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KITCHEN TABLE TALK: PIZZAS ON A GOVERNMENT CREDIT CARD

Kitchen Table Talk is a forum consisting of a small group of Official Opposition MLAs who each week, get together to talk through a legislative policy issue. As part of the process, a short commentary is compiled and then edited. The editorial committee members include GRANT HUNTER, Cardston-Taber-Warner; RICK STRANKMAN, Drumheller-Stettler; DON MACINTYRE, Innisfail-Sylvan Lake; and DAVE SCHNEIDER, Little Bow.

This past week, two members of the Notley government made public statements about spending and debt. The first came from Finance Minister Joe Ceci, who indicated that the government is going to spend $8-$9 billion more this year than it will collect in taxes, fees, and royalties. Wildrose Finance Critic Derek Fildebrandt said his calculations put the shortfall at $9.1 billion. Overall, Ceci said, the NDP plans to spend more than $50 billion.

No Alberta government has ever spent $50 billion. As recently as the fiscal year ending in 2007, provincial spending was less than $30 billion. The interest on provincial debt will cost taxpayers over $800 million this year.

When politicians and the news media start talking about the millions and billions that are being spent, borrowed, or sometimes wasted, many of us get lost in the numbers. Most Canadians don’t write million-dollar cheques. Individuals and their families buy farms, businesses, and homes—but not regularly. And very few of us even know anyone capable of writing a billion-dollar cheque.

The gap between spending a million and spending a billion is enormous. If a government department is spending at the rate of a dollar a minute, it takes 23 months to plough through a million dollars. Spending a billion dollars at the same rate would take 1,900 years. And remember, Alberta’s NDP government is running a one-year shortfall of $9.1 billion. At the rate of a dollar a minute, it would take 17,000 years to eat through that much money. At $100 per minute, it would take 170 years.

The one thing Minister Ceci never mentioned is that Alberta’s government has grown way too expensive. This year, the NDP will spend nearly $50,000 for every family of four in the province. (The actual number is calculated at $48,112.16.) Yet according to Ceci, there is absolutely no way that the Notley government will trim the size of Alberta’s civil service. Apparently, he thinks a top-heavy government should cause every Alberta taxpayer to heave a sigh of relief.

The second statement made this week about government spending and debt was trumpeted by Bruce Hinkley, the NDP MLA from Wetaskiwin-Camrose. Hinkley said that ordinary people get mortgages to buy homes (and think it’s an okay thing to do), so why shouldn’t the Notley government go into debt to spend money on programs.

Hinkley looks right past the fact that government debt and mortgages are worlds apart. When families obtain a mortgage they gain ownership of an asset that generally increases in value. Monthly payments build equity and pile up net worth. The property can be sold and converted to cash. Parents and grandparents can use the equity to pay for retirement, or else leave it to their estate. Their beneficiaries receive the accumulated value of the asset.

When governments borrow and spend, there’s no marketable asset. There’s only debt. It’s like using a credit card to buy pizza. Even when governments borrow to spend on bridges and highways rather than programs, the debt is still not connected to a marketable asset. It’s a liability. Mortgages can be liquidated. Houses can be sold. Who buys used government bridges and worn-out highways?

All things considered, it is irresponsible for the NDP to claim that government debt is the same thing as a home mortgage. It’s not. To view information resources for this commentary:

http://www.kitchentabletalk.ca/rsrcs/resource4_090615.pdf

 

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