Most households understand it’s impossible to live beyond your means indefinitely. When life throws some curveballs like a substantial loss in income, you have to change lanes to stem the flow of red ink. Not so if you’re a ‘conservative’ government in Alberta, which seems intent on propelling itself down the fast lane toward a fourth consecutive deficit budget.
Albertans should feel nervous about the pace at which the Ed Stelmach government is raiding the piggy bank and racking up red ink, especially when looking at the province’s track record at predicting the fiscal future. The 2011-12 provincial budget introduced Thursday contains a $3.4-billion deficit, which on its own is disturbing enough coming off a $4.8-billion shortfall this year. But the latest deficit is downright scary considering last year the province projected the 2011-12 budget would result in a $1.1-billion shortfall — a third of what we’re seeing today. The shear extent of the financial miscalculation is not being felt by most Albertans thanks to the province’s lack of hesitation about reaching its mitts into savings, the Sustainability Fund. At one time the fund was topped up to $15 billion, however through years of living beyond our means it will fall to $5.2 billion by the end of the 2012 budget year. The siphoning isn’t expected to slow down either, plummeting to $1.7 billion by 2013-14 — if provincial projections ring true.
When the province plunged into its first deficit budget after natural gas royalty revenues tanked, Albertans took it in stride. Many remembered and wanted to avoid the bloodletting of the Ralph Klein era in the mid-1990s and saw the value in holding the line on spending — temporarily at least — until revenues rebounded. Revenues haven’t, and it doesn’t look like they’re going to spring back anytime soon, with natural gas prices continuing to fall, a strong Canadian dollar, and economic uncertainty in the U.S. all playing a role in revenues not meeting expectations, according to the government. Considering the province’s inability to predict the future, it’s time to change the current approach of ‘spend now and hope for the best for tomorrow.’ It’s a conclusion that hasn’t escaped government caucus, now suffering an ideological rift amid a leadership race that pits fiscal hawks versus bigger-spending, big-tent Tories.
Certainly there is wisdom in maintaining spending in certain areas. The $17.6-billion capital plan will keep Alberta building roads, schools and hospitals over the next three years, and by pushing ahead Alberta can catch up on its infrastructure needs and save money on projects that would cost more in a stronger economy. Few Albertans want to see drastic cuts to education or health spending, which actually received funding boosts in the budget, but beyond that the government should leave no stone unturned in the hunt to find savings and cut when necessary. It might not be painless, and it won’t happen without a fight from innumerable special interests, but this is reality. The piggy bank might not be available in the future to save the day. Spending with both fingers crossed cannot continue.
