The PC Government recently tabled its 2014 Budget. It is this province's sixth consecutive budget deficit ($2.7 Billion) despite smashing the all-time record for annual provincial revenues ($44 billion).
As with all budgets, there are positives and negatives that will be debated for many months hence, but the most dangerous part of Budget 2014 is clearly related to Alberta's exploding debt and debt financing charges. In just one term, Premier Redford and her PC government have taken us from almost no debt up to a level of borrowing not seen since Don Getty was premier. Amazingly, by 2017, Alberta will have more debt than it has ever had at any point in it's history... unless we change course in 2016 of course.
The following is a two-minute member statement I gave in the Legislature shortly after Budget 2014 was released. I hope you will read it and make your voice heard on this issue:
Mr. Speaker, Budget 2014 adds over $5 billion dollars in debt this year and brings Alberta’s total debt to over $21 billion by 2016.
The Finance Minister compares debt financing for infrastructure to a home mortgage. This is a poor comparison. A home mortgage is secured by an appreciating asset worth more than the amount of the loan – and it’s easy to sell.
In contrast, government assets depreciate, are worth less than they cost to build - and they are difficult to sell even if you wanted to.
The minister also says that because interest rates are currently low, now is the time to borrow. Interest rates are indeed low - for now. But these debts will need to be regularly refinanced, and as our debt load increases so will the available interest rate, and with it, billions in new annual interest charges ($800 million this year alone, rising to $1.2 billion by 2016).
Have we forgotten the consequences of sustained debt financing in Europe, the U.S., and Ontario? Interest rates won’t always be low – Alberta won’t always enjoy record revenues. And when those realities manifest themselves, we and our children will pay a heavy price.
The minister states that folks moving to Alberta aren’t bringing their roads and schools with them, thus we must borrow to build. First off, new Albertans don’t bring roads with them, but they do bring their taxes. Population growth is not a drain on our finances – it pads our bottom line.
Secondly, if we must borrow for projects now to cope with high growth, what’s going to change in the future so we don’t have to borrow?
Forecasts predict high population growth for decades. Those folks will all need schools and roads too. If we can’t build what we need today without going into debt even with record revenues, when will we ever be able to? And when our economy and growth rate slow, how are we going to pay the interest charges on the debt incurred during the high growth years?
Colleagues, it’s never too late to do the right thing. Let us leave our children with a legacy free from the burden of debt. We owe them nothing less.
