Which One Doesn’t Belong? Lougheed, Klein, Notley, Kenney

Paul Stanway
December 24, 2018
One of the sillier narratives competing for traction in the Alberta election is that Rachel Notley and Jason Kenney are modern incarnations of, respectively, Peter Lougheed and Ralph Klein. This ignores the fact that Alberta boomed under Lougheed and has been a bust under Notley, and that Kenney is a philosophical conservative while Klein was flexible populist. Paul Stanway sorted much of this out in his review of Mark Milke’s timely book Ralph vs Rachel.

Which One Doesn’t Belong? Lougheed, Klein, Notley, Kenney

Paul Stanway
December 24, 2018
One of the sillier narratives competing for traction in the Alberta election is that Rachel Notley and Jason Kenney are modern incarnations of, respectively, Peter Lougheed and Ralph Klein. This ignores the fact that Alberta boomed under Lougheed and has been a bust under Notley, and that Kenney is a philosophical conservative while Klein was flexible populist. Paul Stanway sorted much of this out in his review of Mark Milke’s timely book Ralph vs Rachel.
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“Have we seen this movie before? Well, it’s a horror movie and we don’t want to see it again. The movie is called Ralph Klein: The Sequel.”

– Brian Mason, former Alberta NDP leader and current cabinet minister, Edmonton, October 2018

Ralph Klein and Rachel Notley obviously never faced off directly against each other as leaders of their respective parties, but as Albertans head towards an election that will offer voters sharply different approaches to managing the province, it’s already clear the NDP will make an issue of Klein’s legacy – characterizing it as a horror movie for working Albertans. But is that true? A new book by public-policy analyst Mark Milke explores the reality of Ralph vs. Rachel by focusing on the actual outcomes of Klein’s and Notley’s policies.

Public opinion polling suggests Jason Kenney’s United Conservative Party has lived up to its name by re-uniting conservative-minded Albertans under one banner. But that doesn’t mean the NDP’s done. Polls also continue to identify clear areas of strength for Notley’s party: her home base of Edmonton, public sector and unionized workers, voters with post-graduate education and, most of all, Albertans who assume a UCP government will be bad news for health care, education and social programs. These voters share a belief that conservative government – whatever the brand – means hard times for working people, the sick, the young, the marginalized. For Albertans inclined to this view, such notorious public-policy barbarism is personified in Ralph Klein.

It doesn’t take a post-graduate education to conclude the NDP’s primary campaign message will be that electing Kenney and the UCP means a return to the “bad old days” of the Klein era or, as Premier Notley put it herself last year, “The 1990s are calling and they want their ridiculous ideas back!”

It’s more than a quarter century since Ralph Klein won his first election campaigning on those “ridiculous ideas”: deficit reduction, spending discipline, transparent public finances, lower taxes, deregulation and privatization. For a few years, it seemed the argument had been conclusively won. Yet a younger generation with little or no memory of Ralph, raised in an era of seemingly eternal low interest rates and profligate spending by governments wedded to the notion that budgets balance themselves, may need something to help sort fact from fiction.

Milke’s new book – Ralph vs. Rachel: A tale of two Alberta premiers – could be just the ticket. It chronicles the policies of left and right in Alberta and could help cut through the rhetoric and obfuscation that invariably plague election campaigns. Although of primary interest to Albertans, it could also be instructive for politicians, parties and concerned voters in other provinces as a primer on how to make fiscal austerity a political winner.

Rachel Notley is a canny politician and (like her father and NDP political mentor Grant, whom I knew reasonably well) is widely regarded as a warm and empathetic person who genuinely cares about Albertans. Milke readily acknowledges this and wisely eschews character assassination, focusing his criticism instead on what Notley and her party believe, particularly about the economy and fiscal policy.

If voters want to determine which of the two major parties is better equipped to restore the province’s economic and fiscal health, they need some facts beyond the Ralph bad, Rachel good argument offered by the NDP. Milke provides help by examining, in detail, actual outcomes.

I have a feeling Klein himself would have appreciated this approach. The late premier’s policies and charisma transformed him into an icon for Alberta’s right, but he was one of the least ideological politicians imaginable. As a longtime journalist, including editor of the Edmonton Sun for many years, I encountered Klein numerous times. As he said to me more than once, in typical Ralph fashion, he wasn’t sure whether he was a classical liberal or a conservative, but he didn’t really “give a damn about labels”.

