“The only absolute for me is to run balanced budgets and budget conservatively” – Ed Stelmach, November 2006.
With recent talk of the Alberta government running a deficit next year in order to drain the Sustainability Fund of its savings, it’s worth a sober look at how we ever got to this point.
During the 2006 Alberta PC leadership race, the Canadian Taxpayers Federation (CTF) questioned each of the candidates as to where they stood on different issues.
The questions varied from committing to tax cuts, to spending control, to creating a savings plan, to implementing democratic reforms.
Hindsight being what it is, perhaps a very poignant question would have been: “Will you as premier ever run a deficit?”
Unfortunately, that question was not asked. At the time it seemed a pointless and ridiculous question. Of course no candidate hoping to be the leader of Alberta’s Progressive Conservative Party would ever even fathom the idea of running deficits. Especially not after all the sacrifices Albertans made to first balance the books in the mid-90s and then to pay-off the debt by 2005.
Despite not asking the question, one candidate volunteered his commitment to balanced budgets. Nay, it was more than a mere commitment, it was an “absolute.”
Our now premier, Ed Stelmach, in answering a question in regards to Alberta’s hidden sales tax on insurance offered this as part of his response: “The only absolute for me is to run balanced budgets and budget conservatively.”
What a difference a couple of years make.
Heck, what a difference six months make. Mid-summer when the province was rolling in an $8.5-billion surplus, and doling it out in billion dollar increments, few Albertans could even imagine that the province may consider running a deficit or dip into savings to cover any shortfall in 2009.
But that’s exactly what is happening.
Unfortunately, many Albertans, including some of those who sit around the provincial cabinet table will be quick to suggest that the unprecedented drop in the price of oil from $145 to $45 in a matter of a few months, precipitated this ‘need’ to withdraw from savings.
Talk about stretching the truth.
While $45 oil may seem low in comparison to this past summer, it is not all that low considering the price of oil over the past five years.
The Alberta government’s rapid and massive increase in spending over the past few years is the real cause of this situation. In fact, the CTF predicted in 2007 that the government’s appetite for spending would out-strip its supply of cash within two to five years, even if oil prices stayed high. Here we are two years later, and the CTF has been proven right.
So, just how severe is the government’s addiction to spending? Well, in 2008-09 the Alberta government will spend a national high, $10,513 per Albertan on government programs. In comparison, the three other western provinces will spend slightly over $8,000 per citizen.
When it comes to infrastructure spending, the comparison is even more dramatic. This year the Alberta government will spend, again a national high, $8.8-billion on capital projects for our 3.6 million citizens. In comparison, the province of Ontario, and their 13 million citizens will spend $7.5-billion.
According to CTF calculations, the Alberta government will likely collect nearly $36-billion in revenue next year. That still allows the government to spend almost $10,000 per Albertan.
Don’t believe the hype. The Alberta government is the last government in Canada that should ever be considering running a deficit or dipping into savings. We are still drowning in dollars. This deficit talk is a sign not of a softening economy or of any 'economic crisis' but rather the unchecked momentum of a gargantuan provincial government, and a forgotten “absolute” of our premier.
Premier Stelmach would be wise to look back and remember what sits at the absolute core of his political beliefs, because Albertans have seen this deficit movie before, and it’s an absolute stinker.
Scott Hennig
Alberta Director
