Province does not need to go back in debt
Wednesday, Mar 12, 2014 11:33 am
The Alberta government may be back in the black after years of deficits, but the Province’s move to borrow billions is a little more like taking one step forward and two steps back.
The 2014 provincial budget includes a $2.7 billion operating surplus and the Province is also claiming it has a consolidated surplus of $1.1 billion that takes into account totals for all expenses, revenues and savings.
However, the provincial government is also borrowing $5.1 billion for capital infrastructure projects this year. Once all the red ink is added up over the next three years, Alberta’s debt is anticipated to reach $21.5 billion by 2016-‘17.
Make no doubt about it, as much as the provincial government wants Albertans to believe it’s fiscal house is in order now that it is once again posting surpluses, Alberta is heading back on the road to massive debt.
After cutbacks and sacrifices in the 1990s, the work was proudly hailed for paying off a provincial debt built up over the 1980s. It was only last year that the provincial government made the final payment on more than $20 million in debt built up under previous Progressive Conservative governments.
It is true that Alberta built up an infrastructure deficit as the provincial debt was paid off and the boom years of the mid-2000s unfolded.
Alberta is once again facing growth and it does need to be prepared to face it with schools roads and hospitals new Albertans will wants and need.
The provincial government should be able to do just that within the confines of a balanced budget.
The provincial budget includes $421 million in interest and debt servicing, which amounts to one per cent of total operating revenues. This is $421 million that will not go towards nurses, teachers, sheriffs and other front-line workers.
The provincial government defends borrowing as needed to pay for new infrastructure. It is correct when it says new roads, schools and hospitals are needed to serve a growing population.
The Provincial government needs to respond this challenge, but it should do it without plunging Alberta back into debt.