The Fraser Institute

The Fraser Institute

August 14, 2014 08:25 ET

The Fraser Institute: Media Release; Since 2005 Alberta Government Ramped Up Spending on Government Programs and Salaries, Shortchanging Other Priorities

CALGARY, ALBERTA--(Marketwired - Aug. 14, 2014) - Increased spending on government programs has diverted taxpayer money away from other top priorities in Alberta, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, Post-boom spending in Alberta: A $41 billion splurge and lost opportunities, compares Alberta's program spending (government sector salaries, for example) with other types of spending and investment.

"Over the past decade Alberta's government has increased spending on things like government salaries and pensions while taxpayers and their families foot the bill," said Mark Milke, study author and senior fellow at the Fraser Institute.

For example, from fiscal year 2005/06 to 2012/13, the province spent $300 billion on government programs. That was $41 billion more than needed to keep pace with Alberta's population growth and inflation.

On a per person basis, spending on government programs in 2012/13 was $10,672, a sharp rise from $8,965 in 2004/05, when Alberta had fully returned to the high per person spending of the early 1990s.

Alberta's significant increase in government program spending begs the obvious question: Had program spending -- already historically high in 2004/05 -- simply kept pace with inflation and population growth, what could have been done with that $41 billion?

Capital projects

Between 2005/06 and 2012/13, notes the study, the provincial government spent $50 billion on capital projects (i.e. schools, hospitals).

"There's no doubt that greater control of program spending would have freed up funds for capital projects, thus reducing the need to borrow money," Milke said.

Tax relief

Between 2004/05 and 2012/13, the province collected $67.5 billion in personal income taxes from Albertans. That means 61 per cent ($41 billion) of all the personal income tax during that period went to program spending that exceeded inflation and population growth.

Alberta Heritage Savings Trust Fund

Between 2005/06 and 2012/13, the province deposited a mere $4.5 billion -- or roughly one-ninth of the extra $41 billion spent on programs -- into the Alberta Heritage Savings Trust Fund, a rainy day fund for future generations of Albertans.

"The Heritage Fund is another example of a missed opportunity," Milke said.

"If Albertans want more schools and roads, lower taxes, and more money for future generations, government program spending will need to be reined in."

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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