The late Alberta Premier Ralph Klein celebrates elimination of the provincial government debt in 2004.

Klein the politician was a pragmatist in a hurry who blatantly stole the Alberta Liberals’ rigorous ideas on fiscal policy (which had been carefully shaped during the late 1980s to exploit the PCs profligacy and lack of success in promoting economic growth). They fit with his own core beliefs and were clearly what Albertans wanted. Klein was often criticized for lacking interest in detailed policy – which was true – but his approach was to focus on a small number of big issues (deficit reduction, tax reform, deregulation, privatization) and push relentlessly to achieve his objectives.

The NDP insists Klein’s dramatic spending cuts eroded core services – health-care and education for example – and substantively harmed Albertans’ quality of life. Well, if you lived through the 1990s in Alberta you know there is some truth in that, especially for teachers, civil servants and consumers of public services. Both my son and my father spent considerable time in hospitals during those years and the fiscal constraints were self-evident.

But, as Milke points out: “The reality, apart from whatever one recalls from then or reads about that decade now, is that when Klein became premier government debt daily snatched money away from patients and students due to escalating interest costs.” Milke argues that, rather than being the poison harming Alberta’s hospitals and schools, Klein’s policies were the antidote.

In Klein’s first full year in office, 1993, interest on the provincial debt equalled one-third of the province’s healthcare and education budgets, and a whopping 75 percent of the social services budget. It was simply unsustainable and, being the practical politician he was, Klein fixed it. And he minimized the pain by doing so in just a handful of years, which enabled future governments to spend more, per capita, on health and education than any other province (which they have). You might think the left would at least grudgingly acknowledge the fiscal latitude Klein created, but among NDP supporters and, sadly, too many younger Albertans generally, the myth persists that Klein was a wild, ideological scourge who left the province in ruins.

Take taxes as another example. As Milke details, it’s long been a core belief among Alberta leftists that the tax system is unfairly skewed against ordinary working people to the benefit of the rich. The call for policies that would make the province’s taxes more “fair” has been at the heart of NDP policy for decades. But were the revolutionary changes enacted by Klein actually unfair?

In addition to resisting calls for a sales tax to deal with Alberta’s giant deficit, Klein’s signature tax measure was the move to a 10 percent “flat tax” on income. Notley’s predecessors, organized labour and many journalists and academics blasted the idea as grossly unfair, a shifting of the tax burden from the wealthy to the poor that former NDP leader Raj Pannu once called “nothing short of obscene.” It was so dreadful that one of the first things the new Notley government did after its election in 2015 was to eliminate what remained of the flat tax structure.

The reality was decidedly different. When the flat tax was introduced in 2001, it immediately lowered provincial personal income taxes by an average of 23 percent and, by raising the basic personal exemption at the same time, an additional 200,000 working Albertans paid no provincial income tax at all. By the flat tax’s final year, 2014, that number had grown to 850,000 lower-income working Albertans who paid no provincial income tax – more than one-third of Alberta’s workforce of about 2.3 million.

How a political party supposedly championing the province’s working people can characterize that as “obscene” is an enduring puzzle. As Milke points out, the fact that in 2014 Albertans making over $100,000 paid a whopping 62 percent of all provincial income tax also gave the lie to the NDP claim that the flat tax wasn’t “fair” and let the wealthy escape their social obligations. The truth is that the boom unleashed during the Klein years enabled tens of thousands of ordinary oilpatch workers and tradespeople to earn six-figure incomes.

Yet to this day, as Milke reports, the New Democrats and their supporters insist that “the Klein years from December 1992 to December 2006 were ones of unrelenting Dickensian misery” for ordinary working Albertans. Again, the reality lies in the numbers. During the Klein years, net migration to Alberta from the rest of Canada totalled 305,000 people. They flocked in their thousands from Manitoba, Ontario, Saskatchewan, Newfoundland – and most of all from Quebec, which accounted for 142,000 of the total.

As Milke points out (echoing a favourite observation of my former boss, premier Ed Stelmach), they didn’t come “for the balmy weather” – they came for opportunity and work. During Klein’s tenure in office Alberta’s total employment grew by an astonishing 662,000 jobs, a 52 percent increase. To put that in some perspective, it was almost double the increase in the entire rest of the country.

