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Reporter wonders: are cuts the solution to Alberta’s deficit?
Susan Thompson
for Smoky River Express
The Stelmach government started off in an excellent position, with no deficits, no debt, and record revenues from oil and gas. People flocked to the province from elsewhere to take advantage of the jobs here. Just last year we were talking about a massive budget surplus.
Quelle difference!
Today we’re facing increasing unemployment, a massive deficit and very low natural gas prices. Instead of enjoying a budget surplus, we’re now paying for things out of our Sustainability Fund. It’s great to have, but once it’s gone it’s gone, and then what?
The latest fiscal update is also based on natural gas prices rebounding. What if they don’t? We may ultimately have to head into an actual debt, not just a few years of deficit budgets.
Our government’s attempt at a solution so far has been two-fold.
One, no increase in taxes. That’s a policy so important to our Premier that he repealed the higher sin tax on alcohol after three months, much to the surprise and chagrin of liquor store owners who had just finished changing all their prices.
Two (and here is where the 90’s déjà vu sets in) we’re going through a new round of spending cuts. Not surprising if any increase in taxes is out.
The provincial government just announced $1.3 billion in cuts to health care (during a global flu pandemic no less). Then there’s the $80 million in cuts to education, i.e., our kids’ future.
Details have generally been vague so far, with Finance Minister Iris Evans and Alberta Health Services CEO Dr. Stephen Duckett and Education Minister Dave Hancock all saying we’ll find out in the next month to six months exactly where and how money will be saved.
What’s not getting cut? The province’s $2 billion carbon capture and storage program. As much as I do care about the environment, the program is something that should be less of a priority at this point than making sure people can get proper medical attention when sick or get a good education.
That’s especially true because carbon capture is still more of a pilot, meaning the technology isn’t proven yet and costs could balloon more than expected.
Will the government’s other spending cuts work?
Well, if you believe the Canadian Taxpayers Federation, cutting spending is the right thing to do.
Other economists, however, say by cutting jobs and spending Alberta will prolong our own financial pain. Instead, they say we should take a page from most of the other governments around the world and actually spend more, because it will kickstart our economy.
The federal Conservatives are, tellingly, still spending.
Alberta’s still spending on infrastructure, but that’s generally it. No real attempt at stimulus spending here.
Maybe that’s why our own Premier warns it will be years before Alberta recovers from the recession, while Canada in general, we’re told, is already (slowly) recovering.
Ultimately, though, I think the real problem is that we haven’t learned from the past.
Alberta is tied to energy. So when prices go up, we boom. When they go down, all our money evaporates into thin air.
That’s how you can be talking an $8 billion plus surplus one year and an almost $7 billion deficit the next.
Finance Minister Iris Evans said as much when making her latest fiscal update. “We are heavily dependent on our oil and gas revenues,” Evans said.
When are we going to learn to start saving enough for the future during the good times, instead of just trying to cut costs during bad?
More importantly, when are we going to diversify our economy so that it doesn’t solely depend on the unstable energy market?
Right now, all of our eggs are in one basket.
Unfortunately, the bottom of that basket just dropped out.
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