We all love good news. But if a deal sounds too good to be true, it probably is.
The old adage applies as much to governments and budgets as to used car salesmen with gold teeth, alligator smiles and plaid jackets.
Taxpayers and buyers beware. Once the veneer of fine-sounding words has been removed, something unpleasant may be lurking. Tax increases, for instance.
Last Thursday, Finance Minister Ron Liepert presented a budget that appeared more to do with electioneering than prudent management of the province’s resources. There were no new taxes, tax increases or public service cuts, but more money for health care, the severely disabled, education and single mothers.
The budget projects a deficit of $886 million in 2012-2013, down from $1.3 billion last year, a surplus of nearly $1 billion the following year and a $5.2 billion surplus in 2014-15.
Sounds too good to be true?
Opposition parties have panned Premier Alison Redford’s budget as a pre-election spending spree that relies on unrealistically optimistic oil and gas price projections.
There seems some merit to their criticism, for while it is often laudable to view the world through rose-tinted spectacles, wise economic management demands caution and a conservative approach.
The government is banking on strengthening natural resource revenues to reach budget goals for the next three years, with bitumen royalties and natural gas prices to jump significantly.
And what about the Canadian dollar? Redford is hoping the dollar will stay at par or go down.
For every one-cent increase in the exchange rate, the treasury will take an estimated $247 million hit.
Taken together, these projections begin to sound too much like a gamble with the province’s future.
Such a concern is heightened by the government’s ongoing raid of its “rainy day” account, the Sustainability Fund. At the end of fiscal 2011, the fund held $14.9 billion. By 2015, it will have shrunk to $2.4 billion.
“Our province worked hard to pay off its accumulated debt and build up the Sustainability Fund to use in difficult times,” said Liepert.
“We can afford to spend this much, and we will be disciplined enough to spend no more.”
Yet why should Albertans believe this, when discipline does not appear a hallmark of those holding the province’s purse strings?
A piggybank is for emergencies, not a cover for living beyond one’s means – something the average household managing a family budget would surely attest to.
Of course, the government might be right with its commodity price projections, but why expose the province to so much risk? We should leave such risk taking to gamblers in the casino. At least they are spending their own money.
Is it a progressive budget? Draining your savings account for short-term gain seems like a regressive step. Is it conservative? Surely a conservative approach would be to assume slightly lower average gas and oil prices and not to bank on best-case scenarios.
Never mind the official blue of the PC party.
What people should really be seeing after last week is red. If not a red mist of rage, then at least a red flag.
Taxpayers should be on their guard.
