MLA Report: The necessary journey of returning to balanced budgets

By Medicine Hat News Opinion on February 21, 2020.

With the budget coming up for the 2020-2021 fiscal year, the need to return Alberta to fiscal balance returns to the front of my mind. Fiscal responsibility through balanced budgets are something we all have to work towards, especially when it comes to government dollars. This is first and foremost because these dollars came from you, the taxpayer.

I have a hard time understanding the argument that we should just borrow more money to pay for our budgetary shortfalls. The problem is that there will always be a reason to build more infrastructure. It won’t end. One way or another something new will always need to be built for an expanding population, or even repaired.

The provincial government borrowing money only passes the burden of paying for it to future generations through either decreased services or increased taxes; or perhaps even both. As households we are all careful about what we spend. When we use credit to purchase something now, we pay interest that debt the next month, and the month after that until it is paid off. That means less money for us to spend next month on other things we might need. Government borrowing is no different.

With the cost to service Alberta’s $60-plus billion debt sitting around $2 billion a year, it is painful to think of all of the services we could be providing to our residents here in Alberta instead of paying interest. No one in politics wants to be the one to cut funding for programs that people need. Much to the surprise of some, we don’t sit around the table wondering whose life we ruin next through cuts.

As a member of the UCP, I ran on a platform of fiscal restraint and responsibility. At the same time, it was noted that business growth must return, and we outlined measures to encourage that. Among these, we promised to cut the corporate tax rate, which we accomplished.

We had to take this action to attract business back, but the inflow of business investment will take some time as they re-evaluate their options. It costs a lot of money to move a business to a different jurisdiction, and they don’t just hop back-and-forth with the tax rate of the day. We also have to deal with a federal government that has no problem with out-of-control tax-and-spend policies that make investors nervous.

It’s sad to say, but we are not on a journey to win back all of the business and investment that has been lost over the past many years. Much of what will be attracted will be new business; some will be businesses that see expansion opportunities from where they are. In either case, we can’t grow the economy without private investment, and we can’t attract that investment without an attractive tax rate and business policy such as red tape reduction.

We have been criticized for this lowering of the tax rate on corporations. To this I simply say, a higher tax rate does not guarantee the government will bring in more money. As the NDP should have learned over the 2018-2019 fiscal period, raising the corporate rate saw a decrease in tax revenue from that base. It is true that we have had higher tax rates in Alberta in the past when we were doing very well economically, such as the mid 2000s. That, however, was a different time with different tax rates across North America. In the present, we must be competitive to not only keep the investment we have, but attract more.

The present plan for fiscal stability is a simple one. Attract investment, grow the tax base of both corporate and personal taxpayers, thereby generating more money for government revenues. This will allow us to bring the revenues in line with where they need to be to sustain necessary services while paying off debt.

That plan requires time. As your representative in the Legislative Assembly in Alberta, I am painfully aware of the challenges that are faced by those out of work. I wish I could flip a switch and magically have jobs for everyone that needs them right away. That unfortunately is not reality.

Wealthy corporations are wealthy because they are careful where they invest, and we must make ourselves the attractive place for them to invest once again, or our economic pain could get worse.

I will continue to push the government to hold to its commitment of balanced budgets by 2022-2023 so that we begin paying down the debt. For me this is a must, because at the end of the day, choosing how to spend our children’s future is wrong. We must provide them with the ability to choose their own future, not to pay for our present.

Drew Barnes is MLA (UCP) for Cypress-Medicine Hat constituency.

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