By Trevor Busch
The days of deficit are coming home to roost for Alberta, and with provincial debt levels escalating significantly, many are now beginning to question the timetable the Notley NDP have set to bring spending under control.
Last week’s provincial budget forecast a $10.3 billion deficit in 2017 on revenue of $45 billion, while slightly lower than the forecasted $10.8 billion shortfall, this still puts the province further down the road to financial insolvency to the tune of $45 billion by the end of the year.
And the fiscal floodgates are still wide open — provincial debt is expected to balloon to $71 billion by 2020, while debt servicing costs will squeeze taxpayers for $1.4 billion in 2017, and a further $2.3 billion by the end of the decade.
“Obviously I’m concerned. They just don’t seem to be slowing down,” said Cardston-Taber-Warner MLA Grant Hunter. “The latest projections are that by 2019, we’re going to be over $70 billion in debt. This is very concerning, because it’s going to be over $2 billion just to service that debt. How do we move forward with that kind of a debt over our heads? That was one of our reasons, the reason why we had a comparative advantage — an Alberta advantage — to other jurisdictions, is that we didn’t have debt.”
Always a popular choice, infrastructure spending was pegged at $4.5 billion with promises of a new hospital, new schools and more dollars earmarked for seniors and social services. There are no new taxes or tax increases, and program spending is being maintained. Some $100 million has also been allocated for clean drinking water projects on aboriginal reserves.
“I know the NDP says we need this and we need that, but the problem is the majority of the money they’re spending is going towards operational versus capital spending,” said Hunter. “Because of that, this money does us no good in the future. At least capital spending — building capital projects — will do us some good in the future. A majority of this money is going towards operational spending, so we’re just spending way too much.”
In the deficit department, there were some indications of limited spending restraint in future, with Finance Minister Joe Ceci promising to reduce the deficit to $9.7 billion in 2018-2019, and down to $7.2 billion by 2020.
“I haven’t seen any signs of it (fiscal restraint),” said Hunter. “I wish I did, at a time when we have probably actually over 100,000 people that really are out of work — we know there’s over 100,000 people receiving unemployment cheques in Alberta — at this time, we’re seeing the public sector receiving increases in their wages. We know that in most of the sectors, the average is about 20 per cent over the national mean in terms of wages. The problem with that is, everyone else is bleeding, and yet the public sector isn’t bleeding — they’re actually getting raises. A lot of people have talked to me about this. They’ve said this is unacceptable, this is something that we think is unfair, and they are very upset about that.”
Tax revenue is forecast at $21.8 billion, up by six per cent from 2016. Bitumen royalties are estimated at $2.5 billion, while conventional oil royalties are pegged at $476 million.
Overall operational spending is seeing growth of 2.2 per cent.
“I think we need to see some restraint in health care. I think we do still probably have a capital deficit. I think there’s still an argument to be made for capital spending. Do you do a capital spend when we’re in probably one of the deepest recessions that we’ve ever faced in Alberta? Probably not as big as they’re doing, but obviously you do need to spend on the capital projects,” said Hunter.
The elephant in the room for Ceci was probably the budget forecasts being conditional on oil prices reaching U.S. $68 per barrel by 2020 — a long way from current prices that have been fluctuating wildly in recent years.
But they have largely stabilized between $45-$55 per barrel in early 2017.
“You’d have to have a crystal ball to be able to indicate if that’s where it’s going to be at,” said Hunter.
“This government is so focused on the environmental issue, they have forgotten to address the other issues, which are very important as well. I’m not saying they shouldn’t focus on the environment, but so many parts of what they’re doing is all about the environment that they’re really not taking care of the rest of the parts of government.”
Some $14.5 million has been set aside to hire more Crown prosecutors and support staff to help alleviate backlogs in Alberta courtrooms.
“We’ve got some problems, we’ve got some issues that really concern Albertans,” said Hunter. “One of the problems I see is when we’re spending too much on wages in government. In my opinion, the number one responsibility of government is to keep the people safe. So policing, the judiciary — these are all fundamental responsibilities of government. But we just learned that they’re actually turning away cases because they don’t have the resources to take care of them.”
Prioritizing court cases due to a lack of resources is simply unacceptable, according to Hunter.
“What a government needs to do is say where are we going to spend our money, and where should we spend our money? Obviously, governments are just like regular households, they have ridged resources. So the government needs to prioritize where they’re going to spend that money. When I share these stories of them priortizing in areas where really they don’t need to — policing and prosecutions — this is where I think this government is completely off track.”
In education, school fees for parents have been cut by $54 million, and at universities and colleges, tuition fees have been frozen for the third year in a row. Total spending in education now tops $8.2 billion.
The province’s new carbon tax is expected to raise $5.4 billion over the next three years, and will be used to re-invest in green energy projects and programs.
Hunter was largely negative about the implications of the 2017 budget, except in the area of needed infrastructure improvements.
“I really wish that I could say that there was some positives in there. The only thing that I would say we absolutely need to be doing is we need to be building out these capital projects. If there’s a need — we’ve got new people coming into the province, we need schools — then we need to help them. We for sure have not just followed increases in population and inflation in terms of our spending. Our spending has increased substantially more than that. Are we spending more than we should? Probably.”