A new report is painting a dark picture for Alberta taxpayers caused by the province’s debt.
The University of Calgary’s School of Public Policy released Fiscal Policy Trends Thursday morning, which suggests the provincial debt will impose substantial burdens on future taxpayers, with younger age groups paying a disproportionate burden.
“Over half of the burden will be borne by people ages 16 to 35,” said Bev Dahlby, director of research with the university’s School of Public Policy.
“The size of the burden is quite large.”
During the 2018 budget announcement in March, Finance Minister Joe Ceci said the province’s current deficit sits at $8.8 billion. He forecasted it will fall to $7.9 billion, then to $7 billion, down to $4.3 billion, then $4.1 billion and finally to a $700-million surplus by spring 2024.
Authors of the U of C study suggest that means the public debt will be about $90 billion with annual interest payments of $3.8 billion in 2023-24. Interest payments on the debt will be $1.9 billion this year.
The report states 16 to 25-year-olds will take on 19.5 per cent of the burden among Alberta’s taxpayers in 2023, while 26 to 35-year-olds will cover 27.3 per cent of the cost.
A 16-year-old can expect to pay the equivalent of $42,252 over his or her lifetime as well as additional personal income taxes to pay the interest on the debt, according to the study.
“I think Albertans need to know how much they will have to pay in interest as a result of the deficits and debt that has been incurred,” Dahlby said.
“Especially for young people to know how much they will be paying in future taxes as a result of the deficits and debt.”
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The highest burden will be place on individuals who are 36 years old in 2023, who will pay $49,864. Older age groups will shoulder a lower burden, with a typical 65-year-old paying $20,605.
The authors of the study said the growth of the public debt should be concerning for Albertans, but it should be especially worrisome for the province’s youth.
“They should be more concerned about how we’re going to pay for it in the future,” Dahlby said. “It’s a very important issue and maybe that should mean that more of them should take an active part in politics.
“Our assumption is that the debt will never be paid off. We’re just going to pay the interest on the debt, there will be no further deficits that would increase the debt but there will be no attempt to pay it off. To pay it off would mean even larger taxes in the future.”
When Premier Rachel Notley’s NDP won power in 2015, she inherited an economy that was bottoming out as oil prices crashed and erased billions from Alberta’s coffers.
Rather than ratchet back spending, the NDP poured money into infrastructure and avoided cuts to front-line services.
The plan to get back to balance relies on revenue from two pipeline projects approved by the federal government: improvements to Enbridge’s Line 3 into Wisconsin and an expansion of Kinder Morgan’s Trans Mountain line to the West Coast which has faced delays in British Columbia.
— With files from The Canadian press