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Tegan Hill: Premier Smith’s ‘new fiscal framework’ requires constitutional change to make it last 

Commentary

In its recent budget, Danielle Smith’s government in Alberta introduced a “new fiscal framework.” While it’s a positive step forward, the framework is based in statutory law, which means the current and future governments can easily ignore, change, or eliminate it at any time. Put simply, the new framework will only work so long as governments choose to follow it. 

Specifically, the new framework mandates balanced budgets (except when there’s an unexpected disaster or sharp decline in revenue including oil and gas revenue). It also limits annual increases in operating spending to the rate of population growth and inflation, and set rules for the use of future surpluses—at least 50 percent of any surplus must go towards paying off debt with the remaining deposited in a new “Alberta Fund” to be used to either pay down debt, save in the Heritage Fund or spend on one-time initiatives.  

In the past, the province has experimented with similar statutory rules intended to impose fiscal discipline on governments. The rules worked well during good times but unfortunately were easily discarded when times got tough, precisely the times the rules were intended to help manage. 

Consider the Heritage Fund, first introduced by the Lougheed government in 1976/77. Originally, the government was required to deposit 30 percent of resource revenue annually. If followed, this 30 percent rule would have helped governments spend more sustainably and avoid large deficits. But the rule was based in statutory law, which meant the provincial government (specifically, the Alberta legislature) could unilaterally change the rule.

And it did. Following an oil price collapse in 1982/83, the government reduced contributions to 15 percent. Following a second oil price collapse in 1986/87, the government ended mandated resource revenue contributions entirely. As a result, today all resource revenue is typically included in the budget and continues to create volatility in provincial finances.

The Alberta Sustainability Fund (ASF) was another attempt to use statutory rules to help Alberta’s finances. Established in 2003, the fund was meant to “stabilize” a specific amount of resource revenue for the budget, which would limit the amount of money available for spending while saving any excess resource revenue during the good times to be used when resource revenue fell below the stabilized amount. The logic was simple—save during good times to provide a stable level of resource revenue during bad times.

However, following the 2008 financial crisis, consecutive provincial governments disregarded the rule, drained the fund entirely to support the budget, and the ASF was officially eliminated in 2013.

Both the Heritage Fund and ASF started with well-intentioned rules and had the potential to help stabilize Alberta’s finances (just like the Smith government’s new fiscal framework). But in both cases, the fiscal rules didn’t last because they were statutory and therefore easy for governments to change.

To ensure fiscal rules are robust over time, they should be constitutional, which makes them much harder to bend or break. And contrary to popular opinion, it’s possible to change Canada’s Constitution for province-specific measures. First, the Alberta government must conduct a referendum in the province—in this case, asking Albertans if they agree to the terms of the new fiscal framework. If the majority of Albertans vote in favour of the proposal, the Alberta government then must pass provincial legislation to recognize the new rules and present this legislation to the federal House of Commons and Senate for recognition, resulting in a change pertaining to Alberta in the national Constitution.

After that, if a future Alberta government wanted to reverse the rule or ignore its requirements, it would need to reverse each step in this process. Specifically, it would have to seek public approval through another referendum, pass provincial legislation, then ask the federal government to approve similar legislation. That’s a lot of work to undo rules meant to spare Albertans from more deficits and government debt.  

To truly secure long-term fiscal stability, Alberta needs more robust fiscal rules. By making fiscal rules constitutional, they can’t be easily ignored, disregarded, or eliminated in the future.

Jeremy Roberts: If you’re still groggy from losing an hour of sleep, hope may be on the horizon

Commentary

Alas, it has happened again.

Sigh.

The dreaded time change is upon us once again—the bane of parents, teenagers, and coffee addicts alike. 

At 2 am Sunday morning, the government snatched away one precious hour of sleep. Worse, when you woke up, you had to spend at least half an hour painstakingly updating every analog clock in your home, along with the microwave, oven, coffee machine, old digital clocks, and the car. 

It’s not the best way to start a relaxing Sunday.

In return for this inconvenience, we are rewarded with more daylight in the afternoon—the only saving grace of the bi-annual time change legislated in almost all provinces across Canada. “Spring Forward” brings with it Daylight Savings Time (DST).

Four-and-a-half months ago I wrote here about my crusade to end the time change in Ontario. To those who might have missed it, during my time as a member of provincial parliament I tabled a private member’s bill that would move Ontario into permanent DST. If it were enacted today, it would mean that after the Spring Forward, we would stop the time change for good, leaving us with more daylight hours in the evening on a permanent basis.

The bill sailed through the legislature in a record 55 days, receiving all-party support. The catch: in order for the Bill to “come into force” we would need Quebec and New York State to follow suit.

While Quebec has expressed interest in the idea, New York State has always been the sticking point. Wrestling the Empire State into line is no easy feat.

However, I am ever the optimist and there remain some signs of good news.

In order for New York State to move to permanent DST, they require authorization from the federal government. The American Uniform Time Act currently mandates that states either follow the biannual time change OR move into permanent standard time.

Florida Senator Marco Rubio is trying to change that. In a bipartisan effort, he has introduced once again his Sunshine Protection Act, a Bill that would allow states to adopt permanent DST. The last iteration of the Bill passed through the Senate relatively unopposed before stalling in the House of Representatives. The hope of many is that this time, the House will take up the Bill for a vote.

A critical mass of support for this measure is building across the American States. So far, 19 states have passed legislation indicating that they would move to permanent DST if authorized, including Alabama, Colorado, Delaware, Florida, Georgia, Idaho, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Montana, Ohio, Oregon, South Carolina, Tennessee, Utah, Washington, and Wyoming. Meanwhile, California voters endorsed the move in a referendum. 

If the Sunshine Protection Act becomes law this year, it will be incumbent on Canadian provinces, like Ontario, to lobby their cross-border partners to move quickly. While bringing New York State on board is the key to unlocking Ontario’s legislation, having Michigan aligned as well would be beneficial. 

In the meantime, more Canadian provinces should move forward with passing provisional legislation, like my Bill in Ontario. In this way, we could send a strong, unified message to our trading partners south of the border that we are ready to make this change with them. There is nothing stopping Quebec, for example, from doing this. A lone intrepid member of the National Assembly could bring forward their own private member’s bill to do this.

The evidence is clear as to the harm that is caused by this bi-annual ritual of disrupting our circadian rhythms. And I have no doubt that legislators who take up this cause will be rewarded by happy parents everywhere, who will be dealing with groggy children for the next few weeks. 

So if you find yourself grumbling over this change in the coming days, look up your provincial representative and send them a note. Urge them to take up this cause and continue moving this forward.

All eyes are on the U.S. Congress. Let’s hope that this Spring Forward is the last one.