OTTAWA: The Canadian Taxpayers Federation (CTF) today released a comparison of Ottawa's proposed "debt reduction" with Alberta's experience. The comparison shows that the federal government is woefully under-prepared for either an economic downturn, a spike in interest rates, or the volatility that could arise from a constitutional flare-up over Quebec, never mind all three at once.

"Alberta reduced its debt-load by $5.8 billion dollars over the last three years, $6.8 billion over the last four years," said CTF-Alberta director Mark Milke. "That compares to a half-hearted promise to put $6 billion towards the national debt during the next two years, if it is not needed elsewhere. Taxpayers deserve a better commitment on debt reduction from their government."

"At $3 billion per year, it will take us 194 years to pay off our national debt. To ask six or seven generations of Canadians to shoulder the burden of one generation's 'orgy of profligate spending' is like willing massive credit card debts to the grandchildren of your grandchildren," said CTF Federal Director Walter Robinson. "We hope the movers and shakers on Wall Street

-- the same people who grade our debt -- send a clear message to our Prime Minister that his debt reduction commitment is feeble, inadequate, and dangerous."

Alberta (Debt):

• $20.4 billion as of March 31, 1994
  
• $13.9 billion as of March 31, 1998 - a 32% reduction (1994-1998).
  
• $13.6 billion as of March 31, 1998 (forecast) - a 33.3% reduction (1994-2000)

Alberta (Interest):

• $1.6 billion in 1994-95 (peak)
  
• $1.1 billion in 1998-99 - almost 32% less than at its peak.
  
• $1.0 billion in 1999-00 (forecast) - 37.5% less than at its peak

Canada (Debt):

• $508 billion as of March 31, 1994
  
• $583 billion as of March 31, 1998 - a 13% increase (1994-1998).
  
• $583 billion as of March 31, 2000, unless $6 billion is applied in two years, which would then reduce the debt to $577 billion. That would still be 11.5% higher than in 1994 (1994-2000)

Canada (Interest):

• $46.9 billion in 1995-96 (peak)
  
• $41.5 billion in 1997-98 - 11.5% less than at its peak.
  
• $43.5 billion in 1998-99 (forecast) - 7.3% less than at its peak
  
• $45.0 billion in 1999-00 (forecast) - 4.1% less than at its peak

"If interest rates rise by one per cent for two years, and then a further one per cent in the third year, this government's own assumptions predict a $6.9 billion net deterioration in revenues over three years, due to the higher debt servicing costs. If that happens, kiss goodbye to any $6 billion payment towards national debt reduction," said Milke.

"In an era of budget surpluses, it makes no sense for debt servicing costs to rise from $41.5 billion this year, to $43.5 billion next year, and a whopping $45 billion by the turn of the century," argued Robinson. "Wall Street needs to tell our Prime Minister that debt reduction and tax relief are number 1 and 2 on the priority list as opposed to the $12 billion spending binge which now seems to preoccupy our federal government."

The CTF renewed its call for a constitutional amendment for balanced budgets and legislated debt reduction targets.

"To continue to wish our way out of debt is unfair to millions of future taxpayers. Such a strategy does not ensure a Strong Economy or a Secure Society," concluded Robinson.