A lot of the recent public discussion of Alberta’s debt has more to do with scoring political points than talking about the actual state of our provincial economy and our government’s finances. The reality is our economy is rebounding and our government’s balance sheet is the best in the country.
After two years of recession, a collapse of energy-sector investment, and an unemployment surge, green shoots are starting to appear in Alberta. Our economy is forecast to grow by 2.4% in 2017, led by oil and manufacturing exports and government infrastructure spending and reconstruction in Fort Mac. Employment has gone up in six of the last seven months, and the number of full-time jobs have increased by 24,000 since July.
The size of Alberta’s deficit and debt are meaningless without reference to the size of our provincial economy. Our deficit to GDP was -3.5% in 16-17, it’s forecast to be half that in 19-20 (-1.8%). In 2016-17, our provincial government stuck with their stimulus plan (as they did in Budget 2017). Did the NDP act ideologically?
Consider this before you answer: Harper’s government had a -3.5% deficit to GDP ratio in 2009-10, the year after the global financial crisis started. Harper opened the floodgates of public spending and politicians of all stripes thought that was a good move, including Fort McMurray-Athabasca MP Brian Jean.
Nowadays as Wildrose leader Brian Jean makes a big deal out of the NDP’s stimulus budget, but back in 2009 he was a Tory MP that was in favour of short-term deficit-financed spending to stimulate the economy and maintain jobs. The 2009 version of Brian Jean told the Calgary Herald, “We are taking a hit today to invest in tomorrow. It’s better to pay on a mortgage than it is to rent a house and I think this is no different in this particular case.”
In any event, Jean has nothing to worry about when it comes to Alberta’s finances. Alberta’s program spending to GDP ratio is the second lowest in Canada, a bit behind Ontario. Our program spending per capita ranks third in Canada and our long-term average ranking is fourth.
Politically what matters is the Alberta NDP spends less per capita than Brad Wall’s conservative government in Saskatchewan. In 2017, SK will spend $217 more than Alberta. For those keeping score, that’s three Alberta NDP budgets and in all three years Notley spent less per capita than Wall.
Alberta’s net debt to GDP ratio is 3.1% now and will rise to 7.1% over this year. The next lowest net debt to GDP ratio of a Canadian province is SK at 13.8% now, rising to 15.2% over this year.
All in all, after two years of the government of Alberta acting as a shock absorber, our province still has the best balance sheet in the country and green shoots are appearing in the private sector just in time for spring.