HILL AND EISEN: Albertans set to pay more interest on government debt — despite surpluses abpoli
In 2008-09, Alberta’s government debt-interest costs were negligible at just $58 per person. By 2022-23, this number will reach a projected $598 per person.
And despite large expected surpluses over the next few years, Alberta’s debt-interest costs are projected to keep rising. According to the Smith budget, debt-interest costs will reach a forecasted $3.1 billion in 2025-26, equal to about $637 per Albertan. Keep in mind, that’s money no longer available for other important priorities such as health care, education or tax relief.
To avoid further increases in the debt burden for Albertans, the Smith government should understand why debt-interest payments have reappeared as a meaningful line item on the provincial budget. Successive governments ran large deficits, fuelled by high spending, which led to the rapid increase in debt and related growth of debt-interest payments.Article content
If the Smith government continues the high-spending approach of past governments, deficits may well return in the future and the pace of debt accumulation could accelerate. All else equal, this would mean continued growth in debt-interest costs for Albertans. Indeed, Alberta’s current budget surplus is almost entirely the result of higher resource revenues, which won’t last forever.
In its first budget, the Smith government touted budget surpluses. Unfortunately, Albertans will still pay the price of past debt accumulation through higher interest payments.Share this article in your social network
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