Fiscal mess left for future generations

The resignations of two prominent Conservative politicians last week—Alberta Premier Alison Redford and federal Finance minister Jim Flaherty—were long overdue as the two have left a slew of economic problems for Canadians in their wake.
How Alison Redford and her government stayed in power for so long is really a mystery.
Don’t get me wrong, Ms. Redford and many of her colleagues seem like fine people, but they also have had a job to do—and they failed miserably.
Alberta has the world’s third-largest proven oil reserves (behind Saudi Arabia and Venezuela) but still has managed to run budget deficits–big ones–for six-straight years.
In Ms. Redford’s 2013-14 budget presentation, her last before resigning, her government estimated its deficit for the year would be $4.3 billion. Given Alberta’s population of just over four million people, the deficit in Ms. Redford’s final year alone is a staggering $1,000 per person.
And that figure would have been triple had Alberta not collected the $9 billion it did in revenue from oil and gas exports.
Ms. Redford’s budgets pillaged the province’s savings account, as well. Just five years ago, the Alberta Sustainability Fund (the rainy day fund that was put aside in part from oil and gas royalties to offset the price fluctuations of those goods), was more than $17 billion.
As of this month, the Sustainability Fund was estimated to have just $691 million remaining in it.
So, if you’re keeping track, Ms. Redford was premier for just about three-and-a-half-years, presented two budgets in that time, and ended up spending about $16 billion more than her government took in.
It’s almost comical that she was brought down by a $45,000 trip she expensed to go to Nelson Mandela’s funeral and not her job performance.
Meanwhile, the tenure of Canada’s now former Finance minister Jim Flaherty also came to an end this week.
It must be said first that no single finance minister in Canadian history has run up as much debt, and destroyed the fiscal capacity of a government, more than Mr. Flaherty did.
Right from the get-go, the finance minister hamstrung his government by introducing countless tax cuts and tax credit schemes.
The Conservative slogan was that they would “put money back in your pocket.” Unfortunately, they didn’t bother to tell you that it would be borrowed money with interest tacked on.
When the Conservatives came into power in 2006, they inherited a sizable $13.8-billion surplus. But after just two years as finance minister, Jim Flaherty turned that surplus into a $5.8-billion deficit in the year before the global recession.
During his tenure at Finance, Flaherty cut the GST by two points and the income tax for large corporations from 22 percent to 17 percent, both of which will have disastrous consequences for future generations of Canadians who now have an extra $160 billion in federal debt to pay back as a result.
While he has racked up more than $160 billion in new debt, the end goal for Mr. Flaherty always was said to be job creation. Indeed, he brags about how he single-handily “created more than one million net new jobs” since the end of the recession.
Unfortunately, the true number of jobs created–and the payoff for Canadians for the all those nasty deficits—is far, far less than advertised. In reality, between the start of the recession in September, 2008 and September, 2013, just 653,400 jobs were added to the economy.
In fact, the longer Flaherty served as finance minister, the worse things got as the Canadian economy created a meagre 99,000 net new jobs (95,000 part-time and just 4,000 full-time) in all of 2013.
To give that figure some perspective, it should be noted that Canada welcomed more than 261,000 new citizens to our country from abroad that year.
In the end, I’m sure you will join me in wishing nothing but good health and happiness for Ms. Redford and Mr. Flaherty in their retirement.
However, as someone who cares about our future, I’m glad they no longer are active in our political scene as they were fiscal disasters for the people they served—and for future generations of Albertans and Canadians.

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