When the provincial government announced a $4.3-billion budget surplus last week, there were cries for this money to be earmarked for all manner of services.
There’s little doubt that pretty much every facet of government, from health care to education, could use an infusion of cash to improve service levels. Measures to make life more affordable, like a reduction in the recently re-imposed gas tax or the introduction of the income tax break promised during last year’s election, would also be welcomed.
Danielle Smith’s UCP government opted against such an approach, choosing instead to address a string of deficit budgets over the first couple of decades of this century that pushed Alberta’s debt to a record level. It isn’t necessarily the popular thing to do in the short-term, but it’s definitely one we’ll be thankful for down the road.
You only have to look east toward Ottawa to see what continually running deficits -- $40 billion this year – means in the long run. Under Prime Minister Justin Trudeau, the federal debt has doubled, ballooning to a whopping $1.2 trillion. Sure, the pandemic didn’t help matters, but the debt was going in the wrong direction before and after COVID-19 hit.
With interest rates at a 20-year high, the cost to service all this debt has more than doubled already this decade, reaching a staggering $46 billion this year, which is almost as much as Ottawa sends to the provinces for health care. Debt servicing is on track to top $60 billion before the end of the decade.
Can you imagine all the good that money could do if it was being invested in government programs rather than being sent to banks and bondholders that are carrying Canada’s debt? The Alberta government understands how that equation works and although it’s not sexy to balance the books, it will certainly be beneficial in the long run.
