Edmonton

NDP defending carbon tax, high debt and increased borrowing in budget

The growing provincial debt and the carbon tax were the focus of sharp attacks by the Opposition in question period Monday, the first since the Alberta government introduced the 2016 budget last week.

Opposition goes after government in first question period since budget day

The government's plan to borrow billions of dollars is not just 'bad financial management' but is 'morally repugnant,' says Wildrose critic Derek Fildebrant. (CBC)

A growing provincial debt and the carbon tax were the focus of sharp attacks by the Opposition in question period Monday, the first since the Alberta government introduced the 2016 budget last week.

The budget shows the government plans to borrow billions to finance day-to-day operations and build infrastructure.

The government will spend $51.1 billion in 2016, and expects to take in only $1.4 billion in resource royalties, a 90 per cent drop.

All that borrowing means Alberta is expected to be $57.6 billion in debt by 2019. 

Wildrose finance critic Derek Fildebrandt questioned the government's decision to borrow that much money.

"Soon we'll be spending more than $2 billion a year on interest payments to the banks, instead of on schools, hospitals and roads that we need," he told the legislature. "This isn't just bad financial management, this is morally repugnant."

Fildebrandt said the Wildrose warned Finance Minister Joe Ceci last fall that the government would soon exceed its self-imposed ceiling on the ratio of debt to nominal GDP.

The 2016 budget forecasts a debt-to-GDP ratio of 15.5 per cent by 2019. Ceci introduced new legislation last week to remove the 15-per-cent limit.

Ceci said the measure was necessary to get through a "once in a generation" decline in the economy and two years of recession. He said no one in government or the Opposition predicted in October how bad the situation would get.

But Filderbrandt couldn't resist pointing out the quick reversal.

"He is going to break and repeal his very own debt ceiling law, just four months, 11 days, and 14 hours after he passed it."

Carbon tax effects debated

The budget also revealed details of the carbon tax, set to take effect on Jan. 1, 2017. The government has said 60 per cent of Albertans will receive a full rebate.

Wildrose Leader Brian Jean said the government is underestimating the costs of the tax, which he estimates at $1,000 for each family.

Earlier in the day, Environment Minister Shannon Phillips said the Wildrose is overestimating the cost of the carbon tax to families, which she says will be about $500 on average.

Jean said people who need trucks for their jobs or families that need larger vehicles to take their kids to activities such as hockey or ballet will hurt as well.

Last week, Notley said people could switch to smaller vehicles to avoid paying more for gas. Although the premier was not in the legislature, Jean challenged her to change the SUV used by her security detail.

"Will she show leadership by changing herself from her own large Suburban to maybe a Smart Car?" Jean asked.

The legislature will start considering the government's main estimates on Thursday. 

One day after the budget was released, bond rating agency DBRS downgraded Alberta's credit rating from triple-A to double-A.

DBRS said the budget revealed a significant fiscal shortfall. The agency also pointed to the government's unwillingness to increase taxes or reduce spending as reasons for the downgrade.

A number of economists say the government could solve its revenue problem by introducing a PST or HST. Notley and Ceci both say they will not go back on a campaign promise not to introduce a sales tax. 

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