There is no vision in the budgeting process, and all visions discussed outside of the budgeting process have no say here. In the budget process when it comes to spending, you can make cuts, and when it comes to existing, established sources of revenue all you can do is increase it. Alberta's problems though are going to take a lot more than a +/- to specific departments, Alberta needs to re-evaluate it's position and the long-term outlook for revenue and adjust accordingly. This would of course mean deficits for the foreseeable future based on the information presented there but what's important is we spend and invest on a path that provides some sort of a future rather than continually lowering the bar on our standard of living and services and pretend as though balancing the budget is the ultimate goal, it isn't.
Under traditional monetary systems, going into debt wouldn't be that bad under the duties that are supposed to be taken on by the Bank of Canada to be the sole provider of the nation's currency, but under our current model the Bank of Canada simply facilitates entry into a private, international, bond auction. Participating in this type of auction is required if we wish to be involved with free trade which is administered by the WTO. Under this system all of the interest on our debt is given to the private interests which invest in our debt, this goes for the municipal all the way to the federal. All of the interest we pay on our government debts effectively is drained from circulation while at the same time we borrow more which accumulates even more interest, etc.
Under the traditional system the interest on the government debts would be recycled back into the Bank of Canada and always stay within the possession of the taxpayer.
Why are these monetary details important? They are important because they are largely the reason that government finances and budgets now must be treated in the same fashion as corporate or household budgets. It is the reason that not running a deficit is so important as the worse the debt situation gets the worst your credit rating is, and the worst your credit rating is the harsher the interest payments become. We can see the detrimental effect a matured system like this has by observing Europe and soon the U.S. Under the traditional system there is nothing inherently bad about going into debt other than the chance you may inflate your currency away to nothing should you provide too much but under the current system the side-effects can be extremely detrimental and like most consumer debt which is based on the same fundamentals it is increasingly difficult to get out of the more money you borrow.
You can see the results of my budget here and clocked in at a $1.1B deficit. I'll provide some reason to the specific changes I made as my goal when playing with the limited options on budgetchoice.ca was not to balance the budget but to make some of the changes (that the program allows) which would set us up for the future. Again, this is very limited simply due to the fact that when it comes to spending for instance there is no option to increase spending, only make cuts.
Here are the options I changed from their defaults:
- Eliminate future funding for Carbon Capture & Storage [-$60M]. This one was a no-brainer however I would add in addition that to coincide with this change and make it useful the Alberta government should keep emission rules the same as though it was in place and have strict penalties for companies which violate these rules. Let the companies foot the bill for this on their own or cease their operations. CCS is incredible overhead on the backs of the Albertans and we shouldn't have to foot the bill for it. Companies need to start covering their own overhead for Alberta to have sustainable budgets.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.