance Minister Doug Horner need to understand that Albertans have a healthy, natural suspicion of politicians. When those politicians water-down accountability laws in order to hide information, they shouldn’t be surprised if that suspicion turns into derision.

Or perhaps it was best said by former treasurer Jim Dinning on May 11, 1995 as he was moving third reading of the Government Accountability Act: “I’m proud that my colleagues have been willing to set the standard and set a high one such that no matter who may come behind us, they will not be able to water the standard down without looking at the whites of the eyes of Albertans and saying, “We’re going to deliver to you substandard government.””

If Bill 12 passes, Mr. Dinning will be correct. Substandard indeed.

Co-authored by CTF Alberta Director Derek Fildebandt and National Communications Vice-President Scott Hennig

The following OpEd was published in the Calgary Herald

In 2013-14, the Alberta government is will run a projected $5.1 billion deficit.

To be fair, you might have heard a different number. In fact, you might have heard many, many different numbers assigned as the Alberta government deficit this next year.

When the government released its budget last week it significantly changed the way it has previously been presented. The government went from one budget and one deficit number, to three budgets and a pile of different numbers representing deficits, borrowing and “adjustments.”

The result was stakeholder groups, media and opposition MLAs collectively scratching their heads at the strange set of numbers presented.

The next morning the Globe and Mail projected the deficit was $1.9 billion. The Wildrose projected $6.3 billion. The Edmonton Journal and Calgary Sun claimed a $1.97 billion deficit, $4.3 billion in borrowing and a $2.1 billion withdrawal from the Sustainability Fund. The confusion is understandable with everyone having to do the math backwards and try to rebuild the budget based on earlier years.

With the dust settling, it’s time to unmake the budget sausage and explain why the Canadian Taxpayers Federation believes the deficit is $5.1 billion.

Now bear with us, budgets are never sexy, but understanding this budget is critical to the future of Alberta.

The ‘operating deficit’ in 2013-14 will be at least $451 million. That is a cash shortfall for the day-to-day expenses of the government for things like salaries, running MRI machines and buying paperclips. This is the figure that Finance Minister Doug Horner wants Albertans think about.

Yet, while the government spends $38.6 billion on operations, there is still another $5.2 billion spent on the Capital Plan, which has been rolled into separate budget entirely.

The Capital Plan will now be funded almost entirely by debt (88 per cent), in one form or another. The reason that Minister Horner claims that the Capital Plan is not a part of the deficit, is because he essentially considers ‘borrowed money’ to be ‘revenue.’ If you don’t consider money borrowed on your credit card to be the same as money earned from your job, then you don’t agree with Doug Horner.

To understand how much of the Capital Plan is borrowed, one has to peel out several line items that are already counted in the Operational Plan. This includes things like federal transfers for capital funding and self-generated income from arms-length agencies. This leaves the Capital Plan with a funding shortfall of $4.6 billion. This is money that will come from traditional debt and public-private partnerships.

The funding shortfalls for the Capital and Operational plans taken together produce a ‘consolidated deficit’ of $5.1 billion. This is the number that Alberta’s government is going to such great lengths to hide from Albertans.

The CTF’s calculation of the real, consolidated deficit excludes one area of the operational budget that some calculations have included – “cash adjustments.” There’s good reason for this, but one can only go so far when showing how the sausage is made before starting to turn stomachs.

Both sides of the political divide in Alberta have an interest in truthful budgetary reporting. If Albertans and the media buy the government’s budgetary pabulum that excludes the entire Capital Plan from the balance sheet, then the government will have political cover to claim that they have a balanced budget, while they truthfully borrow billions. This is a problem for both those who want government to control spending and those who want to increases taxes.

Taxation and spending levels are a fair debate that we should welcome, but how large Alberta’s deficit truly is, should not be up for debate.

In February, Premier Alison Redford invited the CTF to participate in her Economic Summit. Below is a video of my opening remarks.

The following OpEd was published in the Calgary Herald and Edmonton Journal

With the province’s budget about to come down in early March, it’s time to read the entrails of what Albertans can expect this year, and next. Since it became apparent in September that the government’s election commitments were worth as much as Nortel stock, the Tories have dropped many hints and have been busily spinning away at public opinion. Combined with the hard numbers, the government’s hints allow at least some prediction of what to expect.

For all the bleating from the government about its invented ‘revenue problem,’ public opinion will likely keep real tax hikes at bay, this time. Premier Redford made clear during the election that she would balance the budget by the end of 2013 without raising taxes. She is already likely to break this balanced budget commitment. Breaking her no-new-taxes pledge would require a titanic spin effort in order to convince Albertans of its necessity.

And that is where things become interesting.

If the government is ultimately intent on raising taxes, it will have to at least feign austerity first. Without at least pretending to cut the fat, few in the public would buy into a plan to raise taxes.

For this, expect short-term, modest spending restraint, but no cuts. A few examples shed light on the government’s mood. MLAs have already agreed to a pay freeze. And Finance Minister Doug Horner has announced bureaucratic managers will see a 10 per cent reduction in numbers over three years. This is easily attainable through modest attrition. This comes at a time when the average bureaucrat is costing taxpayers $102,000 a year in wages and benefits alone.

After increasing spending by 25 per cent over the last decade (after accounting for inflation and population growth), spending is still expected to increase in 2013, albeit at a slower pace. There has been precious little noise coming from the government in the way of an actual spending cut.

Shirking its promise to balance the budget, the government has weaseled its way into only balancing the ‘operating budget,’ that is, the day-to-day expenses of the government, and not including their infrastructure spending. The Canadian Taxpayers Federation (CTF) calculates that even this incredibly modest goal post might not be met, as the government could run an operating deficit $270 million or more. The government has said until it’s blue in the face that this will not happen however, making the prospect of actually doing so quite embarrassing. To avoid this, the government may shift some money off of the operating books and onto the capital books. The only thing that would change is politics.

This of course won’t change the real deficit. The CTF estimates that the cash deficit (which includes borrowing) could be somewhere between $5 and $5.5 billion this upcoming year.

The Sustainability Fund will most certainly be entirely depleted between this budget and next. Finance Minister Doug Horner has denied this, meaning that he has only one option: finance the government’s operations with debt. Once that debt exceeds the cash left in the Sustainability Fund, the result will be the same as the Sustainability Fund running dry.

By this time next year, Alberta will be a debtor province again.

To put one’s tinfoil hat on, this may be to set the table for tax hikes in 2014. No government in Alberta (that doesn’t have a political death wish) would raise taxes without carefully tilling the ground in advance. After feigning spending austerity in this budget, the government may feel it has social license to go cap in hand to taxpayers next year.

Without actual spending cuts in 2013, it will be easy to predict that there will be tax hikes in 2014.