During the Klein era, Alberta’s GDP more than tripled from $74.9 billion in 1992 to $238.9 billion in 2006, while the population, which had barely budged in the previous decade, soared from 2.54 million to 3.24 million. The biggest winners were private sector tradespeople in the natural resource sector, who out-earned academics, teachers and even mid-level professionals.

Part of Alberta’s economic success was due to Klein’s widespread business deregulation and privatization of services – including highways maintenance, motor vehicle and corporate registries and, most famously, liquor stores – which ordinary Albertans eagerly embraced. By and large, the only people who experienced the Klein years as a horror movie were entrenched and complacent social and corporate welfare interests, public sector unions and left-wing academics.

The contrast between the Klein and Notley records could hardly be more stark. The former’s election birthed an enduring, province-wide era of opportunity, growth, excitement, success, self-confidence and prominence for Alberta on the national stage. The last four years of NDP government have been marked by economic stagnation, malaise, anger and fear – plus bloated government. It takes considerable chutzpah, and a certain malevolence, for the NDP to blame a dead premier and his achievements for their modern failings. Ironically, the largest thing Klein failed to accomplish (repeatedly shying away from the attempt) was a patient-focused, private-sector-driven reform of the health care system. Yet the left even blames him for today’s long medical wait times.

Klein gets a lot more space in Milke’s book than Notley, which seems unavoidable: Albertans gave the PC premier four consecutive majorities and his long record in office speaks for itself – even through the fog of NDP revisionism. As Notley seeks a second mandate, it’s useful to take a hard look at her policies and their results. We’ve been here before – deep deficits and mounting public debt – so we have a clear idea of the outcomes associated with two very different approaches to managing government finances. We shouldn’t have to guess. But, without books like Milke’s, many of us will forget or never learn to begin with.

The unspoken question closing out Ralph vs. Rachel is whether Jason Kenney and the UCP can restore the “Alberta Advantage” that Klein championed and Kenney channels today. Will Albertans even give them the chance, or will they give Notley four more years to prove, despite reams of data and experience to the contrary, that socialist economics actually work? That, of course, is a political question, and this book is curiously thin on details about the wider story of Klein’s premiership, and the circumstances that led to Notley’s elevation. Milke’s focus is the economic and fiscal policies of two very different premiers, but I think readers – especially those who didn’t live through the Klein years, as well as non-Albertans who buy the book – would have appreciated a little more context for the two most important political disruptions in Alberta’s recent history.

The most glaring omission, to my mind, is the short shrift given to the Alberta Liberals, who go barely mentioned. It was the Liberals under Laurence Decore, who had been a successful businessman and highly popular Edmonton mayor before wresting the Liberal party from more left-leaning leadership aspirants, who originated the tough-love approach to fiscal policy later embraced by Klein. And it was the unusual agreement on tackling the deficit by both major parties (characterized by then-NDP leader Ray Martin as a choice between “massive cuts and brutal cuts”) that allowed Klein to do what he did.

Then again, so little of substance has been written about Alberta politics over the past few decades that there’s not much reference material. Amazingly, there is still no definitive history of the PCs’ remarkably successful 44 years in government, or an explanation of how the province’s political chemistry came to differ so profoundly from the rest of the country. Ted Byfield’s encyclopedic history series, Alberta in the 20th Century, comes closest. Milke devotes his final chapter to a review of other books on the Klein era which – intentionally or not – illustrates how poorly we’ve chronicled our rich political history for the benefit of younger Albertans – who must somehow decide how they’re going to vote in next year’s election!

But despair not. If you know a voter under 30 whom you think is misguided but open to rational arguments, you’d be doing them a favour by buying them a copy of Milke’s book. He’s a gifted public policy analyst and over the years has earned a well-deserved reputation as one of the best critics of how Canadian governments of all stripes over the past half century or more have generally failed to harness the enormous economic and human potential of a great country. Ralph vs. Rachel is a timely and well-researched reminder of how successful the Klein government’s policies were, how his Conservative successors failed to stay the course, and how in four short years Rachel Notley and her NDP government plunged Alberta back into a dreadful fiscal hole.

Paul Stanway has chronicled the politics of Alberta as a journalist for over four decades

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