Olds & District Chamber of Commerce vice-president Ben Stone says he likes Advanced Education Minister Marlin Schmidt's defence of the Alberta government's budget.
Schmidt gave that defence during a 13-minute speech at a chamber-organized breakfast at the Pomeroy Inn & Suites this past Thursday.
Basically Schmidt said during economic downturns in the past, previous Alberta governments have tried to cut spending, including public sector jobs and wages, in order to balance the books and turn the economy around.
Schmidt said that's only made the situation worse. So his government is taking the opposite tack by spending money on infrastructure and trying to diversify the economy.
At the same time Schmidt said, the government is keeping health care and education intact so they don't get worse.
“I was really impressed; I really enjoyed the entire speech. I was just impressed by him in general as a person,” Stone said during an interview with the Albertan.
“As far as the spending, I do like the idea of spending to stimulate the economy. But what worries me is the efficiency of that spending,” he said.
“For every dollar that is put in – that is taken through tax – how much of that dollar is going to make it into the actual program itself? And is that done as effectively through the public sector as it is through the private sector?”
During his speech, Schmidt also touted the government's decision to cut the small business tax from three per cent to two per cent, etc., to stimulate the small business sector. Stone was asked what he thought of that idea.
“I think we'll have to see how things play out in the future. I mean it sounds nice; it does sound good on the surface, but I think you'd really have to do a good economic analysis to really say something in regards to that.
“What he was saying all sounds really nice, but at the end of the day, is the money going to be efficiently spent? Is it efficiently going to make its way down to small businesses?” he asked.
Stone expressed concern that half that cut may be swallowed up by government bureaucracy.
The provincial government also plans to borrow a lot of money to stimulate the economy. Provincial officials have said that now is the time to do that, when interest rates are low and the economy needs the stimulus.
However, largely because of those borrowing plans and the low price of oil, various international credit-rating agencies have downgraded Alberta's credit rating, making it more expensive to borrow that money.
“I do think they are correct. I mean, right now really is the time (to borrow),” Stone said. That's the point of having low interest rates – to encourage borrowing; to encourage spending. That's why the government of Canada does that.
“Now, that being said, it doesn't make any sense to borrow well above your means; being able to pay back with oil the way it is,” he added.
The Alberta budget forecasts that oil prices will average US$50 this fiscal year, US$61 in 2016-17, and $68 in 2017-18.
“I'm not sure if we're going to get there. Whether or not we do, that has a big implication on how the province will be able to handle its deficit,” Stone said.
“So there's a bit of leverage. They're leveraging (borrowing money to stimulate) the recovery, I think. It could certainly work out well, but at the same time, as we're seeing with a lot of oil companies, leverage isn't necessarily the best approach.”
"It does sound good on the surface, but I think you'd really have to do a good economic analysis to really say something in regards to that."BEN STONEVICE-PRESIDENT OLDS & DISTRICT CHAMBER OF COMMERCE
