CALGARY – The Fraser Institute says chronic deficits have helped slash the value of Alberta’s net financial assets by 65 per cent in six years.
A new study, called “Alberta’s Double-Dip Decline in Financial Assets, says that amounts to about $22.4 billion.
The study says the trend mimics the decline in Alberta’s net financial assets during the late 1980s and early 1990s.
That’s the last time the province ran chronic deficits.
Worse, the study says the decline was calculated only until the end of March 2013, so it doesn’t reflect the costs of relief for homeowners and businesses hit in the June floods.
The study says Alberta’s net financial assets declined to just $12.1 billion by 2012-13 from $34.5 billion in 2006-07.
“Provincial politicians, including in the present government, once bragged about Alberta’s net financial assets,” the study’s author, Mark Milke, said in a news release.
“No more, as the continual red ink budgets have led to a steep decline in Alberta’s wealth. This downward trend will be exacerbated because of the province’s plans to borrow ever-more money rather than address heightened per capita program spending levels that the province has only now begun to even tinker with.”
Milke said that ironically, on the revenue side Alberta’s finances in the last 10 years weren’t hit as badly as they were in the 1980s.
“But the province is nonetheless replicating the previous decline in Alberta’s financial assets, this because of near-historic per capita highs on program spending,” Milke said.
He said provincial leaders must acknowledge and act on the problem of spending beyond the province’s current means.