Will Albertans follow Notley down debt-filled budget path?
Alberta has its first-ever NDP provincial budget. Sort of. The budget released on Tuesday is a hybrid budget — combining the spending and taxation aspects of the old Progressive Conservative budget unveiled in March with the increased spending and taxation promises made by the new NDP government elected in May.
Think of it as the PC budget on steroids.
But there is one really big difference — huge, really — between the old PC budget and the new NDP budget. We won’t see it, though, until early next year.
That’s when the NDP government will make a dramatic break from the past.
Starting in 2016, not only will the NDP be borrowing money for capital expenses, it will start to borrow money for operational expenses.
In other words, not only will it take out billions in loans to build projects such as schools and hospitals, it will take out billions in loans to pay public sector workers such as teachers and nurses.
An Alberta government hasn’t borrowed money to pay wages in more than 20 years.
The NDP will borrow $700 million for operations next year and more than $3 billion the year after.
Say hello to the new government, much like the old government … of Don Getty.
Premier Rachel Notley might not like the comparison with a such a well-meaning but unsuccessful predecessor but there are striking similarities.
Getty borrowed money, raised taxes and refused to eviscerate government services.
He didn’t last to see his policies through. He resigned and was replaced by Ralph Klein, whose answer to an economic downturn was to slash government spending, cut transfers to municipal governments, kick 30,000 welfare recipients off benefits, increase health care premiums, hike university tuitions and chop hundreds of public sector workers.
Even when the price of oil recovered, Klein focused on running a budget surplus while running up an infrastructure deficit by refusing to invest enough money in everything from new hospitals to road repairs.
Notley is determined to take a different route.
She is sticking to a plan — outlined in her election platform — to invest in infrastructure projects and protect government services.
She will exhaust the Contingency Account, the province’s $6.5-billion savings account, by the end of next year.
That’s why she will have Finance Minister Joe Ceci start borrowing money in 2016 to keep the lights on.
“There are those who believe that when the price of oil comes down, it is time to fire teachers and nurses,” said Ceci during his budget address. “Albertans told us during our budget consultations that they fundamentally disagree with this talk about multi-million dollars cuts to their health care or their children’s education.” That is true, to a point. While there was a lot of talk this year about the NDP borrowing money to, for example, build new schools, there wasn’t much talk, if any, about the government borrowing money to pay the wages of teachers who’ll be working in those new schools.
Notley is hoping Albertans will understand and appreciate what she’s trying to do, that they will see the value in new infrastructure projects even when they realize the government is planning to run a string of consecutive deficits and be a whopping $36 billion in total debt by the end of 2018.
She is hoping they will believe she can balance the budget once again in 2019, in time for the next provincial election. It is a promise that, like so many PC promises of old, depends on the price of oil recovering.
It also depends on what her government comes up with through its review of the royalty rate system — something that might generate more income in 2017.
Most of all, Notley is hoping voters are ready to follow her down a path paved with the best of intentions, even if it is one riddled with deficit potholes.