By Matt Nemeth @CHATTVMNemeth - CHAT News Medicine Hat

Report cites “absence of spending discipline” between Alberta, Texas

Nov 18, 2016 | 9:41 AM

It’s a report that’s sure to cause a lot of conversation in debt-ridden Alberta, and it takes aim squarely at how the provincial government managed money between 2004 and 2014.

Alberta has long been called “The Texas of the North”. Both places have a lot of cattle, pickup trucks and rodeos. They also have a lot of oil and the money that comes with it. But what they don’t have in common, according to the latest Fraser Institute report titled “One Energy Boom, Two Approaches”, is public spending “discipline,” according to co-author Steve Lafleur.

“When you look at Alberta and Texas, two comparable jurisdictions that both experienced the same energy boom, there were two paths,” said Lafleur over the phone Thursday. “There was the path of Alberta where spending was not controlled and grew in excess of what it needed to control for the increase in prices and population. And there was Texas, where spending didn’t increase quite as much.”

The Fraser Institute report says from 2004-2014 per person program spending increased 49 per cent in Alberta compared to 37.3 per cent in Texas. This “absence of spending discipline” as the public policy think-tank calls it has led to a string of budget deficits north of the border, where fiscal restraint has led to budget surpluses down south.

“The really unfortunate part of this is that during the height of the oil boom in many years Alberta was running deficits, whereas Texas for instance ran five straight surpluses starting in 2009,” says Lafleur. Texas’ economy is also more diverse than Alberta’s, the report states, with oil and gas accounting for 27.4 per cent of our province’s total gross domestic product compared to just 12.3 per cent for Texas. But Lafleur says that just highlights the importance of stable and cautious spending growth in Alberta.

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“The economy here is much more prone to swings, and we need to budget for that.”

Cypress-Medicine Hat Wildrose MLA Drew Barnes has been sounding the alarm about government spending for years, and he says the report reaffirms why.

“What I’ve been saying for 4 years is that if the Alberta government had just restrained its spending to population growth and inflation, there could have been a whole bunch more money in the private economy, for families and communities, or there could have been a whole bunch more money in the Heritage Trust Fund,” said Barnes.

The report says part of the spending problem has been caused by public sector job growth, which increased almost twice as rapidly in Alberta than the Lone Star State. And Barnes claims the current NDP government, who wasn’t in power during the study’s time frame, is ratcheting it up.

“Our information shows that in 16 months they’ve added 23,000 public sector jobs. We’ve doubled down on spending.”

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