Alberta has the smallest debt-to-GDP ratio of all the Canadian provinces, a status that’s forecast to continue for the foreseeable future. Alberta is also the least taxed province in Canada by $8.7B, even after the NDP’s modest revenue reforms in the last two years.
That doesn’t stop the Wildrose and astroturf groups like the Canadian Taxpayers Federation (a federation of 5 people) from expressing ideological outrage about Alberta’s debt and claiming we need to lower taxes even further.
The Wildrose want Alberta to be debt free — not net debt free like Ralph Klein achieved in 1999-2000, but full-on debt free.
How would the government of Alberta build the Calgary cancer centre, the dozens of schools needed across the province, and new bridges, roads and public long-term care beds without taking on debt to build these assets?
The answer is simple: none of that infrastructure would be built without debt financing, and our current capital stock would continue to be neglected as it was under the PCs.
The Wildrose often claim to be advocating for business owners, but they don’t seem to get that debt is a regular part of private business, as it is for governments.
If the Wildrose walked into a downtown Calgary boardroom, say that of Suncor or CNRL, and demanded these oil sands giants conducted business without taking on debt, they’d be laughed out of the building.
During an oil price downturn, two things oil sands majors do is take on more debt and shift some of their short-term debt to long-term debt, because they are in business for the long haul and they need to maintain their assets and build new ones as their ever-evolving business strategies dictate. So some oil projects that were under construction when the price downturn started have been postponed or cancelled and some are being completed.
Governments shouldn’t be run like private businesses, but the government of Alberta is pulling a similar move to oil sands firms right now. Governments, especially ones with good balance sheets like Alberta, can get lower interest rates than large corporations, so Alberta is taking on debt to maintain current assets and build new ones that have been needed for years.
The government is also making tough choices about prioritizing some projects over others. Just ask Hinton’s mayor Rob Mackin, who sat next to me during the Budget 2017 lock-up on Thursday. He was there to see if Hinton is going to get a new public long-term care facility, among other reasons. Such a facility is needed but not in the cards for 2017.
Sure, it would be better if the province could build Calgary a cancer centre without debt financing, but that option isn’t available to the NDP because the Klein PCs eviscerated the government’s ability to raise enough revenue to even pay for core services like health care and education during oil price downturns.
Klein must have had a sense of humour because he called kneecapping the government’s ability to raise enough revenue to cover core services “the Alberta Advantage.” Alberta should turn to the Saskatchewan Advantage, if we adopted Brad Wall’s tax plan then we’d raise $9B more in revenue per year and maybe then towns like Hinton could build the public long-term care facilities they need.