Alberta could have saved families an extra $3,200 a year if it showed restraint

The Alberta government is addicted to spending.

Like any addiction, this is a habit that must be kicked.

Some addicts can kick their habit cold-turkey, others cannot.

While many groups have tried to stage an intervention, the government refuses to voluntarily clean up its act.

Perhaps it's time for some legal persuasion.

The Canadian Taxpayers Federation, Fraser Institute, former federal associate deputy minister of finance and University of Alberta economist Paul Boothe, even the leader of the usually spend-happy Alberta Liberal Party all warn the government its spending is out of control.

Perhaps it should be no surprise 58% of respondents surveyed in an October Ipsos-Reid poll of 800 Albertans, commissioned by the CTF, indicated support for legislation that would restrict provincial government program spending to some measure such as the rate of inflation and the rate of population growth.

Only 38% were opposed.

Considering the success Alberta had in the past with fiscal restraint legislation, the results aren't surprising.

Premier Ralph Klein smartly introduced the Balanced Budget and Debt Retirement Act in 1995, outlawing his government from running deficit budgets and prescribing a minimum payment that must be made each year towards the provincial debt.

This legislation forced the government to make tough decisions, find efficiencies and prioritize to ensure the budget was balanced each year. It further ensured taxpayers and voters the province's $22.7-billion debt would eventually be paid off as promised, which now saves taxpayers an additional $1.5-billion annually in interest payments.

In 1999 however, after the province's debt had nearly been halved, the government was under tremendous pressure to abandon their debt repayment promise and spend surplus dollars.

Klein once again smartly handcuffed his government by introducing the Fiscal Responsibility Act which prescribed a minimum 75% of all surplus dollars be put toward debt repayment.

These three statutory restrictions were key to ensuring government didn't return to deficit budgeting and ultimately led to the full repayment of Alberta's provincial debt in 2004.

Unfortunately, over the past few years, some of the benefit gained by these smartly introduced restrictions has been lost through a major ramp-up in spending.

Just four years ago in 2002-03, the Alberta government spent $20.1 billion on provincial government programs. As of the first quarter of this year, the government is spending $29.4 billion -- a 47% increase!

On average, the government hikes spending an unsustainable 10% a year.

Income taxes, business taxes, education taxes, health-care premiums, Heritage Fund interest, VLT revenue and other fees and taxes bring in $18.9-billion a year. This leaves a $10.5-billion dollar gap of spending, the majority of which is being financed by one-time unreliable, unsustainable resource revenues.

This would be fine if the provincial government could guarantee the current high prices of oil and natural gas were here to stay, but they can't. Nobody can.

What Alberta can do is limit their annual increase in program spending by the combined increase in our inflation rate growth and population growth.

Since 2002-03, Alberta's population increased 8% and prices inflated 11%, a combined increase of 19%.

The government has increased spending 47% during this same period.

In fact, had the government introduced a legislated spending limit in 2004 after it paid off the provincial debt, it would be spending $26.7-billion this year, rather than $29.4-billion.

This would have saved taxpayers $2.7-billion each year. In other words, a family of four would be saving $3,200 each year in taxes. Imagine what your family could do with an extra $3,200 a year to spend, donate, or save each year.

Albertans have seen the benefit of legal limits on their government's ability to borrow. In fact, Alberta would not be in the prosperous position it is today had the Klein government not introduced fiscal limitation laws.

Six in 10 Albertans know the next step is to limit annual expenditure growth if we want to ensure the next government doesn't destroy this prosperity by spending us back into a hole.

It's now up to our PC leadership candidates to embrace this new thinking.