News flash: Alberta’s financial policies are “not sustainable” over the long term.
That blunt assessment doesn’t come from partisan opposition critics, number-crunching economists or opinionated busybodies like myself who have warned the Notley government of a budget snowball headed toward the province.
Instead, the new critique comes from another corner: the independent Parliamentary Budget Officer in Ottawa.
Essentially, Alberta is spending way too much money on programs while collecting far too little revenue to cover the shortfall.
It has led to back-to-back $10-billion budget deficits, and the prospect of $16.9 billion in additional red ink projected for the next two years.
In a report released last week, the PBO reviewed the finances of the federal government, as well as each province (for the first time) to evaluate the sustainability of their current fiscal policies.
The idea is to ensure government debt levels don’t grow continuously as a share of the overall economy.
If the net debt-to-GDP levels expand, that creates a “fiscal gap,” according to the PBO office, which was set up to provide analysis to Parliament on the state of Canada’s finances.
The study’s assessment on federal finances is relatively benign, projecting Canada’s net debt will be eliminated in just over four decades.
The report on Alberta is more like a warning siren going off.
“Current fiscal policy in Alberta is not sustainable over the long term,” it states.
“PBO estimates that permanent tax increases, or spending reductions, amounting to 4.6 per cent of provincial GDP ($14.1 billion in current dollars) would be required to achieve fiscal sustainability.”
In simple language, Alberta would need to permanently increase its tax burden by 25 per cent or slash program spending by 20 per cent — or implement a combination of the two to the tune of $14 billion — to become financially sustainable.
“This is definitely a huge challenge for Alberta,” said Mostafa Askari, …read more
Source:: Calgary Herald