Governments must live within our means

By George Brown, editor

Living within our means.

It’s what we have to do as citizens and families. But it’s usually an afterthought for our governments.

Sure, you have a mortgage, a car loan, some credit card debt and if you’re starting out in your career, a student load to repay. Backstopping you is the loans officer at your bank who won’t let your debt get out of control. They won’t let you incur any more debt than your household income is capable of paying off over time. Warning bells go off when your debt payments consume one-third of your gross income.

The Alberta government has tabled a budget that takes savings out of the piggybank to pay the bills; the federal government will continue to spend more money than it can squeeze out of Canadian taxpayers (unimaginable as that may seem) and post another enormous $54-billion deficit. Two generations of Canadian taxpayers have seen barely a dozen surplus budgets — most of them coming during the years Paul Martin was the Reform party’s finance minister in Liberal clothing.

Why do Albertans and Canadians continue to allow this to happen? Municipalities “creations” of the provinces, cannot run a deficit. Why do we not legally require our senior levels of government to balance the budget every year unless there is a major catastrophe?

In your household, if your spouse loses his/her job, your first reaction is not to max out your credit cards and try to spend your way out of economic difficulty. You reduce spending, find a new job, vacation in Hanna rather than Hawaii, and maybe sell off that boat or snowmobile to reduce your debt load.

Albertans can take some solace in the fact the Stelmach government doesn’t have to borrow to cover its deficit budgets over the next few years. Instead of borrowing the rent money from mom and dad, the province will use its savings account to pay the bills. The government plans to draw down the sustainability fund from $16.8 billion in 2009 to less than $3 billion in 2012-13 — the year of the next provincial election.

Not only does Alberta have to balance its budget soon — and again this PC government is hoping (more likely praying) resource prices rebound to provide that new revenue — it has to rebuild the sustainability fund and repay any new debt. It’s much easier for government’s to respond to economic uncertainties when they have money in the bank.

The next step for the government should be to legislate that a good portion of resource revenues be dedicated annually to the Heritage Savings Trust Fund.

Alberta’s current economic crisis wasn’t brought on solely by the global recession; at least a half a dozen years of out of control spending and poor financial planning put the province into a tailspin. As billions of unbudgeted revenue flowed into Alberta’s coffers, cabinet ministers, nurses, teachers, special interest groups and municipalities lined up at the trough. Program spending shot out of control.

Spending has also been out of control federally since we’ve become accustomed to Liberal and Conservative minority governments, each compromising its principles to get its budget passed in the House of Commons and in the court of public opinion. Had the feds’ spending increases matched the rate of inflation and population growth, the government would have been billions ahead and in a better position to weather this financial storm.

Federally, provincially and municipally, our governments continually outspend the combined rate of inflation and population growth. Clearly, this strategy is not sustainable at any level. Governments must lead by example and make prudent program and service cuts and freeze spending; any new projects must be funded through reserves and previously confirmed funding sources.

We’re beginning to see modest growth in our communities, throughout Alberta and across the nation. But now is not the time to throw caution to the wind and spend like another boom is imminent.

To lay the foundation for future economic and political success, our governments need to take a look back and recall those glorious days of yesteryear when they took a moderate tax for moderate growth and spent it wisely.

And lived within their means.