Mr. Anderson: Thank you, Mr. Speaker. I’d like to move second reading of Bill 204, the Fiscal Responsibility (Spending Limit) Amendment Act, 2010. Bill 204 proposes to limit year-over-year increases in overall government spending to the greater of either the rate of inflation plus population growth or to where total government per capita spending is equal to or lesser than the average per capita spending of Canada’s remaining nine provinces, whichever number is greater.

This bill is necessary because our province currently is spending beyond its means and has been doing so for a very long time.

Despite record-high revenues over the past five years, despite a recession that although difficult was not even remotely as deep or as long as the last two to hit Alberta, our financial picture has become very bleak. Our sustainability fund is, by the government’s own rosy predictions, set to expire in roughly two years. We are not only burning through our savings but accruing billions in debt for future generations to pay. Sadly, any interest made on the heritage fund over the past decade has been spent on the here and now, leaving not one cent for our kids and grandkids during a time when our natural resources have never been worth more and may never be worth this much again.

This government’s per person spending has been first or second in the country for a very long time. Not only is this unsustainable but Albertans are not getting sufficient value for this spending. We see this with a health care system on the brink of collapse, as our emergency docs have said this past week, and we see this with a massive school shortage in many municipalities, like Airdrie and Chestermere, while perfectly good schools in other communities are closed and unnecessary new ones opened.

We are building billions of dollars’ worth of infrastructure with no money left over to staff it. We may be building a lot of buildings and roads, but how can we expect our children to staff and maintain it all 20 years from now if we can’t even afford to do it today? What kind of legacy is that? The temptation to impress constituents with unnecessary frills, the knee-jerk reaction to solve societal problems with public spending, and a general desire to be seen to be doing something regardless of how effective it is have become far too ingrained in our political culture.

We owe it to our children to change this culture of waste and government largesse. In my view, spending away our rainy-day fund within a short few years and piling up billions in new debt on the backs of future generations to dull the pain of a self-inflicted spending hangover is the height of irresponsibility. So, too, is expanding the size of government entitlement programs to the point where the only way to adequately fund them is to substantially raise taxes and to increase debt on future generations.

Bill 204 is the first step in a spending addiction recovery program.

If we can take this first step as a province, the road back to fiscal sustainability is achievable. Not only does this kind of spending guideline make intuitive sense, it is not a new invention. Similar initiatives have proven to be very effective in other jurisdictions, and this plan is endorsed by the Alberta Chambers of Commerce, the Fraser Institute, the Canadian Federation of Independent Business, and the Canadian Taxpayers Federation, among others.

Let me take a moment to head off some misconceptions that I’ve heard surrounding this legislation. First of all, Parliamentary Counsel has confirmed that it is not a money bill and is therefore suitable for introduction as a private member’s bill.

Some are concerned that if we fall behind other provinces in spending, we will not be able to deliver some of the core government services as well as other provinces do. To this I would point out that the formula calls for a limit in spending increases to the rate of inflation plus population growth or a spending increase equal to the average per capita program spending of Canada’s remaining nine provinces, whichever number is greater. Accordingly, when this legislation eventually brings us back into the middle of the pack in terms of per capita provincial spending – and given our lead, this will take some time – we will be able to remain there and not fall behind other provinces.

Others have wrongfully pointed to problems in California. As we know, California is dealing with program cuts required to meet their balanced budget legislation. Balanced budget legislation is not the same as spending limitation laws. They are two entirely different pieces of legislation.

As we know too well in Alberta, revenues can swing wildly from year to year. This may mean that in a severe downturn revenues may plummet so dramatically that achieving a balanced budget is impossible without substantive cuts. That’s not what this law does. Bill 204 limits year-over-year spending increases. It actually insulates governments from the need to drastically slash spending because it guards against massive overspending during good times so that when revenues do drop sharply – and sometimes they do – the need for cuts, if any, will be much, much less.

For a better comparison we should look to the state of Colorado, which passed a taxpayer bill of rights in 1992, that included a provision that government spending cannot exceed inflation plus population growth. Because of this law Colorado taxpayers enjoy a robust economy at lower tax rates than most other states. Their deficit during the past recession was very, very small compared with other states. In fact, the success of their innovative move in 1992 prompted many other U.S. states to pass expenditure limitation laws of their own.

Bill 204 will also make our long-term fiscal planning much stronger. By knowing what our expenditures will be down the road, we’ll be better able to engage in long-term tax and debt reduction planning. This bill will also allow for a more manageable long-term saving strategy to be put in place. This is due to the economic fact that over the long term GDP and the tax revenues generated there from will outstrip the rate of inflation and population growth.

This means we can save more and that we can tax less over time. What a legacy that would be. We could turn a sea of volatile, nonrenewable oil and gas into a mountain of permanent investment capital accruing with interest each and every year.

Another benefit of this bill and one that should appeal to the members opposite is that it will help moderate the expectations of the public as well as public-sector workers when it comes to how much the government is able to spend. Politicians will be able to use this legislation to help stiffen their resolve when it comes to saying no to things that are not priorities or to saying no to massive wage hikes that taxpayers simply cannot afford. While I believe the stability this bill offers will be positive for our social programs in the long run, making them far more efficient than they are today, it will still have the effect of curtailing the size and the scope of government bureaucracy. Departments will look for innovative ways to provide more efficient and better services by reallocating existing resources rather than simply asking for more funding while perpetuating outdated and wasteful programs and practices.

The bottom line is this. If our federal and provincial governments of the day had controlled spending in this way starting in 2000, both would be running surpluses this year despite being in the midst of a global slowdown. According to the calculations of CFIB inflation and population growth have increased by 72 per cent since 1997. Program expenditures, on the other hand, have increased 159 per cent, more than double that rate. Infrastructure is not even part of that calculation. That’s just program expenses like staffing and overhead.

If Alberta’s government had adopted this initiative in 1997, our financial future would be something we could be proud of. The $852 million deficit of 2008 would have instead been a $9.85 billion surplus. Even if we had only adopted it in 2002, our surplus in 2008 would have been $6.36 billion. This year, instead of projecting a record $7.6 billion cash deficit that is wiping out our emergency savings, we would be running a small surplus, one backed by a large sustainability fund and a heritage fund much larger than the one we have today. Instead of letting our heritage fund run down with stock prices and raiding its gains when investments rebound, we would have been making substantial contributions to it over the last five years. This would be a legacy we could have been proud of. It is a legacy that we can still build, but we have to start now, and passing Bill 204 is a first step in the right direction.

Thank you.

Video:

Doing Something About Alberta's Spending Problem
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