The Decline of the Other Alberta Advantage: Debt Service Costs in Alberta Are Rising

Summary

• Throughout recent history, Albertans have enjoyed a substantial fiscal advantage other Canadian taxpayers, resulting from the fact that government debt interest payments in Alberta have been far lower than in any other province.
• For example, in 2007/08, Alberta’s provincial government spent just $61 per person on debt interest payments. The other nine provinces had to spend between $521 and $1,476 per person servicing debt.
• This fiscal advantage has saved Alberta’s taxpayers billions of dollars each year in the recent past.
• Alberta’s debt interest payments were so low because the province carried very little debt. Until 2016/17, Alberta was “net debt free,” meaning that its financial assets were greater than its liabilities.
• In the most recent fiscal years, however, Alberta’s net asset position has flipped from positive to negative and the province is quickly racking up debt.
• As a result of rapid debt accumulation, the cost of servicing Alberta’s debt is quickly catching up with other provinces. Current projections suggest that by 2020/21, Alberta’s debt service payments per person will exceed British Columbia’s and will be approximately 70 percent as large as Ontario’s.
• If Alberta’s pace of debt accumulation continues at a similar rate in subsequent years, Alberta will join Newfoundland & Labrador and Quebec (and possibly Ontario) as the only provinces paying more than $1,000 per year in per-capita debt interest payments.