Forty-one billion dollars. That’s the extra amount, over and above what was needed to keep pace with population growth and inflation between 2006 and 2013, this to fund Alberta government program spending in those years.
Alberta Premier Jim Prentice is in the midst of formulating his first budget and the fiscal path of the province while watching oil prices continue to decline.
If you listen to Alberta Finance Minister Doug Horner, the province's public finances are under control. The government's budget imposes no new taxes, spending growth has been moderated, and Alberta is running an operational budget surplus after successive years of budgetary deficits.
When apologists for the provincial government's new borrowing binge defend it on the grounds that private sector companies borrow money for capital expenses so why not have the Alberta government do the same? their defence invariably contains a significant and faulty assumption: that political behaviour is the same as that of private companies.
As Albertans approach another provincial budget, the usual fables about Alberta's finances often crop up. To inoculate ourselves in advance, let's ponder two myths.
Myth Number One: Alberta's wealth is a result of luck.
This tall tale assumes that the existence of natural resources automatically results in wealth creation, jobs, and a higher standard of living. That's hardly the case. Plenty of jurisdictions have little in the way of natural resources but prosper, while others have plentiful natural resources yet flounder.
For those who dont normally read budget documents, heres what the Alberta government just did in its 2013 budget: they abandoned the sensible budget and financial framework that former Progressive Conservative Finance Minister Jim Dinning introduced in 1993.
The red-ink budgets that have engulfed Alberta since the last recessionAlbertas Finance Minister Doug Horner just announced this years deficit could hit $4-billion are not accidental. Such red ink is not just the result of weaker resource revenues, as Alberta Premier Alison Redford regularly claims.
When governments enter an election year, the political temptation to play fast and loose with budget numbers is strong. The most famous example of this was probably the 1996 budget in British Columbia. That year, then-B.C. Premier Glen Clarks office injected sunshine into revenue forecasts, this in order to trumpet a balanced budget on the campaign trail. His office did so over the objections of Finance Ministry officials. Post-election, once that became known, the fudge-it budget scandal permanently tarred the NDP government.
As many students enrolled in algebra class are likely discovering, numbers can be rather dry. But a proper understanding of them is indispensable to modern life. Without hard, reliable numbers regularly checked, much personal, business, and government planning would be akin to gambling: throw the dice, risk the cash and hope for the best.
I digress on the importance of numbers because as arid as they are, its always curious when governments go to great efforts to avoid discussing them.