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The Alberta NDP Government released the provincial budget last week and the news is not positive for those who think it is important to maintain an Alberta Advantage.

This year’s budget deficit is projected to be over $10 billion. In a few years Alberta’s debt will grow to $71 billion. It will take $2.3 billion in interest payments to service this debt. These assumptions are made with a projected oil price of $55 per barrel. Currently oil is trading at less than $50 per barrel. If oil prices do not increase both the debt and interest payments will be higher.

The NDP government is projecting higher resource prices to make the budget sound better than it is. This is exactly what they criticized the previous government for doing. If the projections are not achieved it is easier to ask forgiveness.  The excuse will point towards the difficulty of projecting resource revenues. The talk of diversifying Alberta’s economy and moving away from a reliance on oil and gas prices seems to be an afterthought.

Alberta was in an enviable position not too long ago. There was no debt. Tax rates were low. Budgets were balanced. Then the price of oil fell. Government spending was generous when oil prices were high. As oil prices fell government spending should have decreased as well. Instead the NDP government has steadily increased spending even though most economical indicators have been in sharp decline.

The Alberta government spends $2,700 more per person than the British Columbia government. If the Alberta NDP reduced spending to British Columbia levels Alberta would have a balanced budget, even with low oil prices. This suggests there is a problem with Alberta’s fiscal plan that starts with too much spending.

The Alberta NDP government has thus far refused to admit any spending problem let alone begin to fix it. Continued deficits will grow the debt and debt servicing payments to record levels. In the meantime Alberta’s Advantage has all but disappeared.