While Quebec is boasting billions in surplus and a booming economy Alberta continues to cut spending battling billions in debt and a weak economy.
On Nov. 7 the Quebec government gave an economic update showing a $4-billion surplus for 2019-20 and a revised surplus of $8.3-billion for 2018-19.
But in Alberta, last month the provincial government was forced to cut $1.3 billion in spending and will have billions in deficit after five years of tough economic times. According to the Alberta government, the provincial debt is about $63 billion.
With their surplus budget, Quebec Premier François Legault said that province will give back $857-million to its taxpayers.
In addition, Quebec’s economy is expected to grow by 2.4 per cent in 2019, the third consecutive year of strong economic growth. The national average for 2019 projected economic growth is only 1.6 per cent.
Premier Legault said he wants to eventually get Quebec off federal equalization payments but this year Quebec will receive $13.1-billion in transfer payments.
Since equalization payments started in 1957, Alberta has only received 0.02 per cent of all the payments. The last equalization payment Alberta had was in 1964-65.
Equalization payments were created to give the federal government transfer funds to have-not provinces to help all Canadians – no matter where they lived – receive comparable services and tax rates. Equalization was put in the Constitution in 1982.
For 2019-20 the provinces that receive equalization payments include Quebec, Prince Edward Island, Nova Scotia, New Brunswick and Manitoba.
The provinces that won’t receive any include Alberta, Saskatchewan, B.C., Ontario, Newfoundland and Labrador.
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Last year – without formal notice or consultation with the provinces – the Trudeau Liberal government made sure Alberta wouldn’t get any equalization payments because of the province’s “fiscal capacity.” Federal Bill C-74 ensures the current equalization system stays in place from April 1, 2019, to March 31, 2024.
In 2008 Alberta didn’t have any debt and $15 billion in reserve accounts as well as about $20 billion in the Heritage Fund and endowment funds.
Fast forward a decade and Alberta now faces a tough fiscal situation after years of government spending increases.
In the past decade, provincial governments increased spending beyond inflation and population growth. The 2007 budget increased operating spending by 21 per cent in one year.
The MacKinnon Panel report released earlier this year revealed that years of rapid growth in operating budgets meant the province spends 20 per cent more per person than the other provinces.
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Alberta’s capital spending has also been higher than the rest of the country. Despite all the complaining from some local politicians, municipalities in Alberta have had a sweeter deal than anywhere else in Canada, with capital grants at least 20 per cent higher than the national average.
Now the UCP provincial government says it is cutting spending to bring down the provincial debt.
Updated Nov. 9 9:20 a.m.
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