It is no secret that the Alberta government has a spending problem. Just how serious this addiction is was highlighted earlier this week when the province issued its first quarter budget update.
While headlines screamed Edmonton will record an $8.5 Billion surplus, the reality is that most of that money was allocated to new spending. After deducting the $4 Billion going to carbon capture technology and public transit, another $1 Billion for capital spending and a smattering of other expenses, including an increase for corporate welfare programs, the actual surplus will be closer to $2.5 Billion. But those are budget details. What’s significant is the unwelcome milestone Alberta has hit as a result of unplanned spending.
Alberta’s rightwing, fiscally responsible, red tape hating, big government loathing, strong and free “Conservative” government will spend $37.8 Billion on government programs in fiscal 2008/09. What makes this figure exceptional is that it is higher than spending in British Columbia. Those sandal-clad, NDP-voting, energy taxing, socialists on the left-coast are slated to spend “only” $37.7 Billion this year and they have nearly a million more citizens than Alberta.
If you break down provincial program spending per citizen, Alberta has held the top spot in Canada for a couple of years. It is now pulling away from the pack. In the west, Alberta spends $10,771 per person each year. That’s about one-third more than B.C.’s $8,001, Saskatchewan’s $8,090, and Manitoba’s $8,026. If a foreign academic was given this information and asked to determine which province is governed by a political party favouring ever-bigger government, Alberta would sadly win the contest.
Put this lavish spending into an international context. The Alberta government now spends about the same as the federal governments of Bulgaria, Latvia and Lithuania combined. These three NATO countries have 13 million citizens between them. Alberta’s population is only 3.5 million. Further, the Alberta government is spending $10 Billion per year more than the government of Pakistan, albeit a poor country with few social programs, but 168 million citizens and an impressive military.
Alberta’s program expenditures do not include all of its capital expenditures for the year, which also rank first in the nation when measured by citizen or by total dollars spent. The figures are striking: Ontario, home to 13 million Canadians, will spend $7.5 Billion on capital projects this year. Alberta with a population slightly more than a quarter of Ontario’s has budgeted $9 Billion. Edmonton is tossing around cash like it will be pumped from the ground forever. This policy has already cost Albertans more than they will ever know.
The province is able to afford its gold-plated spending because non-renewable resource revenues are at record highs. The Alberta government is projected to collect nearly $19 Billion in resource revenues this year. Alberta’s 10 per cent personal income tax is slated to collect $8.6 Billion, not even half of what the province currently collects from oil and natural gas. Or, looking at it another way, Alberta will collect more this year from oil and gas than it spent on all programs and services in the 2000/01 fiscal year when government receipts totaled $18 Billion.
Had the Alberta government limited their annual program spending increases to Alberta’s combined inflation and population growth rate each year starting in 2001, Edmonton would still be spending $27 Billion this year. This is $7,687 per Albertan and a little less than our three Western neighbours.
It would result in a $19.6 Billion surplus this year, the potential for which could be tremendous. Per person, it could allow the government to cut each Albertan a cheque for $5,585. Or, the government could cut cheques in half and put the other half ($9.8 Billion) into the Heritage Fund. Or the government could put half into the Heritage Fund and use the rest to eliminate personal income taxes. Why aren’t we doing any of this?
The Alberta government has squandered a tremendous opportunity to put the province and its citizens into a position of long-term wealth and financial security. Instead of choosing spending control, significant savings and tax reductions, they have chosen wild spending and token savings and tax cuts. All is not yet lost, but the longer we wait, the harder it will be to salvage this golden opportunity. Albertans may well look back on these years with tremendous regret.
Scott Hennig is Alberta director of the Canadian Taxpayers Federation