Increased spending perfectly justified

In recent days and weeks, there has been considerable commentary on and criticism of Alberta’s fiscal situation, with reference to the government spending too much, saving too little and not planning adequately for the future.

In recent days and weeks, there has been considerable commentary on and criticism of Alberta’s fiscal situation, with reference to the government spending too much, saving too little and not planning adequately for the future.

It is true the Alberta government has significantly increased spending in recent years, but there was a need for that.

To begin with, the province was growing at a dramatic pace, with an estimated 500,000 people coming to Alberta since 2003.

These people did not bring with them their roads, schools or hospitals, nor their doctors, nurses, teachers or police officers; government had to provide that.

We also had to address what many referred to as an infrastructure deficit that had built up while government paid off an accumulated debt of $23 billion, plus meet Albertans’ demands for new and expanded government-funded programs and services.

At the same time, our economy was booming and wages were increasing across the province, including in the public sector.

But even as government increased spending to meet the demands of a booming economy and a growing population, we were also planning for that day when the boom would go bust.

Understanding the volatility of energy revenues and knowing there would come a day again when they would collapse, government saved.

In fact, during the five years preceding this year of recession and plunging natural gas prices, we saved some $25 billion. Approximately $8 billion of that was placed in the Heritage Fund and various endowments, while another $17 billion was saved and eventually rolled into the Sustainability Fund, which was created to protect government programs against falling revenues, emergencies and natural disasters.

The plan was to build up this fund during the good times and draw on it during the bad times to ensure government could continue to provide access to vital services such as health care and education.

Alberta is not unique among provinces in its need to run a deficit during these difficult times. It is unique in how it will manage that. While other provinces must resort to borrowing to cover their deficits, thereby going deeper into debt, Alberta will be using its own emergency savings to make up our shortfall.

In short, the Alberta government did have a plan to prepare us for these tough economic times. We also have a plan to recover from them.

We will manage our spending wisely, draw from the Sustainability Fund to protect public services, invest in infrastructure to support jobs and the economy, and promote the province on the world stage to attract further investment. And we will emerge from this recession even stronger than before.

Iris Evans

Minister of Finance and Enterprise

Alberta

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