Thirty years of bad budgets
| Posted: Saturday, Mar 09, 2013 06:00 am
Let’s cut through all of the rhetoric and get past the talking heads. Of course Danielle Smith is going to oppose the provincial budget. Brian Mason and Raj Sherman aren’t going to like it either. And, what a shocker, U of A president Indira Samarasekera and Alberta Teachers’ Association president Carol Henderson think the world is coming to an end.
The truth of the matter is this Tory government had no choice but to deliver the budget they did Thursday. It is a prudent, responsible budget in the face of falling resource revenues. Borrowing $4.3 billion this year and $12 billion over the next three years for capital projects is not only smart, but needed. Borrowing rates are extremely low and the province is growing by 100,000 people per year. Infrastructure has to be maintained and added to if the province is to move forward. A freeze on capital spending now would balance the budget, but it would cripple our economy.
But that’s where the accolades stop. The Redford government laid down a budget that is suited to the situation, but the situation is the fault of not only this government, but PC governments of the last 30 years. Peter Lougheed had a very simple philosophy about government that has utterly befuddled Tory governments since his tenure. That philosophy was based on the principle of paying yourself first, and using the rest for operations. Lougheed created the Alberta Heritage Savings Trust Fund to share our non-renewable energy royalties with future generations of Albertans. Under Lougheed, 30 per cent of Alberta’s non-renewable resource royalties were put in the fund.
Lougheed understood fiscal management. Successive Tory regimes, from Don Getty and Ralph Klein to Ed Stelmach and Alison Redford, have failed to grasp the concept. It was just over one year ago that then-finance minister Ron Liepert stood at the podium at the Sturgeon Valley Golf & Country Club and announced the Stelmach government would base its budget on a $100 barrel of oil. Happy times were here to stay. Fast forward a few months and Alison Redford led the Tories into an election with promises of more money for everything from full-day kindergarten to billions to develop new energy technology.
What went wrong? Redford’s government can’t possibly be blamed because they get their resource revenue projections from industry experts. No one saw the “bitumen bubble” coming. Well, if you believe that, we have some swampland for sale. The truth of the matter is many economists predicted the bubble, including TD’s chief economist Craig Alexander. Alexander told the Gazette’s editorial board in January that he found it hard to believe the provincial government couldn’t see falling oil prices coming, given the intense fracking taking place in the U.S.
Instead of hiding behind industry experts and laying blame elsewhere, this government needs to suck it up, admit its shortcomings, and get back to the days of Lougheed when the government lived within its means.