Hey, big spenders: Alberta's bad habit exposes need for
tighter fiscal reins
The Calgary Herald
Mon
05 Mar 2007
Page: A14
Section: The Editorial Page
Byline:

Source: Calgary Herald

The Alberta government prone to overspending? Who knew?

Last week, the C.D. Howe Institute, a thoughtful, fiscally conservative eastern
think-tank, published a 1o-year comparison of what federal and provincial
governments had spent versus what they planned to spend.

Alberta scored the worst of all the provinces. Only the territories contend
with it for the bottom of the page.

Between fiscal 1996-97 and 2005-06, Alberta underestimated its revenues by
nearly $33 billion, a mean error of 15.73 per cent. Meanwhile, in the same span
of years, it spent $13.9 billion more than it had budgeted.

Only Ontario came close -- $13.3 billion -- but its annual budgets are nearly
three times Alberta's. On a per-capita basis, Alberta is a spendthrift.

Even the modest escape the C.D. Howe report
provides to Alberta Finance, that "Alberta's poor performance in meeting both
its revenue and spending targets reflects the province's widely fluctuating
revenues over the past 10 years," is overly generous.

Certainly, such ups and downs are impossible to control, and challenging for
a treasury to administer, when the bills are formula-driven. School boards
expect to receive consistent per-capita grants, for example, whether revenues
are up or down.

Meanwhile, spending -- which theoretically is controlled by the legislature
through a budget -- has been on the march since it became clear at the beginning
of this decade the debt would soon be retired.

It has often been observed that humanity deals better with adversity than
abundance. Conscious of the need to get its house in order, the province pulled
together in the mid-'90s, first to balance the budget, and later to repay the
debt. This was Alberta's virtuous stage.

Since then, the ruling PC party discovered that money lubricates election
victories. With the provincial bank account in the black, it became increasingly
difficult -- and politically dangerous -- to deflect pay-back demands.

When nurses and teachers threatened to strike, it was easier to pay than
fight. The legislation mandating 75 per cent of surpluses go to debt reduction
was repealed. It became more common to announce mid-year supplementary spending,
using funds from unbudgeted surpluses.

A sustainability fund, intended to even out revenue spikes and troughs was
established, but soon expanded, effectively increasing the government's ability
to spend. And, in a dramatic demonstration of planning by executive fiat, former
premier Ralph Klein ordered the distribution of $1.4 billion to all qualifying
Albertans -- a $400 cheque for each of us.

So much for any illusions Albertans may have had about their government's
fiscal conservatism. If the money's there, the government will spend it.

It is a shameful thing. As the C.D. Howe Institute puts it, "If governments do not meet their
budget commitments, accountability to legislators and voters breaks down."

By the way, the province that does best in spending only what it says it will
is Quebec.

It is to be hoped that as Progressive Conservative Premier Ed Stelmach
prepares his first budget, he has more appetite for fiscal discipline than his
predecessor -- and no less than Canada's most left-wing, overgoverned province.

Edition: Final
Story Type: Editorial
Length:
509 words