By Tamsin McMahon - Tuesday, February 19, 2013 - 0 Comments
Failure to rein in spending and make tough budget choices puts the provinces on course for a European-style debt crisis
Alison Redford made a show last year of demanding an apology from Ontario’s Dalton McGuinty for suggesting his province’s economic struggles and exploding deficit were the result of a petrodollar benefitting Western Canada. McGuinty retracted the comment, but eight months later announced his resignation amid a fractious minority parliament, a provincial credit downgrade and a war with teachers over freezing salaries to plug a potential $16-billion budget hole.
McGuinty may have been pilloried in the West for blaming Ontario’s woes on high oil prices, but in a televised address last month the Alberta premier was also pointing fingers, blaming her province’s projected $6-billion deficit on a “bitumen bubble” that was depressing Canadian oil relative to world oil prices.
Her answer to the problem wasn’t that the province should raise taxes or cut infrastructure spending, but that it would convene a summit of experts and “everyday Albertans” to come up with solutions to Alberta’s ballooning deficit. That was hardly reassuring to her critics. “If Alberta cannot balance its budget with a 4.5 per cent unemployment rate and $85 per barrel of oil, no province can,” fumed Wildrose MLA Rob Anderson.