Alberta Election 2019 – $60 Billion Debt

The fiscal performance of the Alberta government will be a key issue in to May 2019 election. In general terms incumbent governments in Canada are punished at the polls in recessionary times. In 2019, Alberta will be emerging (slowly) from a recession and at time of low commodity prices.

The NDP government elected in May 2015, decided to incur deficits rather than cut services when its revenue streams tanked. The deficits have been pretty breathtaking. Accelerating to $10 billion annually. By the election year 2019, the accumulated deficit will be about $60 billion dollars.

Severely Normal Albertans should expect to hear these talking points in the election debates:

NDP Talking Points

  • ‘Slash and burn’ debt reductions to public services have been monumental failures in the past!

      1. Cuts hurt those most dependant on government.

      2. Drastic cuts were detrimental to stability and quality of the public service.

      3. Infrastructure needs of a growing economy were neglected.

  • Opposition’s plan to balance the budget is both heartless and disingenuous.

  • Budgets will balance (in say 2023-24) by steadily “bending the curve” of reducing costs – the NDP will point to success in health care reductions

  • ‘The debt isn’t that big’, a relatively small proportion of GDP, and not as large as some other provinces. The province can still borrow money quite cheaply

  • Part of the deficit is for capital spending is for badly needed investments in roads and schools – “like wisely borrowing for  home renovations or college tuition”.

  • Spending of capital projects provided jobs during the recession. ‘Competition for these projects got the province good prices’.

  • The programs the NDP saved or started are valuable and well used.

  • “The NDP are good stewards of money – important cuts were made”; e.g doctors’ salary expectations and pay cuts for executives in government agencies.

The UPC Talking Points

  1. “The debt and growing deficit is disastrous”!

    1. Per capita, the debt will be $10,000 in 2019.

    2. Debt servicing costs will be $2.0 billion annually – reducing funds for services.

    3. Alberta’s credit rating has been weakened and borrowing is more expensive now.

  2. Some of the debt paid for operating costs, thus saddling our children with responsibility to “pay off this generations credit card”.

  3. The NDP have no effective plan to return to balanced budgets.

  4. The debt is ‘proof positive’ that NDP are bad money managers and ideologically driven.

  5. The budget can be reduced by ‘cutting fat’ – not frontline services.

  6. The timeframe to return to balanced budgets can be only a few years away (maybe 2021-22).

  7. Some programs are ‘boondoggles’, particularly the $2.0 billion needed to get rid of coal fired electricity plants.

  8. A UCP government, with experienced business people, will manage money better and will grow the economy thus generating more taxes.

Looking forward to 2019 the debt policy debate will could play out like this:

What you have the believe for the NDP to win:

  • Voter turn out from those using government services will be high, because service cuts will be threatened.

  • Voters will agree that infrastructure spending on roads and schools was a wise choice to make in the recession.

  • The economy improves and more tax revenue reduces the annual deficits below current projections.

  • And budget surpluses demonstrate NDP’s plan to  ‘bending the cost curve’ is working.

  • A more comprehensive deficit plan, and a cabinet shuffle brings a fresh approach to the Finance Department.

What you have the believe for the UCP to win:

  • Debt and deficits become a major hot button issue as the debt mounts year after year.
  • Voters see the UCP as better budget managers than NDP.

  • Examples of program waste are highlighted, demonstrating cuts are needed.

  • The economic recovery and oil revenue remains sluggish creating the impetus for a change in government.

  • The UCP plan to balance is seen as reasonable and necessary.

Severely Normal Albertans will have to figure out how debt reduction and service reductions are to be managed.  And who can achieve that balance!