Remember when one of the hallmarks of Conservative governments was fiscal prudence, but today as the UCP wallows on the far right, that is no longer the case. Alberta has become a financial disaster, reminiscent of the Bob Rae NDP government in Ontario in the 1990s.
Premier Kenney’s decision to invest billions in the Keystone pipeline four months before the American presidential election, not after when the winner was known, burned through $1.3 billion dollars of Alberta taxpayer dollars with nothing to show for it.
As international institutional investors backed away from investing in oil and gas, the UCP government saw the Alberta Investment Management Company (AIMCo), the provincially owned investment arm, as the financial saviour of the oil patch.
Their first step was to get more assets into AIMCo which was quickly done by passing legislation to force three large public sector pension plans and the teacher’s pension plan into AIMCo.
In 2020 AIMCo reported $2.1 billion dollar investment losses after using a risky oil and gas investment strategy called VOLTS (volatility trading). A post-external review concluded that AIMCo’s investment decisions, risk controls, collaboration and risk culture within the organization were ‘unsatisfactory’. But the investment managers who made the decisions still received million-dollar plus compensation packages.
The UCP’s quick decision to off-load crude-by-rail contracts signed by the Notley government cost Alberta taxpayers $2.1 billion dollars. Most concerning, the details were never made public.
Three transactions in the first two years of the UCP’s reign and 5.5 billion dollars up in smoke. That’s not fiscal conservatism.
But there’s more.
In November 2020, Alberta’s Auditor General, Doug Wylie, revealed the Kenney government made a staggering $1.6-billion in accounting errors in its annual financial statements.
Soon after the UCP became government, AIMCo invested over $1.1 billion in conventional oil and gas and intermediate producers and oilfield services companies. Ironically, many of these same industry players were not paying their municipal tax bills or cleaning up expired oil well sites.
And we have yet to price the UCP’s decision to ‘open for summer’, but it will be hundreds of millions of dollars spent on avoidable health care costs, and multi-millions of dollars of lost economic opportunities.
The UCP has a beef against the media, so taxpayers spend $30 million annually on a propaganda ‘war room’. In its first year of operations, the Auditor General found that $1.3 million in external contracts from the war room were sole-sourced—a definite no-no in government.
The UCP has a beef against environmental groups so taxpayers spend $3.5 million to investigate wrongdoings only to find out there is no evidence of wrongdoings.
The move to a provincial police force comes with huge cost consequences. Aside from the estimated $366 million in transition costs, the report by PwC and paid for by Alberta taxpayers, conveniently forgot to factor in the 30 per cent contribution made annually by the federal government.
PwC said a provincial police force would cost $759 million annually, versus $783 million for the RCMP—an annual savings of $24M. But after the $170M transfer from the federal government, today’s RCMP costs are actually $613M annually or $146M less than a provincial police force.
For one of the top accounting firms in the nation, it’s surprising that PwC didn’t include the 30 per cent federal contribution when doing their cost comparison.
The UCP has been a very expensive experiment for Alberta. Kenney and his caucus love the show—referendums, inquiries, jiggered financial reviews, verbal fights with Ottawa, war rooms, drinking and carousing in government offices, but the cascade of ill-thought-out investments and di-vestments, is astounding and will severely hamper all our futures.
Brenda Schimke
ECA Review
