Tomb

There’s a tiny park in downtown Calgary that is a stark reminder of everything that went wrong in Alberta after the boom of the 1980s, and seems to be happening all over again.

The park is right next to the Bank of Montreal’s 41-storey office tower. It was supposed to be the site of a second tower that was cancelled when the bank realized the boom was over, and it wouldn’t need all those offices in Western Canada after all.

Twenty years later, the price of oil and gas has nosedived again and major projects are about to be cancelled or capped. Developers of what is slated to be the tallest building in Western Canada declared recently that they need $1.1 billion to keep the project going. There is already a one-square-block hole in the ground and a forest of girders and cranes on site in the heart of downtown, but the future home of Encana Corporation is desperately trying to arrange construction financing in a tight credit market.

Building permits on five other large projects are set to expire because of inactivity. In some cases, the city has had to seal empty construction pits because the developers have pulled the plug.

You would think that in a city, and a province, that has experienced more than a few booms and busts over the past 80 years, some sort of common sense would have evolved about how to thrive over the long-term in such an economy.

However, it seems both the private sector and the government are easily blinded by their wishful thinking: they keep telling themselves and everyone else this boom will last forever, the money will keep rolling in. It never does. In the same week that the city’s largest construction project was revealed to be in trouble, the finance minister and the premier announced more bad news. The provincial treasury’s projected surplus for 2008-09 dwindled from $8.5 billion to $2 billion because of declining oil and gas prices and will likely dwindle even further. Plans for new roads, schools and hospitals are now on hold.

Premier Ed Stelmach also revealed that he is deferring a new royalty regime, which was to have added over $1.4 billion a year to provincial coffers, because it’s simply the wrong time to increase taxes and risk a further slowdown of the petroleum industry. No doubt, he wishes Ralph Klein had increased royalties years ago when the industry was awash in profits.

With the price of oil so low and unstable — a minute a go it was $53 a barrel, who knows what it will be by the time this column is published — the provincial government will have to figure out how to manage without all those billion-dollar surpluses.

Steady Eddie is already talking about balancing the next budget so spending doesn’t overtake revenue, something an Alberta government hasn’t had to worry about for over 10 years. How long will it be before he starts talking about deficits? And how long before he starts cutting into health care, education, social services, seniors programs, children’s protection services and the environment?

We’ve been playing catch-up in these fields ever since Klein’s disastrous cuts of the 1990s. If you’ve visited a hospital emergency department lately it’s clear we still have a long way to go. When the oilpatch layoffs begin, as they surely will, likely in early 2009, more people will want to go to school to upgrade their skills or start a new career. However, our universities, colleges and technical schools are already overloaded because the Conservatives have been so short-sighted about post-secondary education.

The Conservatives did manage to pay off the provincial debt. Actually, we all paid it off with our taxes, by paying fees imposed for necessary services of all kinds and by bearing the burden of reduced or tattered infrastructure and social programs. Now our government will easily be able to borrow money again if it has to go into deficit. In other words, we’re almost back where we started.

If the provincial government had prepared for the bust while the boom was ongoing by saving some of its billions of dollars in bounty, we would be much further ahead. It didn’t. Instead, it spent billions on infrastructure when the cost of labour and materials was skyrocketing; at one point, it issued $400 cheques to every man, woman and child in Alberta, a $1.4 billion giveaway; and it kept oil royalties low for much too long.

Alberta still has the Heritage Savings Trust Fund established by former premier Peter Lougheed, but it is only worth $15.8 billion. Norway, by contrast, has managed to squirrel away $350 billion since 1991.

Stephen Harper’s federal Conservatives have also managed to whittle away billion-dollar surpluses. Perhaps they also thought the boom would last forever. Or perhaps all those Alberta Conservatives simply forgot about that famous bumper sticker from the 1980s which read: “Please God, let there be another oil boom. I promise not to piss it away this time.”