Friday, February 23, 2007

"Debt that makes sense"

Interesting news out of Edmonton, where it looks like Wild Rose Country will be Debt Free Alberta no longer.

Thanks to the oil boom and the resulting tax revenue, Ralph Klein retired all of Alberta's debt in 2004, displaying a flashy "Paid in Full" sign to celebrate the achievement.

Unfortunately it seems he forgot about much needed infrastructure needs such as roads, schools and hospitals along the way as he chased that fiscal conservative debt-free rainbow. And passed out gimmicky rebate cheques. To rectify that his successor, Premier Ed, is putting the province back into debt to the tune of $341 million to pay for a highway, and it seems like that's just the beginning.

It's a funny story. I agree with infrastructure investments, even if the federal Cons don't, but given the ferocity that Conservatives both in Alberta and Ottawa have attacked debt and deficits, it's rather amusing for them to now be spinning phrases like Smart Debt, Responsible Debt, and Debt That Makes Sense. You know, I vaguely recall the NDP making some of those arguments over the years…

Anyway, in Ottawa it's a slightly different situation. But despite the Conservatives having inherited an enviable fiscal balance sheet from the Liberals, the Cons seem to be determined to endanger that record of fiscal responsibility with tax cuts for the rich, goodies to buy off targeted voter groups and billions to solve a mythical fiscal imbalance/win enough seats for a majority.

I wonder how long it will be before Flaherty starts to run a deficit and we begin to hear phrases like "Smart Deficit" in Ottawa too.

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9 comments:

ottlib said...

Mr. Flaherty will not have to.

He is a past master at hiding deficits. Just ask Mr. McGuinty.

McLea said...

Can we all quit acting like debt is something that is inherently evil? Overloading yourself with debt may be a cause for concern, but for a province that is experiencing an unprecedented level of growth to borrow some money (on better terms than pretty much any other government world I imagine) to pay for some much needed infrastructure sure as hell isn't.

So borrowing money to fund a project that will give the province returns far greater than the cost of borrowing the money to fund it = smart.

Delaying the project for no reason other than the fact that borrowed money would have to be used = stupid.

Anonymous said...

"Mr. Flaherty will not have to.

He is a past master at hiding deficits. Just ask Mr. McGuinty."

Get your facts straight.It was after Flaherty left.Duh.

And its funny, McGuinty is a master of making a deficit when none exists.In fact i'll use BC'ers own words.

"In Ontario, the government could have posted a surplus last year but they wanted to save that splashy achievement for an election year, so instead they dropped billions into a subway expansion and other spending."

Anonymous said...

Get the facts straight - Flaherty left a hidden debt - and that debt was on "borrowed money" so that the Ontario Conservatives could bring down taxes and make everyone feel they were economically brilliant.

Hmmmm - watch out Canada !

saskboy said...

It seems creating infrastructure to actually get the oil out of Alberta is going to cost a lot. Who'd have thunk that pickle eh? Good thing EnCana, and the oil boys don't have to pay directly for their roads.

Mushroom said...

The truth is I fully expect the government of Canada to go into debt in the next half decade.

What we need to decide now what do we borrow money on. Tax cuts for the wealthy or to spend on the social spending programs that are desperately needed. This is the debate that we need to focus on.

Anonymous said...

"Get the facts straight - Flaherty left a hidden debt - and that debt was on "borrowed money" so that the Ontario Conservatives could bring down taxes and make everyone feel they were economically brilliant."


Brilliant sentence. Last time i checked borrowed money was considered debt.

And Sorbara admitted the last full year Flaherty was minister the budget was balanced.So what about McGuinty's fake deficit?Do explain.

ktr said...

mclea said
So borrowing money to fund a project that will give the province returns far greater than the cost of borrowing the money to fund it = smart. Delaying the project for no reason other than the fact that borrowed money would have to be used = stupid.
My math tells me 1.4 Billion for gimmicky tax rebates was the stupidest. If our province needed this infrastructure, clearly we should not have blown the 1.4 billion on rebate cheques.

perhaps the infrastucture debt could be paid off in a couple years simply by changing the royalties formula? oh wait, ralph already reviewed that in a committee of one and a unanimous decision said the oil companies were already donating plenty to the alberta PC party.

Feynman and Coulter's Love Child said...

Good luck, though, on finding an Albertan conservative not part of government who's excited over the notion of going back into debt to spend some money that private interests have already balked at.