In just six years, the value of Alberta's net financial assets--the broadest, most comprehensive measurement of Alberta's financial wealth--has dropped by 65 percent, from $34.5 billion in the 2006/07 fiscal year to $12.1 billion in 2012/13, a six-year, $22.4-billion decline.
The recent decline mimics how Alberta's net financial assets plunged by $36.2 billion be¬tween 1984/85 and 1993/94, from $15.3 billion in net assets to a net debt of $20.1 billion.
Arresting the present decline in Alberta's net financial assets has not been helped by historically high per-capita program spending. In 2012/13, such spending was $2,861 higher per person in real terms relative to the turn of the century. (This spending is not linked to flood relief, as this study ends with the last fiscal year, March 31, 2013, before the recent floods.)
The decline looks set to accelerate with recently announced borrowing and provincial spending on flood relief.
The common sense implication and recommendation is that the reality of spending beyond the province?s current means must be acknowledged and acted upon.
With the exception of extraordinary flood costs, normal, per-capita program spending must be restrained and pared sooner rather than later, and/or program spending held to a rate of growth below that of government revenues generally.
