For the last four years in a row, I’ve written about this province’s growing fiscal problems.
Fiscal problems? What fiscal problems? It sounds out to lunch, doesn’t it?
We’ve been awash with oil-funded surplus budgets for years, financial institutions regularly pick us out as the province to watch for economic growth, and the provincial government isn’t afraid to characterize us as having a “sizzling” economy.
Well, here’s the thing: that sizzle is the sound of oil dollars, and there’s only so much oil in the bottle.
I’m not the only one to have been sounding warning bells on this for years: Vic Young wrote about it in his royal commission examination of our place in the Canadian federation.
He pointed out that our producing oilfields are in decline, new fields — such as they are — won’t pick up the slack, and development of any potential future fields has been sluggish at best.
For several years, the province’s auditor general has written about the same thing.
There’s only so much oil, and we’re overdependent on it — when either the price falls or the supply dwindles, we’re in for extremely tough times, and, the auditor general points out, we’ve done little to mitigate that.
Oil prices might not fall — but the supply is a fixed amount.
It is, apparently, either a hard concept to grasp, or else it’s a concept that no one’s in a big rush to grasp — because recognizing it would actually mean having to tighten our belts.
With non-renewable resources, particularly oil, accounting for as much as one out of every three dollars that come into the provincial treasury in the run of a year, and with our annual expenses as a province growing astoundingly and far outstripping the rate of inflation, we’ve put ourselves in a dangerous position as a province.
Think about it this way: non-renewable oil revenues are this province’s savings, its bank account.
There’s a lot of money in it, but only so much — the dollars, like the oil, are finite.
You can use that money to do a lot of things, but if you’re taking money out of your savings — every day, every month, every year — to pay your basic household expenses, then you’re living above your means.
And we’re living above our means.
Our provincial government — to its credit — has managed to reduce the amount of our total provincial debt, so we’re paying less money out in interest than we have in earlier years.
But at the same time, the same government has taken billions of dollars of oil cash and used it to bulk up all kinds of things. It’s raised public sector wages and rapidly increased the size of the public service.
It’s expanded all sorts of spending. Here’s how I described it in an April 20 editorial: “total expenditures by the provincial government this year will top $7.8 billion. Compared to the first year of the Tory administration, overall government costs have been raised by $3.56 billion — an increase of 83 per cent in just eight years.”
During that same eight-year period, inflation has increased costs across this country by only 16.9 per cent.
I raised that same issue in 2007, in 2008, 2009 and 2010. The government’s direction hasn’t changed.
The provincial government
hasn’t moved to protect or retain or invest oilfield revenues in any meaningful way.
It has continued to spend them hand over fist on day-to-day expenses — and every dollar taken out of that bank account is one that we’re not going to get back.
Now, you can make the argument that this province has lived with hard times for so long that there was plenty of catching up to do — hospitals and schools that needed to be built, services that needed to be added, paycheques that had to finally be brought up to national standards.
And that’s true.
But it doesn’t matter a bit if, 10 years from now, we have to go in reverse and start drastically cutting back.
Have not will be no more? Well, maybe it isn’t right now, but have not could come back pretty darned fast.
For the past week or so, the issue has suddenly started getting attention.
CBC’s David Cochrane ran a piece explaining the dramatic, and frankly, astounding growth in the province’s civil service.
And, at a public forum Wednesday, economist Wade Locke tossed out numbers that suggest that, on its current course, the provincial government could be running
$1.6-billion-a-year deficits just nine years from now.
Other wealthy provinces are being warned about the same thing. Even in cash-rich Alberta, influential researchers doing work for the provincial government are warning that province has to stop spending oil money as fast as if comes in, and has to keep money aside for when the oil’s gone.
Yep, for the last couple of weeks, it’s been almost a cause celebre.
But there’s no sign that the mindset is changing.
It is fiscally irresponsible to keeping doing this.
We have to lower our expectations and our expenses — and if we don’t do it now, circumstances are going to do it for us.
Truth is, that’s old news. But there’s no sign the provincial government has ever heard it.
Another trip to the bank, another withdrawal.
Good thing money grows on trees.
Russell Wangersky is The Telegram’s editorial page editor. He can be reached by email at email@example.com.