The NDP budget released this week throws caution to the wind in its reckless fiscal plan, and punishes families with a $3 billion carbon tax.
Driven by a decade of overspending, Alberta has already run eight consecutive deficits under four PC premiers and one NDP premier. Alberta’s net financial assets have declined by $65 billion since 2008 – a staggering balance sheet meltdown that should shock Albertans.
With a consolidated deficit of $14 billion this year alone, Alberta’s debt will reach at least $56 billion by 2018. The sheer size of the fiscal hole that our government is digging is real cause for worry.
However serious this problem is, it was entirely avoidable. Governments of different partisan stripes over the last decade refused to heed calls for spending restraint, and we are now reaping the consequences.
While the Wildrose called for $2 billion of spending reductions from 2015 levels, the NDP will forge ahead with huge new spending increases of $6.5 billion over the next three years.
Under former Premier Alison Redford, Ralph Klein’s strict controls against excessive government borrowing were repealed, and replaced with weaker controls that contributed to the current state of our finances. Last November, Premier Rachel Notley watered down these already weak controls even further, raising Alberta’s legal debt ceiling to 15 per cent of GDP.
After just five months, the NDP are already projected to break their own debt ceiling law, and quietly announced that they will repeal it in order to make this budget legal.
Having no debt limits whatsoever will put Alberta on course for yet another costly credit downgrade.
Even without another credit downgrade, debt interest costs will reach $2 billion per year by 2018, making it the most expensive branch of government after health, education and social services.
As much as the NDP may dismiss these facts as academic balance sheet issues, they have real consequences for Albertans.
Higher debt interest costs will be passed on to Albertans, costing the average family $2,000. That’s $2,000 a year that will only pay interest on the government’s credit card, without a single penny of the principle.
In addition to reckless borrowing, the NDP’s budget will impose the single largest tax increase in Alberta’s history. The Carbon Tax will ramp up starting in 2017 and raise $9.6 billion over five years, costing the typical family roughly $1,000 a year. The rebate cheques will cover less than half of this cost, ignore the higher costs to electricity and consumer goods, and exclude an Albertan with an income higher than $51,000.
Now what is all of this borrowing and new taxes going towards? Mostly, new bureaucrats and government slush funds.
More than three quarters of the Carbon Tax’s $9.6 billion in revenue will be directed mostly to a series of corporate welfare subsidies and spending programs that the NDP hope will be able to entirely reform our power grid in just a few short years. It’s a risky gamble on an experiment that has yet to work in any other North American jurisdiction.
Most of the borrowing will go to paying for the already bloated size of government. Rather than put forward a serious job creation plan for the private sector, the NDP’s budget hires even more, high-priced bureaucrats to staff the government’s ranks.
Instead of increasing spending by $5 billion over the next three years, the Wildrose presented a 10-point spending reduction proposal that would generate $2 billion in savings this year while keeping essential services intact. Given that our government spends $2,000 more person than BC and Ontario – that’s $8 billion in added spending annually – finding meaningful savings every year while holding the line in general is the only responsible way to address our fiscal crisis.
Carbon taxes and massive debt is not the answer. The NDP’s 2016 budget is hugely irresponsible and imposes punishing new costs on families today and promises even more in the future. The Official Opposition will hold them to account and continue to propose solutions to undo the damage.
Derek Fildebrandt is the Wildrose Shadow Minister of Finance and the MLA for Strathmore-Brooks