Over the last 25 years, Albertans have had a very strange relationship with debt. It’s become our obsession and pride to have our provincial and federal government’s debt free. Yet in stark contrast, at municipal level governments and personal levels, we’ve become extremely indebted over the same period of time. In fact, dangerously so!
Local governments in Canada are posting record deficit levels, over $10 billion dollars in 2013 and continuing to trend upward. It’s easy to understand, the federal government balances their books on the backs of provinces (started by the Chretien Liberals and continued by the Harper Conservatives). The provinces in turn balance their books on the backs of municipalities.
Local governments at the bottom of the heap and closest to their voting public have little choice other than grow the deficit or take the unpopular route and raise taxes as the Paintearth County did this spring with a 10 per cent bump. There is nothing easier than balancing the books if you’re at the top of the pyramid.
Then there was the $9 billion infrastructure deficit left by the “debt-free” Klein administration and from which Alberta has yet to recover. At the same time, right wing supporters are going ballistic that the new Alberta ND government is going to take Alberta down the trail of debt — ironic given our personal desire for debt!
The national news recently reported that the Rolex watches and Gucci handbags are piling up in Calgary pawn shops and expensive boy toys are a dime a dozen on Kijiji. Maybe we don’t have so much of a debt problem as a spending problem.
Bad debt is credit card debt and consumer loans used to sate our consumerism addiction. Good debt is debt that appreciates; debt you can afford even with a downturn in the economy.
Bad government debt is borrowing to pay for annual operating expenses. Good government debt is investing in infrastructure to grow the economy especially during seasons when businesses have their hands in their pockets with no intention to invest or create jobs.
Individual Albertans have racked up more debt than other Canadians. Today household debt as a percentage of disposable income in Canada was 165 per cent.
In Alberta the debt ratio was 170 per cent.
The Liberals ran six consecutive surpluses under Chretien by downloading expenses on provinces and municipalities.
The current federal Conservatives lowered taxes and balanced the budget for the election period (they’ve run six consecutive deficits leading up to the election) by selling shares in GM, budgeting to spend but not spend, and taking money out of the contingency fund.
It’s like taking out a home equity loan to go on trips and buy that cabin for the children then wonder what happened when it’s time to go into a privately-run seniors home and there’s no equity left in the family home to fund the next phase of life.
Any political party in this election campaign that says they can balance the budget, not raise taxes or better yet lower taxes and still deliver our favourite programs and a bucket full of new goodies, despite a faltering economy, is spinning the truth.
The federal government surplus of $1.9 billion reported this week is so miniscule in terms of the total federal budget it would be equivalent to a worker earning $200,000 and bragging about having $100 left at the end of the year.
Selling the economic-only story has been a little harder for Harper this go round. It seems more Canadians are reflecting on other items of substance, honesty, integrity and refugees, not just dollars and cents in their jeans.
As Albert Einstein’s famously said, “Not everything that can be counted counts and not everything that counts can be counted.”