The Government of Alberta has posted an online survey to get input from Albertans as they work towards developing next year’s budget. You can find the survey online at http://www.budgetdialogue.alberta.ca/. Below you will find my answers to the survey where I push for reduced spending and balanced budgets! This issue is critically important to our province. If you agree with the principles of the Alberta Blue Committee, please take a few minutes to answer this survey yourself and add your voice to the call for responsible government.
Question 1: Setting the right priorities
Albertans have worked hard to get out of debt, but during the recent global economic downturn the province ran a deficit. The shortfall in the budget was covered by the province’s rainy day fund (the Sustainability Fund), which helped us maintain programs and services without going into debt. We used the fund because Albertans said it was the right thing to do at the time. But we want to know how that fits with your priorities today.
Rank the following in order of priority (1-4):
Balance the budget (no deficit)
Spending on priority areas
Maintaining low taxes
Saving for the future
My Response and Comments
- Balance the Budget
- Saving for the future
- Maintaining low taxes
- Spending on priority areas
The trouble with this question is that the priority for the next budget should be “Cutting spending.”Alberta is spending 40 percent more than Ontario and 30 percent more than British Columbia to deliver the same basket of services. If Alberta cut $12 billion out of its $30 billion budget, we would be spending the same as Ontario to deliver health, education, social services and everything else.
In short, spending is out of control in Alberta and needs to be cut. That should be the number one priority.
Questions 2 and 3:
Meeting your needs
One of the biggest challenges for any government is managing all the competing priorities. Just like your household budget, we need to determine where the money goes.
How would you allocate the budget?
Health
Education
Social Services
Agriculture, Resource Management and Economic Development
Other (Other includes transportation, justice and policing, regional planning and development, environment, recreation and culture, housing, government operations and administration, and debt servicing costs.)
Please rank the items in the ‘other’ category from one to six:
Transportation
Justice and Policing
Regional Planning and Development
Environment
Recreation and Culture
Housing
My Response and Comments
40% Health
30% Education
10% Social Services
5% Agriculture, Resource Management and Economic Development
15% Other
- Justice and Policing
- Environment
- Transportation
- Recreation and Culture
- Regional Planning and Development
- Housing
The button I wanted to push for this question was “less than we are spending now”. In general I find this type of question unhelpful, though what the government is trying to do is gauge relative priorities. On that front, I must say that I prefer how Alberta does education to how it does health care, and by a wide margin. Our education system is the best in the world because it gives parents choice between state schools, charter schools, independent schools (some of which are part of the state school system and some remain separate) and home schools. And these are all public schools in the sense that they are all funded by the public purse. What a great province.
Questions 4 and 5:
Building your province
Public infrastructure is essential to supporting a strong economy and maintaining the quality of life for Albertans – giving us the schools, health facilities and roads we need for a growing economy.
Through the current three-year capital plan, Alberta will invest roughly $18 billion to pave or re-pave approximately 1,400 km of highway, build five new health facilities and 22 new schools, and maintain many other facilities.
Overall, how do you feel about investing in infrastructure? In the coming years would you like to see that investment:
Increase
Decrease
Remain the same
Would you be willing to borrow to invest in infrastructure – just like taking out a loan to buy a car?
Yes
No
My Response and Comments
Overall, I would like to see investment in infrastructure decrease.
I would not be willing to borrow to invest in infrastructure.
The first question is obvious. Where I live (Chestermere) the government is building highways where no one lives, they are building sculptures that I drive over (called overpasses) and they are building massive hospitals where very few folks seem to live (south Calgary). I’m all for infrastructure and believe this is a government responsibility, but following the massive injection by the federal government and the 10 year spending spree we have been on provincially, I can’t shake the feeling that we should, as in all other areas of spending, just take a breath and slow it down, if not reverse it!
The second question is curious. At about the time I worked at Alberta finance (at the turn of the century), the accounting for infrastructure changed from a cash model (where the government had to book all expenditures on infrastructure in the year they were spent) to an accrual model (that allowed for booking of capital expenses over a much longer period of time based on some notion of depreciation). The result is that our accounting system means we are effectively borrowing already – we can spend billions on infrastructure and only book a fraction of the total cost.
To say that we want to borrow on top of this, well, I just don’t think that makes sense. Households cannot account for a large expenditure by “booking” the costs over many years… and then also take out a loan. So neither should governments!
Question 6: Saving for the future
When Alberta has returned to a balanced budget and has a surplus, what are your priorities for that surplus revenue?
Heritage Fund (province’s long-term savings account)
Sustainability Fund (province’s short-term, or ‘rainy day’ savings account)
Spending (programs and services)
One-time capital projects
My Response and Comments
I would put 100 percent in the Heritage Fund.
Here’s why. During the 1990s, a vast majority of our surpluses went into the Sustainability Fund. And guess what happened when we headed into deficit? Right, the government plundered the sustainability fund. By the end of next year Alberta will have wiped clean most of the sustainability fund.
Let’s stop that. Let’s stop pretending deficits aren’t so bad because we have a “sustainability fund”. Let’s make politicians run deficits and build up debt… or face the wrath of Albertans by draining the very popular Heritage Fund.
The purists will say I am just engaging in a communications exercise. Fine. But that’s how the government got away with wiping out a decade’s worth of savings in just three years.
And it should go without say that the last thing we need is more spending. Cripes!
Bonus Question:
If there are options or priorities we haven’t mentioned, we want to know that too.
My Response and Comments
If Alberta spent the same per person as Ontario to deliver all the programs Albertans value, we would be spending $12 billion less. If we spent the same as British Columbia per person, we’d be spending $8 billion less. And I see no evidence that we get better services than Ontario or British Columbia. It’s simply profligate spending, because we think we can.
And why is Alberta spending so much? Because it is squandering our children’s inheritance. Alberta is spending all of the resource revenues it takes in. But these are not really revenues, they are merely the conversion of an asset in the ground (oil and gas) into a financial asset (royalties). Alberta is squandering our assets to pay for today’s consumption.
Alberta desperately needs to cut at least (at least!) $5 billion from our spending. This should be a cakewalk. Look at what BC does on education and what Ontario does on health care, and you’ll be there.
Please, please cut spending and stop squandering our children’s inheritance.
