CTF Alberta Director
This op-ed was published in the Financial Post on Thursday, February 23, 2017 and is now available for other outlets to publish, free of charge.
It’s time for the Alberta government to lift the burden off Albertans. Between punishing new taxes and a mounting debt load, the government has been putting off difficult decisions of its own and instead, is choosing to make life more difficult for Albertans.
The provincial government is now wasting $1 billion annually on debt interest payments.
That’s money that will be handed over to the banks because the government can’t get its spending under control. Incredibly, that number will double to $2 billion per year by 2018-19.
Alberta’s $28.4 billion debt is rolling in at a rate of over $355 per second. Some proponents of increased government spending like to argue that the debt load is nothing compared to that of the monstrously high debt in Ontario (the world’s most indebted sub-national borrower), but consider that Alberta eliminated its debt as recently as 2004.
After all the collective belt-tightening Albertans endured to free themselves and their children of the debt, PC and NDP governments started from scratch and have now rebuilt this pile all by themselves.
Despite rhetoric of “controlling spending,” Alberta Finance Minister Joe Ceci has overseen increases in program spending, the advancement of new government programs like moving forward with $25-per-day daycare, and the hiring of 3,458 new government employees over the last fiscal year.
That’s like saying you’re controlling your household spending while hiring a team of contractors to put a new addition on the house, with designer finishes – but holding off on your dream indoor pool and waterfall.
The provincial government is also ramping up the corporate welfare, once again failing to learn from Ontario’s messy example, where green energy subsidies have become a boondoggle that’s contributed to energy poverty in that province.
The government is failing to learn from our own history too, during which we’ve wasted over $2 billion on the same ‘diversifying’ subsidies.
To (somewhat) fund their costly endeavours, Alberta government ministers have substantially increased taxes on Albertan families and businesses.
The carbon tax is costing Albertans billions, the business tax has been increased by 20 per cent, income taxes have gone up, and the government has hiked taxes on goods from train fuel to craft beer.
Between the last PC government and the ruling NDP, Albertans’ gas taxes have gone up 94.3 per cent in less than two years.
The only tax relief has come in the form of a paltry reduction in Alberta’s small business tax from three per cent to two per cent, which the government only brought in to make the carbon tax look more appealing.
Taxes keep increasing because the government keeps choosing to spend more. Total government expenses have increased by 32.6 per cent since 2005-06, adjusted for inflation and population growth.
To put today’s spending increases in perspective, if spending been held relative to 2005-06 levels, Albertans would be spending $15 billion less in 2016-17. Yes – our entire deficit.
Instead, expenses are projected to reach a record high of $59.4 billion in 2018-19. According to RBC, Alberta’s per cent change in program expenses are the highest of any province in Canada, at 7.9 per cent. When it comes to healthcare, Alberta is the highest per-capita spender.
It’s time for tough decisions. A 15 per cent reduction in program spending would save Albertans $7.8 billion, shaving off about half of the deficit.
Of course, the government should prioritize against cuts to frontline services and focus on the fat. Reducing the number of government employees by 10 per cent would save an additional $2.56 billion. Reducing the compensation of government employees – be it through pension reform or salary rollbacks, would go a long way as well.
When it comes to infrastructure, the government must resist the temptation of handing contracts to union friends, and instead spend responsibly – removing the arbitrary ban on public-private partnerships that can save Albertans money.
Forget new government programs and wasteful corporate welfare – we simply can’t afford it.
To curb future spending, the government should introduce a legislated spending cap at the combined rate of inflation and population growth.
These are just a few suggestions, but if the government is truly open to reducing spending like they say they are, it should not fall on deaf ears.