On February 24th, PC Finance Minister Robin Campbell released the province’s third quarter fiscal update showing a $465 million projected surplus for the current fiscal year. For anyone paying attention to the state of Alberta’s finance’s or the world price of oil, this was a rather bold claim.
The Alberta government has been a running deficit every single year since 2008, running up $11.5 billion in debt and wasting nearly $11 billion of the Sustainability Fund in the process. The result has been a $22 billion net decline in the province’s financial position in just 8 years.
With the Alberta government running massive deficits when the price of oil often exceeded $100 per barrel, how is it possible that they could be running a surplus this year? The truth is, it is not.
In 2012, Alison Redford re-wrote the accounting rules to chop the province’s budget into three separate parts: operational spending, capital spending, and savings. It allowed the government to calculate it’s budget “surplus” as all revenues less only day-to-day operational spending, but left between four and six billion dollars in capital spending off of the books. With the wave of a magic wand, those annoying deficits became surpluses.
When he sought the leadership of the PC Party last summer, Jim Prentice promised to fix the obscure accounting used by Redford and to give Albertans the honest, straightforward numbers that they used to expect from their government. Like many other promises, that commitment has been tossed aside.
An honest accounting of the deficit will show that the government is still spending $2.1 billion more than it collects in revenue. That figure is sure to grow in the next fiscal year as the reality of low prices takes it toll on the government.
Failure to plan for the eventuality that oil prices will not always remain north of $100 is the fault of a government that has overspent for years and only now realizes that it has run out of money, but it still has not taken responsibility for its actions.
Last week, Jim Prentice told listeners of CBC Radio, “In terms of who is responsible, we all need only look in the mirror.”
It’s quite something to have been in power for 44 years and to then blame Albertans for the government’s financial mismanagement, but it is indicative of the government’s plan to dig itself out of its own hole. Making Albertans pay new health taxes, higher income taxes and a possible Provincial Sales Tax are just passing the buck on to the people who have been doing their job all along: taxpayers.
There is a way forward to get the budget under control without raising taxes, and it starts with eliminating corporate welfare subsidies to big PC donors, and reducing the size of the bureaucracy.
If any government is to be trusted to get the province out of the mess that it is in, it needs to start by providing Albertans with honest, clear numbers. If the government has a blank cheque without any effective opposition, you can be sure that you will not get them.