As a small business owner specializing in debt, Chris Dugan often sees the consequences of taking on too much debt and making poor financial choices.
It’s something on his mind as the provincial election approaches in the midst of a struggling economy.
“The priority for the next government has to be balancing the budget and reducing the growth of operational spending,” he says. “This will go a long way in creating an environment that will enable the economy to heal itself.”
As the Principal of Case Receivable Management Inc., a debt recovery and credit reporting firm, and as Past Chair of the Alberta Chambers of Commerce (ACC), Dugan has had a front row seat watching Alberta’s economy go through cycles of prosperity and hardship.
“There are consequences to a lack of fiscal prudence – especially in difficult times,” he says.
“Unlike private enterprise, governments have the ability to tax and borrow pretty much at will, but debt doesn’t go away on its own and eventually, the piper has to be paid.”
Dugan points out that during an economic contraction, fewer tax dollars flow into government coffers, which – if taxes are raised to compensate – imposes a greater burden on businesses. “You’re taking a larger bite out of a shrinking pie, which hurts the very people you’re relying on for tax dollars,” he says.
The impending risk of creating such an environment is losing the confidence of the financial community – not just in Alberta, but in Canada and abroad. “Capital flows across borders a lot easier than people,” says Dugan. “Over the last few years we’ve seen an exodus of both capital and skills, especially capital, and either alone is a destructive force to an economy. It’s not good.”
The policy of borrowing to meet shortfalls is also fraught with economic peril, particularly when the government goes into debt to meet operational expenses. “Spending your way into prosperity doesn’t work when it involves going into a budget deficit” he says. “The ACC is an apolitical organization, and my own politics is that of common sense, which is ‘how can you continue to spend more than you take in?’”
Ken Kobly, ACC President and CEO echoes Dugan’s sentiments. “We need a plan to balance the budget and the threat is that future revenues will be allocated to service that debt,” he says. “Job creation remains low, and too many of our young people are without work, while investment continues to plummet and creditors continue to downgrade our ratings.”
The ACC encourages the next government to launch a full program and service review that includes external stakeholders.
“They should be listening to business owners who have practised prudence and are able to live through the hard times,” says Dugan.
With the provincial debt set to hit $96 billion by 2023, the solution lies in consulting experienced people to develop optimal approaches that will stabilize government revenues and expenditures. “We want this election to focus more on policy than personalities, so, we’ve put our solution out to all the leaders to come in and talk with us to ensure future prosperity,” says Kobly.
“Relying on oil prices to rebound is a prayer, not a plan.”
To learn more about how the next provincial government can be made more accountable to taxpayers, visit voteprosperityab.com
This story was created by Content Works, Postmedia’s commercial content division, on behalf of Alberta Chambers of Commerce
Click here for the original article on edmontonjournal.com: ‘Eventually the piper has to be paid’ Increasing government debt will have consequences