Klein Crowd on a Spending Spree

Frontier Centre, Role of Government, Uncategorized, Worth A Look

Are you better off than you were four years ago?

It’s a standard question among political challengers. The asker hopes the
voter’s answer will be “no.” No, I am not better off, therefore I will risk
voting for change.

But, slightly modified, it would be a good question to ask Alberta
taxpayers, too: Are you getting more provincial services than you were nine
years ago?

Wednesday, the Canadian Taxpayers Federation pointed out that in 1996-97 —
the low point of the Klein-era cuts — the provincial government spent $12.7
billion on program expenses (all government activities, except debt
servicing). In 2005-06, the CTF reminded, “spending on government programs
in Alberta will be $25.5 billion — an increase of 100 per cent.”

Provincial government spending has doubled in under a decade.

Admittedly, Alberta’s population has grown over that period from just under
2.8 million to just over 3.2 million. And more Albertans means that even
providing the same level of services per capita as in 1996-97 would cost
more money. There are 400,000 more Albertans now — a number equivalent to
half the population of Edmonton.

And there has been inflation, too.

According to the Bank of Canada, prices have risen by about 19 per cent
since 1996. Even a government bound and determined to maintain the same
level of service over the years — no more, no less — would have to spend
nearly one-fifth more money than a decade ago just to tread fiscal water.

But a 17-per-cent increase in population and a 19-per-cent rise in inflation
hardly explains away a 100-per-cent increase in provincial spending over the
last nine budgets.

Adjusted for inflation and growth, provincial spending in 1996-97 was $5,462
for every man, woman and child in Alberta. Today, after making the same
adjustments, it is $7,878. That is a real increase of $2,400 a year, or 44
per cent.

In other words, the Klein government is spending 44 per cent more today than
it did at the depths of its spending cuts, even if we account for increases
in the cost of goods and services and allow for the increased number of
Albertans.

The provincial government is spending nearly half again as much as it did
less than a decade ago.

It is spending all of the money it receives from Ottawa — $3.2 billion. A
decade ago, even though it was teetering on the budgetary edge, the
provincial government didn’t need a nickel of Ottawa’s cash.

It is now also blowing through all the money it has saved in debt-servicing
costs. In 1996-97, because of the profligacy of the Getty years, the
province had annual interest payments of $1.5 billion. Today, its yearly
interest payments are just $290 million, and rapidly approaching zero.

But all the $1.3 billion in savings is going into more program spending. It
is not being saved for a rainy day. Nor is it being refunded to Albertans.

“Here, we’ve paid off our overspending from the 1980s and early 1990s. We
don’t need extra money from you anymore to get our debt out of the way. So,
you keep your money,” about $720 per Alberta taxpayer.

Not happenin’.

Even though the government could return about $60 a month to each Alberta
income tax filer, just from the money it is saving in interest payments, it
has decided to keep that money and spend it on government priorities instead
— the “We know better than you” school of public finance.

Why if they gave us our money back, we’d waste it on something frivolous,
like a mortgage or a car or a night out. Better the politicians and
bureaucrats keep it and waste it on something they think is important.

Every cent the province gets its hands on, it blows as quickly as it can,
which is all well and good so long as it can maintain the level of income it
has today forever.

But, of course, history shows Alberta’s economy is prone to wide
fluctuations, and provincial government revenues right along with it.

Moreover, I am not sure we have much to show for all this additional
spending.

Are you receiving 44 per cent more provincial service than you were nine
years ago. Forty-four per cent more health care? Forty-four per cent better
roads? Forty-four per cent better schools and universities?

Probably not. What we are getting is more and better-paid bureaucrats. More
consultants advising the government on policy and strategy. More
administration and construction of offices for administrators.

John Carpay of the Taxpayers Federation calculates that if provincial
politicians had “limited growth in spending to Alberta’s population growth
plus inflation, we would not be paying any provincial income tax (or) health
care premiums.”

The average Alberta family would have felt that. I doubt they even notice
the massive additional public spending.

The added spending hasn’t even succeeded in shutting up the special interest
groups, who still complain as if we were back at 1996-97 expenditure levels.

If only.