Alberta’s NDP finally introduced their long-awaited first budget on October 27th. It won’t come as any surprise to readers that as a fiscally conservative Wildrose MLA, I’m not a big fan of it, but there are many reasons that Albertans should be concerned.
Before the budget was even introduced, Alberta was left a significant deficit and a massive spending problem by previous governments; but rather than make things better, the NDP government is doubling down on old policies.
As a province, we have already run 8 consecutive deficits resulting in the near liquidation of the $17 billion rainy-day Sustainability Fund, and currently we have run up $14 billion in debt.
Budget 2015 will accelerate Alberta’s fiscal decline by taking on at least $47.4 billion in debt by 2019 under the most optimistic economic scenario. Without explaining how, the budget projects an economic boom in 2018 and 2019 to balance the budget in 2020. Without a steep increase in oil prices and this unforeseen boom, we will remain in deficit for further yet.
To borrow even more money, the government will yet again raise Alberta’s fluid ‘debt ceiling’ for the second time in three years.’ I fear that this will become a regular occurrence, as governments bend their own rules whenever they come close to breaking them. The change in borrowing rules will also allow deficit financing for the government’s day-to-day operations, something that hasn’t happened since Getty was premier.
A large portion of higher spending will be to pay interest on the spiking debt. This will soon be about $1.3 billion a year in interest payments. This is the equivalent of the combined departments of Aboriginal Affairs, Status of Women, Service Alberta, Seniors, Jobs, Skills and Labour, and the Legislative Assembly. Put another way, the Alberta could run six entire departments for free if we were not paying interest on the debt.
Beyond just interest on the debt, the budget contains in it no plan to pay back any of the principal. Without such a plan, we are at a serious risk of a credit downgrade as a province. That would mean that every dollar that our government borrows for itself and municipalities would cost even more.
Of the $9.7 billion deficit, $6.1 billion is the fault of new spending. This is despite $2.7 billion in new taxes. In fact, 80% of every new dollar collected in higher taxes on Albertans and Alberta businesses will go straight into higher pay and benefits for government employees.
That isn’t to say that all spending in the budget is wasteful or even bad. For example, the budget finally follows through on key pieces of infrastructure that every party is in favour of.
But at $50 billion a year and growing, our budget is not an efficient one. We are still spending more than $2,000 a year per capita on government operations than BC’s government does.
Record levels of spending – paid for with record levels of debt – will merely leave the bill for future taxpayers to pay.
Albertans do not want to go through the pain that they went through the last time our debt chickens came home to roost in the 90’s. Putting today’s bills on the credit card will only assure that that day will come sooner rather than later.
As your Official Opposition, the Wildrose caucus is standing up for Albertans every day in the legislature for responsible government and fiscal prudence.