No plan in sight to pay off mammoth debt

It’s a big NDP budget, stuffed with fluff and feathers, but the shocking number that soon jumped out isn’t even in it. $96 billion.

That’s the debt the province will carry by 2023-24.

You won’t find it anywhere in the 170-page fiscal plan. The figure was first mentioned, then confirmed, by officials and Finance Minister Joe Ceci.

This is actual money that will have to be repaid in cash.

The NDP has a “path” for balancing the annual budget by 2023-24, but it’s strewn with risks.

And there’s no plan at all for the long slog of paying down that mammoth $96-billion debt.

The province will pay nearly $2 billion in annual interest on today’s debt, estimated at $54 billion in the new budget year.

By 2021, the annual interest charge will be $2.9 billion as debt hits $77 billion.

The budget doesn’t show an interest calculation for 2023-24, when debt will be $96 billion.

But you can bet that by then, this province will be paying $5 billion a year.

Even now, it’s clear that the government is borrowing money to pay interest on money it has already borrowed.

And the books also show that the province has not been repaying any principal.

Now, I’m one of those who agrees with the government’s social and environmental objectives. It would be awful if these important gains were reversed.

But all this has to be paid for, and the government is rapidly approaching the point where its grand designs will be unsustainable. In the end, good plans can never survive bad finances.

Starting in 1992, the province erupted in a fiscal revolution when the provincial debt was $23 billion and Premier Ralph Klein took office.

Klein’s cost-cutting agenda — including a five per cent pay cut for a great swath of people earning public salaries — met tough opposition, but also wide general support. Finances were seen as a serious crisis.

And yet, in hindsight, that problem looks almost minor.

The debt of those days would amount to only $35.6 billion in 2018 dollars.

Today’s debt is nearly $20 billion higher than that. By 202324, Alberta will have a crisis three times bigger than the one Klein faced.

Economists might say the parallel isn’t exact because today’s economy is bigger and more complex, with higher capacity to generate revenue.

But it’s very hard to see where all the necessary money will come from — except the bankers and, ultimately, taxpayers.

The coming annual budget will have a deficit of $8.8 billion. That’s only $300 million lower than the fiscal year now ending.

Deficits will continue right through to 2022-23, although declining, until a surplus of $700 million arrives in 2023-24.

To support that projection, the NDP projects a spectacular $18.4-billion increase in annual revenue — from $47.9 billion this year to $66.3 billion in 2023-24.

Much of that is supposed to come from uncertain sources, including the Kinder Morgan pipeline.

Full construction and operation would bring higher prices and, thus, higher royalty payments.

Directly linked is another source of revenue the NDP anticipates; much higher carbon tax receipts.

The government counts on the carbon price rising to $40 per tonne in 2021, and $50 in 2022.

By that time, carbon plan “allocations” — including rebates — will decline, and more of the higher carbon tax money will go into general revenue for paying down the deficit.

Premier Rachel Notley says she won’t agree to those carbon price hikes if the pipeline isn’t built.

But the NDP is well aware that Ottawa would then just impose the increases on Albertans, and rebate the revenue to the province.

The catch is that it all depends on the federal Liberals, and Notley, still being in office after 2019. What if they aren’t? Conservative governments would abolish the carbon plan, and the revenue would vanish.

The mammoth gap between revenue and spending would have to be plugged — by a new premier named Jason Kenney.

His answers will make Ralph Klein’s look like a public-sector picnic day.