How low can we go?
That's the question many Albertans asked themselves after finance minister Joe Ceci presented the first quarter fiscal update on Tuesday.
The Fort McMurray wildfire has certainly burned its way into the NDP's budget – adding more than $500 million to the deficit for this year – but the budget was already full of red ink before the fire. Alberta's deficit is $10.9 billion this year, and though the government expects a modest bit of growth next year, how deep into debt is the Notley regime willing to go?
Ceci's "prudent approach" hopes to have the province return to balance in 2024, but a lot can happen in eight years. As Tuesday’s fiscal update showed Albertans, it's hard to predict what can happen in four months.
Since the government delivered its budget in April, things haven't exactly gone on as planned; projected corporate tax revenue has fallen and oil prices have gone up slightly.
There will always be factors that can't be controlled, but that doesn't mean we need to dive into debt every time. As Wildrose Barrhead-Morinville-Westlock MLA Glenn van Dijken pointed out, by not reining in spending the government is taking Albertans down a “dangerous path.”
The NDP like to blame previous governments for the current situation, but what changes have they made to reflect the current economic climate?
If the Alberta government were a business, it would be clear that changes would have to be made following a significant loss in revenue. But instead the government continues to spend in the public sector and now is borrowing money just to fund its operations.
The desire to cut during a downturn may not be strong, but plenty of others are making those choices now. Albertans are losing jobs at an alarming rate: more than 100,000 since July 2015. In St. Albert, we've learned this week that the number of food bank users receiving unemployment insurance or income support has doubled over the past year. Last month, provincial unemployment jumped to 8.6 percent – the highest in more than 20 years. Things are tough all over the province, unless you work for the government. Perhaps the NDP is reluctant to make cuts in the public sector because it has traditionally relied on those workers for support. The consequence of not cutting spending is that all Albertans will carry the load.
“This recession won’t be put on their (Albertans) backs,” Ceci during the news conference on Tuesday. “We’re cushioning the blow.”
What Ceci fails to recognize is whether it’s now or in the future, the government’s spending will be put on Albertans’ backs. Cushioning the blow now still results in pain down the road.
It costs the province more than $1 billion annually just to service its debt. We don't know when, or how, oil prices will rebound, but borrowing more money isn't a sustainable option. If you go too far into the hole, you may never get out.
