Debt debate of 2019

A skirmish broke out at Public Accounts Committee on Halloween. No, it wasn’t about costumes or who stole the candy. This time the backbenchers got in on the fun.

Severely Normal Albertans should see this as a beta test for the 2019 election platforms.  We will hear a rising crescendo of this over the next 500 days or so.  It could make you want to turn off your porch light!

It was Halloween when the Goblins from the Government and the Ghosts from the Opposition met to discuss the Finance department. The MLA Public Accounts Committee of the Legislature meets to discuss the budget and operations of various departments. Usually the Minister and the Auditor General attend and are questioned by a committee of about 18 backbenchers from both parties. The conversations are often more thoughtful than Question Period – and the answers more straightforward.

TREATS FROM GOVERNMENT

The NDP Goblins tossed softballs questions at the Deputy Minister who was sitting in for the absent Minister. It went something like this….

Goblin Number One – Deputy Minister do we have Fiscal Sustainability?

Answer – Why yes we do – “our GDP to debt ratio is reasonable”  (Code for we can get more debt if we need to)

Goblin Number One – Deputy Minister do we have Financial Flexibility?

Answer – Why yes do – we have tax room….     (code we could raise taxes if we had to)

Goblin Number Two – Are we Financially Vulnerable?

Answer – No we are doing alright, our overall position is strong

Goblin Number Three – Does Alberta have a tax advantage over other jurisdictions?  

Answer- Our taxes are $8.7 billion more if we used British Columbia’s rates

Goblin Number Three – Government implemented the Family employment tax credit and the Alberta child benefit. Deputy Minister how many people were helped?

Answer – Last year the government provided $106 million in benefits to 110,000 families with 205,000 children.

Goblin Number Four – Is the economy improving?

Answer – Yes oil prices, jobs and other indicators are turning positive

TRICKS FROM THE OPPOSITION

The Ghosts from the Opposition asked tougher questions:

Their main focus was the management of debt and the independence of AIMCo. (the independent investment group that manages government pension money and the Heritage Savings Trust fund). There were a series of back and forth question and answers on these topics. The summary of the three most salient question:

AIMCO Are you meddling with AIMCo’s independence?

Answer – No we did change terms of reference a bit, but it was minor. We didn’t tell them about it in advance and that upset them – Lesson learned. The Government also instructed AIMCo to invest some of the money in Alberta.

BALANCED BUDGET – When will government bring in a balanced budget?  

Answer – 2023. It will balanced by controlling expenditures (not drastic cuts) and limiting expenditure to less than inflation and population.

DEBT SERVICING COST –  The Auditor General says the debt will be $35 billion in 2015, $50 billion in 2016 and $90 billion in 2019. What are the interest payments on that debt in those years?

Answer – I dont have those specific numbers with me today. But our debt will only be 7.1% of GDP which is low.

DEBT SUSTAINABILITY LEVEL-  Does your department have a number of the maximum amount of debt Alberta can assume before it become unsustainable?

Answer – No, but we monitor it.

The Opposition members were openly critical of the Deputy Minister’s politicized responses to their questions! That approach might be OK for politicians but is unwelcome from public servants.