Alberta’s growing debt problem deserves some serious attention
Finance minister Ceci faces tough task of justifying our fiscal plan to Wall Street
As far as quotes of the week go, this one romped home by at least three furlongs: “They were asking for further elaboration to understand the fundamentals that we built our plan on.”
Quick, give Alberta Finance Minister Joe Ceci some type of lifetime achievement award for coming up with that beauty in explaining the reaction of the various international rating agencies to Alberta’s ongoing fiscal plan.
Ceci was in Toronto, trying to explain our current government’s “we’ll eventually balance the books” narrative to the worldweary analysts of outfits such as Moody’s and Standard & Poor’s.
To be fair, he went in there with a decent shot. After all, these are the same bunch that merrily handed out Triple As to those apparently safe-as-houses bundled mortgage investments a while back — consisting of loans to people who really couldn’t afford a second-hand hamster cage, never mind a four-bedroom villa in Florida with room for that someday pony.
Yep, bankers, along with their various Wall Street kissing cousins, love selling hamburger as steak to us poor rubes, while grabbing their fat fees.
Sadly, the opinion of these outfits actually still matters when you borrow a ton of money, as their ratings influence the interest rate Alberta pays on its debt. And that’s now growing by almost a billion bucks each month.
When you owe $70 billion and counting, then an extra per cent or two of interest can soon make even the most blasé finance minister’s eyes water. Yes, once the world of finance has you by the naughty bits, they’ll squeeze. Call someone in Greece to gain a true understanding of how that works.
So, odds are, after listening to Ceci’s mind-numbing explanation about how he and his government are going to balance the books sometime over the rainbow, which equates to about 2023-24, they likely met for about five minutes, ordered in some bubbly on someone else’s tab, then agreed to downgrade Alberta, though to appear prudent and thorough, they probably won’t announce that for a few weeks.
Looking back, Ceci certainly got the shortest of short straws in being made finance minister from among the weak-kneed collection of social engineering wannabes that collectively comprise this government we’re saddled with.
Still, distasteful as it must be, someone has to do the job, and that entails trying to sell the strange idea there’s some sliver of fiscal sanity still remaining in Alberta. But when you’re budgeting to spend $10.3 billion a year more than you take in just to keep those government-installed light bulbs on, that’s no easy task.
Even that unholy borrowing binge is based upon oil prices averaging $55 a barrel — a number not reached so far in this admittedly still-young fiscal year.
Just to show how bad things actually are, we recently got Canadian GDP numbers for 2016.
While the entire country grew at a reasonable 1.4 per cent clip, Alberta’s economy shrank by 3.8 per cent. That was even worse than the horror show of a year previous, when it fell by 3.7 per cent.
You’d have to travel back 35 years to find a time when GDP fell for two consecutive years in our province. Of course, if anything falls far enough, even economies, eventually the bottom arrives with a resounding thud. Maybe these green shoots that Ceci loves to blather on about are actually daisies growing out of the broken husk left splattered on that particular landing spot.
Still, you have to give the guy credit for continuing to smile happily as he wanders past this economic graveyard.
“We were sharing what that plan was and I was clear throughout that we will continue to have the backs of Albertans throughout this difficult time,” said Ceci of his rating-agency chinwag.
“They didn’t share any disagreement or disappointment with our plan — they were asking for further elaboration to understand the fundamentals that we built our plan on.” Oh, no doubt they were. They certainly wouldn’t be alone in that.