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To balance the budget, Alberta's government must learn to say "no"

May 01, 2017
To balance the budget, Alberta's government must learn to say

This op-ed was published in the May issues of Business in Calgary and Business in Edmonton Magazines. 

With the Alberta budget comes implications for Calgarians and all Albertans – but no one more so than future generations of taxpayers.

With the NDP government’s initial platform promise of a balanced budget in 2018 nothing but a distant memory, the province is plunging itself deeper into debt, with no real plan to pay it off. By 2020, Alberta will have a record $71 billion in provincial debt (more than doubling the current $31 billion) and will pay $2.3 billion per year in debt interest payments to the banks.

This year’s budget pencilled in a 2024 balanced budget date – though the ‘plan’ to get there is to cross our collective fingers and hope oil prices rebound. We’d all like to see oil prices spike upwards, but without a crystal ball, it’s not a solid plan and it avoids the government having to make any tough decisions.

The sting for future generations will arrive when the proverbial debt collectors come knocking, when debt interest payments are eating up even more of the budget, when borrowing for services has become more expensive due to further credit downgrades, and when the debt load has become unsustainable. Those tough times could come sooner or they could come later, but either way, the free-spending decisions of today’s government will be paid for by someone else who will have to make the sacrifices these politicians are unwilling to make.

This budget features a record level of infrastructure spending – over $9 billion this year alone. As such, Calgary Mayor Naheed Nenshi gave tepid approval to the provincial government, though predictably, he wanted to see even more money dedicated to Calgary projects.

Absent from the hundreds of pages in the budget documents was any information on city charters – the forthcoming special agreements between the province and both Calgary and Edmonton – which could include new taxing powers for big city mayors or guaranteed revenue-sharing agreements between the cities and province, costing all Albertans more.

Also missing from the budget was any projections on the price of upcoming labour deals. As negotiations with big-ticket government employee unions are ongoing in Alberta, it’s important to note that the enormous $12.4 billion the province is adding to the debt this year doesn’t include any potential wage increases – meaning that number could snowball further. This is significant given that compensation eats up about 50 per cent of Alberta’s budget.

Thinking optimistically, the government could hold a hard line with government employee unions and actually chip away at the deficit, but neither Premier Rachel Notley nor Finance Minister Joe Ceci has committed to that thus far. With the province’s cost pressures evident to anyone with a brain and a wallet, the government has the opportunity to rein in spending by approaching labour negotiations with a heaping spoon of reality.

Despite Minister Ceci insisting the province has a revenue problem, reducing spending levels to that of British Columbia would completely eliminate our $10.3-billion operational deficit. On a per-person level, Alberta spends over $2,400 more than B.C., while delivering essentially the same services. A big part of that gap is compensation costs.

Demands from mayors, unions and interest groups will always be high – but ultimately, the Alberta government must learn to say “no,” or they’re screwing over future Albertans who will pay the bill.

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