EDMONTON, AB (June 29, 2012): In yesterday’s year-end financial report, the PC government made several claims about spending, savings and the size of the budget deficit. If the government was truthful with Albertans, their news release would have been quite different …
WHAT THEY SAID #1: “Revenue was $39.2 billion, $3.6 billion higher than budget mostly due to higher land lease sales, resource revenue and investment income.”
WHAT THEY SHOULD HAVE SAID #1: If it wasn't for a spike in oil prices due to unease about world supplies related to Arab Spring tensions, we would have missed our budget projection by $1.12 billion. And we really hope we can repeat the $2 billion-surprise uptick in land leases somehow.
WHAT THEY SAID #2: “Expense was $39.3 billion, nearly $300 million higher than budget due to disaster assistance.”
WHAT THEY SHOULD HAVE SAID #2: We are going to understate our total expenses to make ourselves look better. All the capital expenses are being shifted to another ledger so Albertans will think we're really prudent, but actually our spending is up. Way up. Spending has risen 33% in the last five years, and program spending alone is slated to go up $2.4 billion next year. And next year we've got to pay for all those leadership and election promises.
WHAT THEY SAID #3: “The Sustainability Fund stood at $7.5 billion at March 31, 2012, $2.2 billion higher than the budget estimate.”
WHAT THEY SHOULD HAVE SAID #3: We spent a lot of Sustainability Fund money even though our revenues were up by all that oil and land lease revenues. The Fund lost value in 2011, dropping $3.7 billion from the start of the fiscal year when it stood at $11.2 billion. This is the 3rd year in a row the so-called “Rainy Day Fund” has dropped in value. Even when it's not raining, we spend it.
WHAT THEY SAID #4: “The Heritage Savings Trust Fund’s fair value stood at $16.1 billion at March 31, 2012; the fund generated almost $800 million in investment income during the fiscal year.”
WHAT THEY SHOULD HAVE SAID #4: Because we would rather spend than trim anything, and because we like to make extravagant promises, we had to take $344 million from the $800 million earned in 2011 just to help pay for things. But we've been doing that for a long time. Adjusted for inflation, the Fund is worth less today than it did when it started up in 1976.
WHAT THEY SAID #5: “Alberta brought the bottom line close to balanced with a $23 million deficit, $3.4 billion lower than estimated at budget.”
WHAT THEY SHOULD HAVE SAID #5: We hope Albertans won't notice our true cash deficit is actually $3 billion. We hope they don't look too closely and notice that despite a huge injection of surprise money from oil prices and land leases, and despite burying our capital expenditures, we still couldn't balance the books.