Just over nine years ago, in early 2001, six Albertans signed a now-famous letter to then-Premier Ralph Klein. The authors included Stephen Harper and Ted Morton, both of whom went on to political offices of some distinction. The Alberta Agenda, or “firewall” letter as it became known, recommended five major initiatives. They were borne out of frustration with the 2000 election campaign after federal Liberals used Alberta as the “whipping boy,” especially on health care.
As with any move that results from momentary passion, the initial firewall advice looked less desirable with the morning light. But even nine years later, many people still assert the proposals are desirable. The most recent example is how the Wildrose Alliance platform contains two firewall ideas: Alberta should collect her own provincial personal income tax and withdraw from the Canada Pension Plan (to set up an Alberta variety).
Three other firewall suggestions were to replace the RCMP with a provincial police force, take policy responsibility for health care (including foregoing federal funding if necessary), and force Senate reform back on to the national agenda.
There were problems with at least three of the five ideas right from the start. For example, while Senate reform is desirable in theory, the trend to elected Senators might have some undesirable consequences. Imagine an unchanged but elected Senate where four Atlantic provinces with 2.3 million people have more elected Senators (30) than do four Western provinces with 10.5 million people (24). I have no magic bullet on Senate reform, but abolishing it rather than reinforcing the existing disparity with elections seems preferable.
On provincial personal income tax collection, thecost of creating a new bureaucracy to collect, process, hear appeals, deal with inquiries and audit tax forms has never been estimated by its proponents. When I looked into this several years ago, Alberta paid just $20,000 to Ottawa to have the federal government process provincial forms. When, in 2004, the Alberta government estimated the annual cost of duplicating what the federal government already does, the additional annual cost ranged between $71 million with 1,000 new staff (using Quebec’s administrative costs as a model) or $160 million and 2,000 new staff (using federal costs as a baseline).
Albertans file almost 1.9 million returns every year. The notion these filers will happily fill out not just a few additional provincial pages as they do now, but an entire, additional duplicate set of provincial forms for every federal piece of paper they now touch, and then deal with two bureaucracies on questions, appeals, differing notions of taxable income and the like, is fanciful.
As for the RCMP, the Solicitor’s General Office informs me Alberta pays $184 million for the RCMP, or 70 per cent of the cost. That means Ottawa’s bill is $78 million. There may be other reasons to move to a provincial police force, but on cost at least, the firewall folk have not yet made a convincing case.
On pensions, firewall proponents argued that because Alberta’s population is on average younger than the rest of the country the province could withdraw from the CPP and have lower contribution rates but similar benefits. Perhaps. But rare is the politician who, when given a discount on the cost of a program will lower taxes/pension contributions. It’s more likely vote-getting benefits will be increased. This is especially true when the cohort to soon gain from topped-up benefits–retirees or near retirees—vote in much greater numbers than do younger people.
The firewall crew’s strongest point was on resuming policy control over health care. This makes sense. However, in the present deficit environment and on the related point of foregoing federal cash if necessary, Alberta would not forego $2 billion just to get creative on health care policy. However, in the medium-term, Alberta and every province should seek to end federal transfers in exchange for tax points. That would result in flexible, innovative provincial policy.
In general, one major complaint that animated the Alberta Agenda was that Alberta is massively short-changed in Confederation due to federal transfer programs. I agree. So why, until tax points are given up by Ottawa to such a degree that the disparity is greatly reduced, should Alberta take on the few bills Ottawa does pay—the cost of income tax collection and partial contributions to policing and health care? That would only increase the disparity.
In addition to the lack of defensible number-crunching (save perhaps on pensions), the original Alberta Agenda cited Quebec as an example to follow in four out of the five issues. That too would be a mistake. Instead, Alberta and the rest of the Western provinces should come up with a more realistic agenda, one which better positions the West and heightens her influence in Confederation. More on that newer and more desirable agenda next week.