ALBERTA

Fraser Institute: Spending, Not Oil, Caused Alberta Deficit

10/08/2015 11:01 EDT | Updated 10/08/2015 11:59 EDT

CALGARY — A new report from the Fraser Institute claims plunging oil prices are not the main culprit behind Alberta's budget woes.

Rather, the right-leaning think-tank says it's a decade of program spending growth that's to blame.

It says that between the 2004-2005 and 2014-2015 fiscal years, provincial program spending ballooned by 98.3 per cent.

But if spending has simply kept pace with inflation plus population growth, Alberta would be looking at a $4.4-billion surplus, it says.

Instead, the province is on track to post a record deficit of at least $5.9-billion when it announces its budget on Oct. 27.

The institute says Alberta's new left-wing NDP government doesn't deserve much of the blame, since the bulk of the spending growth accumulated under successive Progressive Conservative premiers.

"While Alberta's new provincial government is not at fault for most of the problems documented in this paper, it is nonetheless responsible for solving them,'' the report said.

"It is therefore concerning that the new government has already taken actions that will see spending increase further and thereby increase the already daunting projected budget deficit it inherited.''

Meanwhile, the report said that even if the province had increased spending in tandem with the rate of economic growth over the decade, Alberta would have posted a $1.9-billion surplus.

And its faults the province for failing to balance its books in recent years when oil prices were around US$90 a barrel — roughly half the current price level.

"Successive Alberta governments failed to restrain spending growth during the good times and now that the boom has ended the province is mired in red ink,'' said report co-author Charles Lammam.

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