The NDP government may have outlined a course to bring the provincial budget back to balance by 2023, but it needs to get a handle on rapidly rising interest costs that will linger much longer.
The 2018 provincial budget unveiled last week includes $1.9 billion in interest payments on Alberta’s current $54 million debt.
That’s $1.9 billion and rising, and it’s all lost doing nothing but going into the pockets of Alberta’s lenders instead of paying for vital services.
Only in health care, education, advanced education and community and social services is spending higher than the Province’s interest payments.
At $1.9 billion, the Alberta government will pay $300 million more in interest that it will for children’s services in 2018. Interest payments are almost half a billion dollars more than what the Province expects to pay for justice and the solicitor general office and they’re three times what the Province is planning to spend on seniors and housing.
Granted, the interest is roughly 3.5 per cent of the Province’s total expenses, but it’s rising quickly. This year’s interest payment is nearly double what the Province paid two years ago and interest payments are on course to reach $2.9 billion by 2020. It could be higher if Alberta’s credit rating is downgraded once again.
Alberta’s debt is on track to reach as high as $96 billion by the time the Province is in the black, which will only drive interest payments up further.
The NDP government was faced with a difficult choice when Alberta descended into recession. As Finance Minister Joe Ceci has said, the Province chose to build, because deep cuts could’ve risked making the situation worse.
Now that the provincial economy is showing signs of turning the corner, it’s essential the Province brings the budget back into balance, keep spending under control and have a plan to bring down debt and interest payments.
