Taxing not the answer to debt problem: MLA Smith

Taxing not the answer to debt problem: MLA Smith

Alberta has a spending problem, not revenue problem

In the spring election the people of Alberta had a choice to make. Instead of re-electing an NDP government that had increased our debt from $13 Billion to $60 billion they elected a United Conservative government that campaigned on balancing the budget over the next four years and working towards eliminating the debt after that.

In May of 2019 the new Alberta government appointed the Mackinnon Panel who’s Chair, Janice Mackinnon, was a former Minister of Finance from the NDP government in Saskatchewan that had to tackle an even greater economic crisis in Saskatchewan during the 1990’s.

The Mackinnon Panel was appointed to … “conduct a “deep dive” into Alberta’s fiscal situation, recommend a path to balance, and propose a realistic plan to start paying down the debt.”

The Mackinnon Panel reviewed the Alberta government’s finances including:

• Government’s fiscal outlook

• Ministry expenditure trends and cost drivers.

• Develop a new fiscal framework that requires future balanced budgets by 2022/23 without raising taxes and a plan to retire the accumulated debt.

The Mackinnon Panel reported back to the Alberta Government on August 15, 2019 and their report was then studied by the government and recently released to the general public. The report’s conclusions and recommendations are important and they are not necessarily going to be easy to pursue. Here are some of the conclusions of the Mackinnon Report:

“Alberta’s debt has increased rapidly in the last four years, $13 billion to $60 billion, and without a change in course will exceed $100 billion in just four years.”

“Growing deficits and debt mean more and more tax dollars are spent on interest rather than on programs … the payments to service the debt in 2022/23 could pay for more than 30,000 teachers or 35,000 long-term care beds.”

“(Alberta) is spending more per capita than the three other large provinces on most of its programs and services but often getting poorer results. Raising taxes to find more money for the current level of programs and services is not the answer.”

“In some key areas, in spite of the higher levels of funding, the results achieved are no better and, in some cases, worse than in other provinces.”

Alberta’s spending would be $10.4 Billion less every year if we matched the average spending of Canada’s three largest provinces – Ontario, Quebec and British Columbia. Alberta would have a $3.7 billion surplus instead of a $6.7 billion deficit.

To balance the Alberta budget in four years, operating expense will need to drop by at least $600 million by 2022-23, relative to 2018-19 actuals, and $1.1 billion relative to the 2018-19 budget.

The Mackinnon Report clearly shows that increasing taxes to address our debt and deficits is not the answer. Alberta does not primarily have a revenue problem – rather, as the Mackinnon Report concludes Alberta has a spending and program efficiency problem. We need to ensure that the tax dollars we do collect and the government services we do provide are being used and delivered at least as efficiently as in Ontario, Quebec and British Columbia.

As we move forward into the fall budget the government is going to be reviewing and implementing many of the recommendations of the Mackinnon report. This will not be easy, but it is necessary, if we want to ensure that the people of Alberta continue to be able to have a government that has the financial capacity to deliver the services that all Albertans want and deserve.

Mark Smith is the MLA for the Drayton Valley-Devon constituency and writes a regular column for The Pipestone Flyer.

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