“Economics is extremely useful as a form of employment for economists” – John Kenneth Galbraith, Economist
As long as Severely Normal Albertans can remember, economists have scolded us about Alberta’s bad budgeting habits. Back in the day, most of the scolding was because our reliance on energy revenue was risky – revenue fluctuates, and public services don’t. And there was the complaint that we were spending oil revenue that rightly belonged not just to this generation, but to future Albertans, too.
Nobody likes a nagging economist, so we ignored them – put on our superhero Alberta Advantage capes and let the good times roll (along with a few moments of remorse when we offered the Alberta prayer ‘Give us one more boom – we promise we won’t waste it’).
Well, now the economists are back at it again! But this time with an even darker prognostication. According to the latest news from the University of Calgary think tank; even when energy revenues rebound – we are going have a long term gap between revenue and expenditures.
If you have a stiff drink in hand you can read the full report: https://www.policyschool.ca/wp-content/uploads/2018/11/AB-Fiscal-Future-Tombe.pdf
Most of us hoped that after a couple of years we would get to a balanced budget and we would be back to normal. But no – the budget projections out to 2040 will leave us with a nasty “budget gap”.
It seems that we are going to be spending more on health-care as the population ages and health-care inflation continues. While our population will grow, our resource revenue won’t expand enough to fill the nasty gap. And let’s not forget we will have some debt servicing to pay for roughly $90 to $100 billion dollars in borrowing.
This makes the economist’s conclusions quite bleak. We can pick our poison – forego spending $1 for every $6 or maybe, establish a sales tax of about 10%. Or implement some other combination of cuts and revenue generation.
So as we listen to the siren calls of “elect me” over the next 6 months; Severely Normal Albertans might keep in mind that there will be a ‘budget gap’ reckoning somewhere down the road.