Future generations are harmed when politicians spend frivolously
It’s not just today’s taxpayers who pay the price for wasteful government spending, future generations will be stuck with the growing government debt tab. And future taxpayers will be in for a rude awakening when it’s time to pay the piper.
While most teenagers are busy thinking up reasons to get out of their math homework, Grace, a fifteen-year-old old from Airdrie, has crunched the numbers and she’s worried about her financial future. She called into the recent Alberta budget telephone town hall and let Finance Minister Travis Toews know exactly what’s causing her grief.
“I realize that this overspending is a huge problem for my generation,” said Grace. “What I want to know is how we are going to be able to prevent it so that it won’t affect our future generations?”
Grace should be concerned about her government’s fiscal missteps. After all, it will be her and her friends who will be stuck with the bill.
The Alberta government’s fiscal situation isn’t pretty. Last year, the Alberta government added billions of dollars to the provincial debt tab, even though it brought in more revenue per-person than neighbouring British Columbia. The government’s debt tab is now over $60 billion and interest payments cost each Albertan about $450 last year.
Things will only get worse for Grace if Alberta’s politicians continue to overlook our spending and debt problem.
By 2040, when Grace is in her mid-thirties, interest payments on the government’s debt are projected to balloon to more than $22 billion. If Grace has two children and a spouse, her family’s per-person share would be more than $14,000 and, instead of going towards something useful, it’s going straight into the pockets of bond fund managers on Bay Street.
The picture is even bleaker when considering the federal government’s debt, which is increasing by more than $2 million every hour. Generation Screwed, a student group initiated by the Canadian Taxpayers Federation to inform and mobilize the next generation of taxpayers, launched an online calculator to show the impact of today’s overspending on tomorrow’s taxpayers.
Fifteen-year-olds like Grace will, on average, pay about $2.2 million in taxes over their lifetime. But they will only get back about $1.7 million though government transfers. That means their net tax burden is roughly $500,000 each. Compare that to someone born in 1979, who will face a net tax burden of around $32,000.
The difference between each generation is striking. How can we expect the next generation to be optimistic about their future when they could face a tax burden that is 15 times as much as their parents?
Fortunately, provincial politicians are starting to understand what Alberta families and businesses have known for a long time: we need to live within our means.
“When I was out meeting Albertans in my constituency, there was one issue that there tended to be agreement on … that we simply can’t spend the next generation’s program spending today,” said Toews during the budget town hall.
“We can’t mortgage our children’s future. Virtually all Albertans agreed with me on that.”
Toews needs to put all areas of the budget under the microscope. The billions of dollar worth of corporate welfare commitments need to be scrapped, and all current spending, from inflated salaries and benefits to health care, need to be brought in line with other provinces.
New spending ideas must be funded by cuts to other programs, and then some. Consider the recent $10 million funding for venture capitalists, the $30 million energy war room and the $1 billion funding for indigenous businesses. These may all sound nice, but the Alberta government is spending cash that’s coming from the pockets of future taxpayers.
Toews says the Alberta government is ready to stop mortgaging “our children’s future.” But talk is cheap. In the upcoming budget, Alberta’s politicians need to prove to future taxpayers like Grace that they’re serious about tackling the debt problem.
Franco Terrazzano is the Alberta Director for the Canadian Taxpayers Federation and Kris Rondolo is the Executive Director of Generation Screwed.
This column was originally published in the Edmonton Journal on October 23, 2019.