They’re running six-to-one right now. That is, six credit downgrades under the NDP, and one under the Tories. Tuesday evening, Moody’s bloodied the UCP fiscal record by lowering Alberta’s rating from AA2, to AA3..Predictably, the NDP blame it entirely on the Tories..Predictably, the Tories blame it entirely on the NDP..“The $4.7 billion corporate giveaway has created no jobs to date, and this government’s corruption and pro-separatist rhetoric has chased away investors,” was the line fired off by NDP Finance Critic Shannon Philips..That the Tories have cut corporate taxes and have fired the Elections Commissioner isn’t in question, but it’s news to this columnist that the UCP now supports Western independence..Still, the NDP can make a case that the corporate tax reductions will hurt the government’s bottom line, but it isn’t on entirely solid grounds in any case. Reducing taxes on businesses is probably the strongest ace in the hole Alberta has for attracting investment right now; but in the NDP world where businesses operate entirely without regard to the tax or regulatory environment, this makes sense..On the other side, UCP Finance Minister Travis Toews predictably laid the entire thing at the feet of the NDP..“This decision shows how previous governments’ fiscal mismanagement and inability to gain market access for Alberta’s energy continues to affect our province.”.He has a stronger case to make – the NDP drove the provincial finances into the ground – but it isn’t complete. The UCP government does have to take some responsibility; if not for the hole left by the NDP, then for the tepid pace at which they are trying to dig out of it..At his party’s annual convention in Calgary over the weekend, Premier Jason Kenney went to pains to emphasize that his government is only shaving a paltry 2.8 per cent from the budget, in contrast to Ralph Klein who lobed off in excess of 20 per cent. It is a strong argument in the face of government union bosses like Alberta Federation of Labour president Gill McGowan suggesting that assaulting female political opponents is acceptable because of the spending haircut..After a full decade of deficits – run by premiers Stelmach, Redford, Prentice and Notley – fuelled by spending far in excess of Alberta’s ability to pay, few outside of the NDP and their affiliated unions think that balancing the budget shouldn’t be a priority. But the UCP’s approach is overly timid and balanced on a knife’s edge..Both the UCP platform and first budget were predicated on a significant economic rebound to power revenue growth to match spending that was effectively frozen for four years. This was always going to be a gamble. While government can influence economic growth (downwards easier than upwards), spending is entirely within its purview.. Trudeau on WE scandal: Case closed .Clearly, Moody’s does not believe that economic growth will match spending on the timeline presented by the government..The Tories have three options before them now: do nothing, do as the NDP recommend, or get serious about spending cuts..Kenney himself admits that the 2.8 per cent reduction in Alberta’s massive budget – after a decade of deficits – is just a drop in the bucket. The premier should recommit himself to the seriousness of deficit elimination that possessed him as the former president of the Canadian Taxpayers Federation, and as a candidate for the UCP leadership..Failure to do so will likely lead to more credit downgrades to come.
