How to eliminate Alberta’s $3.5 billion deficit

Using the updated numbers from the 3rd Quarter Fiscal Update, the Canadian Taxpayers Federation (CTF) projects

Derek Fildebrandt


Using the updated numbers from the 3rd Quarter Fiscal Update, the Canadian Taxpayers Federation (CTF) projects that the Redford government is on track to post a $3.5 billion deficit this fiscal year, bringing Alberta’s debt up to $8.7 billion. By the end of fiscal year 2015-16, Alberta’s debt will stand at an eye watering $17 billion.

This, when the premier pledged repeatedly during the 2012 election that she would balance the budget before March 31st, 2014. Unless she has $3.5 billion secretly stuffed in a mattress, Premier Redford will break this promise by a spectacular margin.

The province can no longer cushion its deficits with the now defunct Sustainability Fund, having drawn it down by $14.2 billion since 2008-09. Between the Sustainability Fund withdraws and new debt taken on, the province will have blown $22 billion in just seven years to dam its ‘short-term’ budget hole, which isn’t even close to being plugged yet.

It doesn’t take a rocket scientist to tell that something must have gone off the rails when the wealthiest jurisdiction in North America isn’t able to pay the bills.

Finance Minister Doug Horner may table yet another budget on March 6th with the numbers cooked up to look much better than they are; but despite his Mr. Horner’s best efforts, nothing can hide the fact that the Sustainability Fund is nearly empty, and the government is still spending $3.5 billion more than it brings in every year.

On February 3rd, the CTF provided some unsolicited advice to the minister of finance in the form of a 67-page balanced budget plan titled Rebuilding the Alberta Advantage.

The CTF’s plan lays out $3.1 billion in spending reductions and savings to balance the budget by the end of fiscal year 2015-16, two years later than Premier Redford’s promise during the election. Better late than never.

In Alberta, government employee compensation is wildly out of line with most equivalent jobs in the private sector – 10.3 per cent more for the same job according to the Fraser Institute. The CTF’s balanced budget plan works to close this gap and save $1.26 billion a year by enforcing a hiring and wage freeze, rolling back government wages by 2 per cent, and reducing the number of non-frontline bureaucrats by 5 per cent.

Alberta has a competitive business tax rate, but our government continues to subsidize businesses. The CTF’s plan has identified $141 million in low-hanging corporate welfare subsidies that any government interested in balancing the budget would be wise to eliminate, and $100 million in assets held by the Alberta Enterprise Corporation’s slush fund.

The CTF’s plan would also see the five-year capital plan expanded over seven years. This means that most infrastructure projects current planned would still get built, but that some measure of prioritization will be forced upon the government.

Few would disparage the government for building important infrastructure projects that are critical for a growing province, but the government’s plan isn’t to build what can be afforded – or even needed – but to just build everything it wants and put it on the credit card. This is a plan that will result in rising interest payments on the debt (from $205 million in 2009 to a projected $1 billion in 2015), which will eventually crowd out spending priorities like healthcare, education, and of course, infrastructure.

When the government tables its budget on March 6th, Premier Redford has only one option if she has any intention of belatedly keeping her promise to balance the budget without raising taxes: cut spending.


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