MLA Column: Left- and right-wing fiscal policies: How they affect jobs and the economy

The idea of a politician or political party being right-wing or left-wing dates back to France in the 1700s. Back then, members of the Assembly who supported the monarchy sat together on one side of the chamber. Members who opposed the monarchy sat on the other. As a result, when anyone said that a certain politician was “on the right” or “on the left,” it meant something to the listener.

This right-wing/left-wing idea still exists. Yet instead of telling us what a politician might think about the monarchy, it tells people what a politician’s general emphasis and priorities will be on key issues. For example, when it comes to the fiscal issues, most people agree that being “on the left” generally means that a person or party is prone to want larger government and higher spending, with the associated increase in taxes. Fiscal conservatives are usually said to be “on the right.” Even so, let’s keep in mind that like most things in life, there are always exceptions.

One of the biggest exceptions to the left-wing stereotype was the New Zealand (NZ) Labour government that some people say was one of the most fiscally conservative governments any country has seen in the past thirty-five years.

The New Zealanders who led that country’s Labour government in the 1980s publicly claimed to be left-wing, and even socialist, yet they set new standards for the world when it came to reducing the size and cost of government—far beyond anything Ralph Klein did in Alberta. In addition to slashing spending, they privatized whole departments and agencies of government, terminating thousands of employees and otherwise tipping public sector jobs into the private sector. Income tax rates were cut in half in favour of a GST. The agencies and departments of government surviving the purge were forced to run as competition-oriented bottom-line business enterprises.

In time, then-Finance Minister Sir Roger Douglas became much more than a budget balancer. Douglas also studied how different government fiscal policies affected the ability of people and business to create new wealth. He acknowledged that even the wealth government’s collect in royalties has to be created before it can be taxed.
Here in Alberta, this means that a private business must invest its own money, drill an oil well, build a mine, or harvest timber, before the government can collect royalties. Royalty revenue hinges upon private investment and commercial transactions.

High taxes scoop up dollars, hindering the ability that people and businesses have to invest. Government deficits do the same, chewing away at a province’s economic health. For example, Ontario has rung up so much debt that it’s now spending $11-$12 billion per year on interest. (God help them when interest rates rise.) That’s more money than every Albertan combined paid in personal income taxes during 2014-15—money for which Ontario taxpayers get absolutely nothing.

In Alberta, for over ten years, the size of government and public spending has been increasing far beyond the rate of inflation and population growth combined. This unsustainable spending was largely masked by record revenues due to the commodity bull markets we enjoyed. The commodity bull has now left the barn and has taken all the extra cash with him. Alberta’s spending problem is now fully exposed.

Some members of NZ’s 1980s Labour government openly admitted that their party turned itself into what some saw as a juggernaut for right-wing fiscal ideas. Yet they also drew attention to the fact that (at the time) the New Zealand government was broke. Finance Minister Douglas indicated that when anybody is unable to borrow and unable to pay the bills, there is no choice but to become a fiscal conservative.

In fact, when the money runs out, we all become conservative.

Alberta still has a window of opportunity to remain solvent if we are able to reign in this excessive growth and spending.

Glenn van Dijken, MLA
Barrhead-Morinville-Westlock Constituency

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