Province facing looming debt crisis, panellists say
Former Saskatchewan NDP finance minister urges cuts to program spending
The Alberta government is depending on rising oil prices to balance the budget instead of tightening the purse strings to reduce spending, says a former Saskatchewan NDP finance minister.
“My message to them is to do more now,” said Janice MacKinnon in an interview Thursday. “Three or four years from now it’s a crisis … that track isn’t necessary.”
She was one of several former politicians and political advisers who spoke about Alberta’s fiscal future during a University of Calgary School of Public Policy event at the Hotel Macdonald.
MacKinnon, who was appointed finance minister in 1993 under former Saskatchewan premier Roy Romanow, explained how the NDP had slashed spending due to a slumping credit rating and rising debt.
There are lessons for the Alberta NDP in how Romanow’s government dealt with a bleak fiscal situation, she said.
“If they looked at what happened in Saskatchewan, the government would be moving more quickly with plans to balance the budget and reduce spending, and do program review … to avoid having to make the really difficult and painful decisions,” she said.
The March budget estimated a debt load that will balloon to $96 billion by 2023 from $54 billion in 2018-19.
Alberta Finance Minister Joe Ceci’s most recent fiscal update included a deficit of $7.8 billion this year, down from the projected $8.8 billion. He said the province is on track to balance the budget by 2023-24.
He attributed a $1-billion deficit reduction to resource revenue brought about by higher than expected oil prices and a low U.S.Canada exchange rate.
In the August update, the province also increased its forecast of the average West Texas Intermediate oil price to US$61 per barrel from US$59 per barrel for the year.
“They ’re relying too much on the price of oil recovering,” Mac-Kinnon said. “A plan requires program reductions.”
Panellist and former Alberta PC MLA Jim Dinning, who was provincial treasurer under Ralph Klein during the 1990s, said job creation needs to be the government’s singular focus.
“We are on our way to the ministry of debt servicing being the fifth or sixth largest department of government,” he said in an interview.
“We don’t have a revenue problem, we have a spending problem.”
He said the province needs to “use a scalpel” to determine what programs can be cut.
“When you find yourself in a hole, the first thing you’ve got to do is stop digging,” he said. “My conservative party and colleagues left the NDP a hole … an accumulating deficit and debt. And the NDP problem is that they didn’t stop digging.”
Former deputy provincial treasurer Al O’Brien, who was also a panellist, said Alberta’s current debt and deficit are manageable, but there’s no plan to balance the books.
“There’s no acknowledgment that the current situation is unsustainable,” he said, adding one of the issues is communicating fiscal worries to the public.
“Albertans don’t regard this situation as one that must be addressed.”