“Too much is never enough and Too little is never enough” were lyrics from Pop Evil’s “100 in a 55” single that was a hit this past summer. It also can be used described the reaction to Budget 2010 – Striking the Right Balance. After digesting the release of the budget and subsequent reaction, I want to share some of my thoughts.
First, many have suggested that the government is a) continuing to spend too much and b) running a deficit that is unhealthy and unsustainable. I want to explore these two concerns in this blog.
The total amount of increased government spending over last year’s budget is $2.3 billion. Of this increase $759 million is a onetime expenditure to pay off the AHS accumulated operating deficit. In addition AHS and school boards received operating increases of $1.7 billion and $247 million respectively. By adding all three of these expenditure results, the total is $2.7 billion. What this means is that, outside of these three increases, the overall total government budget was reduced by $400 million from last year’s budget. Consequently, fifteen government departments saw reductions in their budgets.
I am pretty sure most Albertans didn’t need a fortune teller to figure out that a majority of future spending increases were going to go towards health care. Most experts have been telling us this was going to be the case not just in Alberta but right Across Canada. Well with Budget 2010 we have inched closer to the 40% threshold for health care spending as a percentage of the total budget. When it comes to the long-term fiscal picture for Alberta, health care costs are going to continue to drive the agenda. Solutions to this challenge are much more long term and cannot be implemented through a onetime budget correction without significantly impacting the delivery of health care services to patients in Alberta. I will be dedicating a blog later this week to address this concern.
My point here is that, if you leave healthcare out of the equation on account of it being much longer-term budgetary issue, it then becomes very evident that this was a fiscally prudent budget.
Finally, I want to address the issue around the projected deficit of $4.7 billion. If you look strictly at operating expenses which are at $33.2 billion (including municipal infrastructure support) and revenue which is at $33.9 billion, you would see that in fact the government is operating with a $700 million operating surplus. The $4.7 billion deficit results from $5.5 billion dollars of capital/infrastructure investment.
This breakdown is important, as it provides an important lens to look at the deficit through. First, it shows that the deficit is going towards capital investment which, I would argue, is productive investment. Second, it shows that the deficit is covered in whole by a withdrawal from the sustainability fund, our short-term savings. I know that I, like many other Albertans, have a short-term savings account to utilize for one time capital expenses such as replacing my roof or front side walk, building a garage, or painting my walls. If Albertans see it prudent to maintain their personal finances in this way then it would only make sense that such a practice would also be reasonable for their government. While there are some potential pit falls of looking at government operational and capital spending this way (again this is a topic for a future blog later this week), many Albertans could benefit from having the budget deficit portrayed in this manner.
With all of this being said, I believe that our government can do more to reduce and control spending. By no means do I advocate a “slash-and-burn” approach, but rather a rational and systematic approach to increasing government efficiency and looking at areas of program irrelevancy. Over the last year the Treasury Board has done an admirable job in finding approximately $1.3 billion in savings through its value reviews. However, I will continue to push, like I did in QP this last week, for ongoing reviews of programs to see if they are relevant and meeting the outcomes they have been set out to achieve.
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