Alberta’s Progressive Conservative government released its budget last Thursday, and although the budget projects a surplus of $1.1 billion, its detractors cite borrowing ($5.1 billion this fiscal year alone for building infrastructure) as making the government’s claims of a good-news budget moot.
As far as Minister of Education and Athabasca-Sturgeon-Redwater MLA Jeff Johnson is concerned, the budget is “tremendous.”
Travis Olson, an Athabasca County resident and vice-president of communications for the Wildrose Party, said the budget addressed some concerns the party had, but also created areas of concern.
“Some of the highlights were some road construction in Calgary that was definitely needed,” Olson stated, adding the continued twinning of Highway 63 is also important. “There was $600 million for future planning in flood areas in southern Alberta to help with flood relief and flood prevention.”
However, Olson stated the budget is being publicized by the PC party in a way that is unfair to Albertans.
“The big thing would be the fact that by their projections, they are going to saddle Alberta with $21 billion in debt by the end of 2016,” Olson stated.
Johnson said the government will in fact have a surplus this fiscal year.
“We are projected to run a $2.6-billion surplus,” Johnson said. “That is fantastic.”
The $2.6-billion surplus is in the government’s operational budget (its day-to-day costs to run programs, pay salaries etc.); the debt to which Olson refers is money borrowed to finance projects under the capital budget (which covers the building and maintenance of projects like roads, schools and hospitals).
Johnson continued to say the third facet of the budget, the savings plan, is looking good. He said the Heritage Trust Fund and the Sustainability Fund are both where they should be.
“The fact is that we are running a big surplus, that the Heritage Trust Fund is going to grow. Plus, the Sustainability Fund, which is our short-term savings to balance off the dips, that is going to be back up at $5 billion by the end of this year,” Johnson explained. “The opposition had claimed that we were burning through our Heritage Trust Fund and that the Sustainability Fund is gone. Both of those accusations are not true, and the budget proves it.”
Olson said the Wildrose Party disagrees.
“Basically, we had a Sustainability Fund that had almost $17 billion in it, and it’s all but gone,” Olson said. “When (Minister of Finance Doug) Horner goes around and says the budget is balanced and we have a surplus … I don’t think that is respectful of Alberta.”
Olson said he does not believe Albertans will fall for it.
“I think it is incredibly insulting that he thinks that is actually going to work — that Albertans are that ignorant of simple accounting principles,” he said. “It is incredibly disrespectful, and I don’t appreciate it.”
Johnson said because the budget last year was bare bones, the PC party has been able to deliver on its promises.
“The promises that we made are all being delivered on, including 120 school projects,” he said. “Because of the tough decisions we made in the last budget, and trimming our operational costs, now we are back to a balanced budget a year before we thought we would be.”
Johnson said the government will not be allowed to spend more than three per cent of its operational revenue on debt interest payments.
“We are well below that,” Johnson said. “The reality is that we could pay cash for all these things, and the opposition wants us to pay cash for all the schools, the roads and the hospitals.”
Johnson said it would not be fiscally responsible to pay cash.
“We have enough money to pay cash for these things in the next three years, but we are making more than 11-per-cent interest on our savings account, and we can borrow money at less than four per cent because of our credit rating,” Johnson said. “Who in their right mind would liquidate their cash to pay for infrastructure? There is a big difference in borrowing money to build capital that is going to be there for 50 years and borrowing money for sustaining operations.”
Johnson stated Horner was presenting legislation that would create new endowment funds for medical research.
“We are creating three endowments, and one is based on rural Alberta and agriculture. That will turn out money every year for researching for agriculture and rural Alberta,” Johnson said.
Johnson acknowledged the province has always had debt, but he said it is the way it is managed that makes a difference.
“(Paying cash for everything) would do two things: that would slow us down so we wouldn’t get Highway 63 twinned, we wouldn’t get all the schools built, and we need them now. The other thing it would do is force us to take all the cash we have in the bank,” Johnson said. “We are not borrowing money for operations. We are borrowing it so we can amortize our capital, our schools, our senior centres, our roads.”
Highway 63 twinning is high on the government’s list of priorities.
“More than $600 million to complete the twinning of Highway 63 from Grassland to Fort McMurray,” Johnson said. “There is a lot more money in the budget for transportation because a lot of our roads are getting into disrepair, so we have to invest there.”
Johnson stated some of the money hasn’t been allocated yet, and he is going to be an advocate for Athabasca.
Olson said there is no way the government should be incurring debt with soaring revenues coming in.
“We are going to bring in almost $45 billion this year, and we have never brought that much money in before,” he said. “We are in absolute record booming times, and we are going to run massive deficits.”
Olson wants the PC government to be careful about throwing the term “surplus” around.
“Now, there are two different budgets, the operational and infrastructure, and the reason they are doing that is because they can’t balance the budget,” Olson explained.
Olson compared Alberta to Quebec and Ontario.
“They have the Bloc Quebecois, and one of the most liberal governments in Ontario’s history right now, and they are more fiscally conservative than we are by leaps and bounds,” Olson stated. “Per-capita spending of $11,000 per person is 20 per cent more than Quebec and Ontario.”
He stated the budget has some great attributes; however, he said, “There is a lot of wasteful spending there that we can do without.”
Olson stated the government is creating a problem future generations will have to pay off.
“It’s pretty frustrating sitting there and watching the intergenerational theft,” he said. “We are spending money in this generation that we are going to saddle our kids and grandkids with.
“We are spending like drunken sailors and asking our kids to pay for it by taking on all this debt,” he said. “I don’t think it is appropriate.”
