Net debt, priority areas targeted for reinvestment

Shelley Russell

The extra $200 million available to the Alberta government in 1997/98 should be spent on faster paydown of the net debt and priority areas like health, education, programs for children in need and seniors' benefits.

That is the gist of a report prepared by the Standing Policy Committee on Financial Planning on May 14 and 29. The committee suggests that while the government should create the climate for economic expansion and job opportunities by investing in infrastructure, it should put its proposed tax reduction plan on the back burner with the exception of an employment tax credit for low- and middle-income working families.

The report reflects the results of Straight Talk, Clear Choices, the government's reinvestment survey. Alberta Treasury mailed 1.1 million copies of the survey to Albertans in February at a cost of $245,000. The response rate was 5.6 per cent.

Albertans were asked whether extra dollars should be reinvested in faster paydown of net debt, targeted spending on priority programs, tax reductions or a combination of all three. Just over 35 per cent of respondents identified faster net debt paydown as their top priority, followed by a combination (30.5 per cent), targeted spending (20.3 per cent) and tax reductions (7.7 per cent). Health, education, the economy and job opportunities, programs for children in need and seniors' benefits were ranked as the top five priorities for targeted spending.

Calgary Egmont MLA Denis Herard questioned the idea of speeding up the government's 18.5-year debt elimination plan. He pointed out that Albertans who have mortgages would not accelerate their payments at the expense of food, clothing and shelter. "People want to ensure the basic things are looked after before we get too caught up in trying to reduce the debt too quickly," he said.

Bonnie Laing, MLA for Calgary Bow, made a pitch for reinvestment in infrastructure, including schools, as a way to create the climate for economic expansion and job opportunities. "We'd like to see the infrastructure in the schools and the institutions maintained," she said, adding that such maintenance would help attract business investment.

Lacombe-Stettler MLA Judy Gordon agreed. "If we're going to look at the future of this province, then we have to look at infrastructure," she said.

Medicine Hat MLA Rob Renner suggested public-sector compensation as an area of reinvestment. "Our public service has been in a wage freeze for a couple of years now," he said. "Compensation to the public service cannot remain static forever."

Clint Dunford, MLA for Lethbridge West, advised his colleagues not to get too carried away with targeted spending. The government was elected on a platform of deficit elimination, he reminded them. "We're going to pay one hell of a price at the polls in '97 if we forget what elected us in '93."

Federal and Intergovernmental Affairs Minister Ken Rostad questioned the validity of a survey completed by only 61,000 Albertans. "It's a very nice exercise in terms of finding out general responses," he said, "but I don't think it has any scientific validity."

Provincial Treasurer Jim Dinning acknowledged the survey is not scientific but suggested it confirms what he has heard from Albertans. He defended the proposed employment tax credit for low- and middle-income families on the grounds that those families, especially the ones with children, "have taken a beating." Other tax cuts could come "after we've made continued good progress on paying down the debt and shown Albertans that we've got our priorities right," he said.

Every $100 million applied to the debt frees up $8 million for reinvestment. The $200 million available for reinvestment in 1997/98 could rise to $426 million the following year.

The report will be debated by cabinet and government caucus this summer.