Alberta’s fiscal update should be a loud wake-up call for politicians and interest groups in Alberta who think we can keep racking up charges on the taxpayer credit card.
At just over $24 billion, Alberta will have the biggest deficit in the province’s history. Alberta’s debt is also expected to reach $100 billion by the end of the year, according to the fiscal update. That’s $22,400 that every man, woman and child will owe to cover the provincial government’s red ink.
On top of that, interest costs needed to service the debt will eat away at $2.5 billion this year. For anyone counting, that’s more than $500 per person or $2,000 for a family of four. That means thousands of dollars will leave families’ budgets and, instead of going towards a useful government service or tax relief, it’s going straight into the pockets of bond fund managers on Bay Street.
The state of our province’s finances has fallen significantly since the summer of 2004 when former premier Ralph Klein hoisted his “paid in full” sign to symbolize a debt-free Alberta. Fast-forward about a decade and a half later, and our debt tab will soon be twelve digits long.
There’s no doubt that a shortfall in revenue from the economic shutdown and the collapse in oil prices are key contributors to this year’s $24-billion deficit. Extra spending during the pandemic also added to the debt. But the roots of the fiscal problem were planted long before COVID-19 reached Alberta in March.
The Progressive Conservatives began eating away at the provincial treasury almost as soon as Klein announced Alberta would be debt free. From 2004 to 2015, the PCs doubled the Alberta government’s program spending and somehow managed to run deficits during boom years.
Then the New Democrats came to power and continued the spending spree. Even after increasing business taxes, income taxes and imposing their carbon tax, the NDP still managed to run-up a $50-billion debt tab.
While the United Conservatives were elected to clean up the mess, they’ve been doing damage control instead of fixing the actual problem. In its February budget, the UCP-government planned on spending more tax dollars and running a higher deficit than the NDP did in 2018. And that February budget was before COVID-19 and the oil price collapse.
Wild Rose Country hasn’t hit rock bottom yet, but there’s only one way out for our province: Premier Jason Kenney must get serious about cutting government spending.
Last year, Kenney’s Blue Ribbon Panel on Alberta’s finances concluded that “raising taxes … is not the answer” to fixing our budget woes. The panel noted that the Alberta government has the highest per person spending in Canada, and would spend $10 billion less every year if it spent like Canada’s other large provinces.
If there’s one silver lining for taxpayers amidst all this red ink, it’s that our politicians have rejected tax hikes. In fact, it may be the one thing that both Kenney and Prime Minister Justin Trudeau can agree on.
“I cannot imagine a dumber thing to do in the midst of a time of economic fragility, an oil price collapse and a global recession than to add a multi-billion dollar tax on the Alberta economy and Alberta families,” Kenney said when asked about a sales tax.
Similarly, Trudeau acknowledged that “the last thing Canadians need is to a see a rise in taxes right now” and that the feds “are not going to be saddling Canadians with extra costs.”
For years, politicians have been hitting the snooze button while government spending has been skyrocketing and our finances have been deteriorating. Alberta’s dire fiscal update and $100-billion debt tab should be the only wake-up call politicians need to get out of bed and start taking action on the spending problem.
This column was originally published in the Edmonton Sun on September 11, 2020.