Hicks on Biz: Will Alberta end up like Greece? BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, OCTOBER 30, 2015
When reading about the latest provincial, federal or municipal budget, do your eyes not glaze over about three paragraphs in?
None of us can see beyond our own noses.
No serious tax increases are in the new Alberta ND government’s 2015-2016 budget. Good.
The 20 per cent of Edmontonians who work in the public or quasi-public sector can breathe easy. No lay-offs, no salary reductions. The New Democrats will not cut the civil service, the health system or public education. Good.
Good – now, back to the real world. How’s McDavid doing with the Oilers?
Oh, the government’s going into serious debt. Who cares!
The average Ontarian doesn’t care about his/her provincial government’s $300 billion debt and it’s way worse than ours. The annual interest Ontario pays on its debt is “only” $11 billion, or a little under 10% of its latest $125 billion budget.
Jolene and Joe Average couldn’t care less about what the ND are doing in Alberta, or the Liberals in Ontario. As long as we’re okay, Jack. That’s the only thing that matters.
Jolene and Joe won’t care until – eventually, if ever – we end up like Greece or Spain. Both countries went on spending sprees, lived far beyond their means by borrowing for decades.
Until the poop hit the fan. Those governments ran out of money and nobody would lend them any more money.
The Greeks have woken up to a staggering drop in per-capita income and no employment. The country is on the verge of chaos. Of course they are blaming everybody but themselves.
But that’s not going to happen to us, at least not for, say, another 30 years.
The ND budget projects, optimistically, an accumulated debt of $36 billion by 2019. That’s only $1 or $2 billion a year in interest payments, out of what will be $60 billion budget.
Who cares – if the debt keeps growing, it’ll be our children’s or our grandchildren’s problem, not ours! That’s way too far off in the future to worry about now.
So, really, Rachel Notley’s budget is just fine.
Doesn’t matter that our province’s number one wealth-generator has gone over a cliff, that our gross provincial income from oil and gas is 50% lower than what it was from 2006 to 2014.
Our government doesn’t have to tighten its belt. It’ll just borrow. The big-time lenders in London, New York City and the Middle East will be happy to lend money to us into the foreseeable future.
By the way, the NDs tell us the price of oil will magically return to $68 US a barrel in just a few years. At the same time, this government, through its recently released Climate Change Discussion Paper, is telling us the province must learn to live in a “fossil fuel-free world”.
What scares the bejeezus out of fiscal conservatives is sliding down this slippery slope of major government debt with no corresponding belt-tightening. But that worry has no resonance with Joe and Jolene, not yet.
Fiscal conservatives are horrifically afraid that this borrowing will never stop. Already, our government has pushed by its “promise” to balance budgets from 2017 to 2019.
By 2017, balancing the budget will likely be pushed back to 2021, by 2019 to 2024. And so it goes.
Today, the Ontario government brags it’s “only” adding $10.9 billion to its accumulated debt.
And so it could go on, until the Alberta governments ends up as loaded with debt (on a per-capita basis) as Ontario, Quebec and the federal government. P.S. Any legislation regarding a cap on borrowing isn’t worth the paper it is written on.
But even in Ontario, Quebec and all Canada, Joe and Jolene don’t seem to care.
So why should Albertans worry? Our city council is full of Joes and Jolenes. Provincial debt? Pffft … not our problem. Just give us more money.
Perhaps the inherent fiscal conservatism of Albertans will return, especially when the provincial economy worsens after Christmas.
Public pressure could force the New Democrats in their next budget – only five months from now – to rein in spending, and, if need be, introduce a provincial sales tax.
Then again, they can just go out and borrow some more.
Because nobody seems to care.