It's official. Alberta is now on watch for our ballooning debt that Moody's Investor Service has said could negatively impact our triple-A credit rating.

The Calgary Herald reported:

Alberta’s debt climbed by more than $3 billion in 2014-15 — to $11.9 billion from $8.7 billion — and that boosted annual debt service costs to $714 million from $590-million.

It’s been ten short years since Ralph Klein declared Alberta debt free, and a lot has changed. The government has stripped away Alberta’s unique and advantageous flat tax, and is racking up debt like a runaway train. Moody’s report says Alberta’s debt burden could double this year if the province continues its investing. Though I remain optimistic for a turnaround – a shift away from the PC tax-and-spend budgeting Albertans rejected in the recent election – we’ve we’ve seen little to indicate any change on that front. While the NDP government reversed PC spending cuts and has certainly hiked a whole host of taxes, we’ve heard nothing of trimming spending, offering tax relief or paying down the debt.

Recently, the NDP continued the PC increase-the-debt-now, ask-questions-later plan to increase debt borrowing room by a whopping $6 billion – with no debt repayment plan in accompaniment.

The Herald reports:

“The absence of a credible plan to restore fiscal balance in the next few years, rebuild reserve funds and contain debt accumulation could erode the credit profiles of both entities,” the report says.

What’s also concerning is that debt servicing costs – the money we spend solely on interest payments to our debt – have “nearly tripled.” That’s money we could be spending on programs we actually value, or giving back to Albertans in much-needed tax relief. Instead, the government is using it to pay the interest costs on our Taxpayer Visa Card.

Now, of course we need to pay for infrastructure, and indeed the Canadian Taxpayers Federation (CTF) maintains that infrastructure is an important and justified area of government spending. However, what isn’t justified is borrowing recklessly now and shovelling massive debt loads onto the backs of our children. If we aren’t paying for it now, future generations of taxpayers will pay for it later. And that’s just plainly irresponsible.

At the risk of repeating myself, has the government even tried to trim spending? Have they gone to every department and asked, “If you had to, where would you make a modest cost reduction?” If so, taxpayers certainly haven’t been informed of it, nor have we seen the beneficial impacts of spending reductions.

Currently, Alberta’s debt is increasing by an estimated $11,000 per minute! Certainly there’s room to rein it in.

So why is our credit rating important? The interest rates taxpayers pay on financing the government’s debt is determined by our provincial credit rating. The lower our credit score, the more expensive it is to finance the province’s debt.  

We’ve seen other provinces’ credit ratings tumble, and we’ve watched the social and political ramifications of that play out. That isn’t what we should aim for here in Alberta.

Earlier this month, Ontario’s credit was downgraded by S&P for the second time since 2009. They’ve also seen multiple credit downgrades by other credit rating agencies. This year, Ontario is already paying $11.4 billion on debt interest payments alone. That’s HUGE.

A persisting problem in Ontario is that the government simply hasn’t listened to the warnings of those credit rating agencies. As a result, their credit ratings have plummeted, and it’s been costly for taxpayers.

This is our warning.

Moody’s has now alerted the Alberta government that they’re keeping an eye on their finances and our provincial credit rating could be negatively impacted if the government doesn’t make responsible decisions now. Our government would be wise to take the tip and immediately begin paying off our debt, for the good of Alberta taxpayers today and tomorrow.