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What Would Ralph Do? Faced with plummeting oil prices, he taxed and spent

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Ralph Klein

What would Ralph do?

In a typically lame editorial over the weekend, the Edmonton Sun asked: "If Premier Ralph Klein were facing a $7-billion drop in revenues in the coming year, how would he handle it?"

Drawing inspiration from those evangelical Christians whose test for the rightness and righteousness of any action is asking, "What would Jesus do?" -- often abbreviated for bumper-sticker purposes to WWJD -- the Sun's editorial brain trust proposes a similar test for Alberta. To wit: "What would Ralph do?"

WWRD? With the process of deification of Klein now complete, the Sun asks: "Would he introduce a provincial sales tax? Would he get rid of our flat tax on personal income in favour of the left’s preferred 'progressive' tax?"

Since Klein has gone to his reward, although presumably not the Christian one seeing as he led us to believe he took his guidance from another tradition of spirituality, he is not around to tell us directly what he would have done. So the Sun, kindly, answers its own question for us, stating: "Klein's answers would be NO and NO."

But what would Klein have done, really?

Quite possibly not what the Sun suggests. Leastways, his record suggests otherwise if you actually pay attention to it.

When Klein was premier of Alberta, the economic situation he faced was different. It did not involve a precipitous (and most likely temporary) drop in the price fetched by petroleum products, budgeting and sustainability problems that all of Klein's Progressive Conservative successors except Dave Hancock have had to confront.

Yes, as the Sun acknowledges, Klein and his finance minister, Jim Dinning, slashed government spending in a serious way -- although, in truth, they often only transferred the payments citizens had to make from taxes for public services to higher fees paid to private corporations for the same essential work.

In addition, to achieve the political and ideological goals he had set for his government, Klein allowed the province's infrastructure to crumble -- resulting in both higher municipal taxes for Albertans as towns and cities coped with the mess, and eventually a bigger repair bill when the huge infrastructure deficit was finally partly addressed by his successor, Ed Stelmach. The latter was a true intergenerational transfer of liabilities.

What's more, actual program spending by the Alberta government had been flat for a decade before Klein's cuts, as insiders knew well at the time.

But that all happened after Klein had found a new parade and pushed his way to the front of it.

The one time Klein actually confronted a situation analogous to that now faced by Alberta Premier Jim Prentice, however, he did the opposite of what the Sun suggests he would do.

That would have been in 1982, when Klein was mayor of Calgary.

In the early 1980s, as is well known, oil prices dropped when a glut developed on world markets as a result of the energy crises of the 1970s. By 1986, two years before Klein left office in Calgary to pursue a career in provincial politics, oil prices had plunged below $10.

But the economic bust had really hit Alberta well before that, in 1982, Klein's second year as mayor. That was when too-rapid expansion of the Alberta oil patch and the worldwide recession hit the province hard. Legend in Alberta has it that Pierre Trudeau’s National Energy Program was the cause, but that is self-serving right-wing cant cooked up to serve ideology, not a reflection of what caused Alberta to stagger in the 1980s.

So what did Klein actually do, as Calgary mayor, in the face of this perfect economic storm?

Well, we know that under his leadership Calgary continued with construction of the LRT system megaproject that had opened its first line in 1981, pushing through to completion of the northeast line in 1985, even as oil prices reached their lowest ebb. The city borrowed heavily to build this necessary and valuable asset, a positive benefit in the recession then under way and positive legacy ever since.

And we know, of course, about the Winter Olympics, in 1988, which for many Calgarians was the high point of their city’s history. They were funded from a variety of governmental sources, naturally, but could not be called a low-cost endeavour.

The Olympics turned out to be an entirely sensible response to the economic slowdown inevitable an oil-producing region hit by low petroleum prices, and like the LRT, left a valuable legacy for Calgary.

Average property taxes in Alberta, by the way, held steady at about 5 per cent of income from the 1950s to 2000, a percentage and a half above what they were in 2014. Some of Calgary’s biggest property tax increases were posted during the 1980s, if the rather sketchy information that can be found on Google is to be believed.

In other words, the true answer to the question WWRD? -- if we go by what Ralph and his council did when confronted with the same kind of situation Prentice is dealing with today -- is that he would spend big and raise taxes.

There's plenty of evidence, by the way, that this was the right thing to do.

And WWJD? Well, that depends on whether you mean Jim or Jesus.

I can't answer for Jim, although his purchase of an expensive high-fuel-consumption antique sports car while on a government trip to the southwestern United States last week may suggest he's either persuaded oil prices really will stay low for a long time or, more likely, is a charter member of The 1%.

As for Jesus, though, that’s easier. He would have adopted a progressive income tax and explained to you it was good for your soul -- "and again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God."

But then, the guy was practically a socialist. If He lived today, He would almost certainly be a member of the Carpenters’ Union and therefore probably a supporter of the NDP. Plus, of course, he hung around with tax collectors.

This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

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