The Fraser Institute has released a report that shows low oil prices in Alberta aren’t the issue when it comes to the deficit.
According to the report, government program spending is the culprit having increased an average of 7.1% per year between 2004 and 2015, while revenues only increased at an average rate of 4.6%.
And though this problem started long before the NDP came into the picture, they’re making it worse.
Program spending will increase by 7.5%, including the expenses accumulated from the Fort MacMurray wildfires. While it’s true the province had to increase spending to cover the costs of a natural disaster, this could have been mitigated by decreasing spending on other programs like healthcare, the biggest line item in Alberta’s budget.
I spoke with one of the report authors, Ben Eisen, via email and asked him how we can dispel some of the common myths surrounding low oil prices and program cuts.
With regard to low oil prices, he says things would have been manageable “if we had managed spending choices differently in recent years.”
Then there’s the common assumption that reducing program spending means sacrificing quality but again, Eisen says that “without [fiscal management], it actually can become harder to fund high quality public services over time.”
The bottom line? The Progressive Conservatives overspent on public programs, but the NDP are just making things worse.
The PC’s and the new government should have taken a page out of Ralph Klein’s book in the 90’s when he reduced spending by being prudent even during times when oil prices were low, which resulted in surpluses and tax reductions.