EDMONTON — A right-leaning think tank is blaming population growth and spending increases well above inflation for the current budget crisis in Alberta.
The Fraser Institute says the province has spent $49 billion more than necessary, mostly in unreformed public-sector pensions and public-sector contracts that were double the rate of inflation.
Author Mark Milke calls his report “Fumbling the Alberta Advantage.”
He says Premier Jim Prentice’s warning that the drop in oil prices will drain $7 billion from expected government revenues ignores the effect of past decisions to ramp up program spending.
The study also notes that the increase in program expenditures has handcuffed the government in terms of options in such areas such as capital spending, tax relief and deposits into the Alberta Heritage Savings Trust Fund.
The last government deposit into the province’s rainy day fund happened in 2006-07.
Meantime, ATB Financial’s Todd Hirsch says the report misses the mark.
He says what many people don’t realize is that salaries and wages make up a large portion of any organization’s budget, and so there’s something ultimately wrong with the “inflation plus population growth” equation.