Corbella: Generation Screwed is worried for the future

Alberta Finance Minister Travis Toews presents the province's first quarter fiscal update on Aug. 27, 2020. Alberta’s deficit is forecast to hit $24.2 billion in the wake of the COVID-19 economic fallout.

They call themselves Generation Screwed. It’s hard to argue with them.

Matthew Melbourn, 21, the prairies regional co-ordinator of the Ottawa-based group, found

Alberta’s fiscal update

on Thursday depressing.

The province’s debt is forecast to hit $99.6 billion next March, an increase of $25.4 billion from 2020.

Alberta Finance Minister Travis Toews called what happened to Alberta this past year a “triple black swan event,” during a media briefing on Thursday.

“The pandemic, the energy price war, and global economic contraction blindsided our economy, just as it was beginning to show signs of improvement and approaching pre-recession levels of economic activity,” he said in his speech in the legislature.

Melbourn understands that governments had to step in and help people forced to shut down during the COVID-19 crisis, but he points out that governments were spending way too much prior to the pandemic and even during good times.

“Someone born in 1990 is gonna have a lifetime tax burden of nearly half of someone born in 2000, and that’s just 10 years,” points out Melbourn. He gets those figures from the Generation Screwed website, which allows you to plug in various dates to see the tax burden facing people born in various years.

Actually, Melbourn is underplaying the severity of the tax difference in just 10 years. According to the Generation Screwed calculator, a person born in 1990 will pay a tax bill of $706,099. Someone born in 2000 will pay $1,661,504, a 235-per-cent increase.

That, of course, does not include the projected federal deficit of $334 billion this fiscal year, racked up as a result of necessary COVID-19 measures, but also reckless spending as well.

According to the

Canadian Taxpayers Federation

, every hour of every day our federal

debt grows by $39 million

or $940 million per day. Every man, woman and child in Canada owes $22,629 towards that growing debt.

In Alberta, every person owes an

additional $17,285

as our share of our provincial debt.

Franco Terrazzano, the federation’s Alberta director, points out that Alberta’s debt servicing charge this year is $2.5 billion.

“It’s crazy to think that a little over a decade and a half ago Ralph Klein was holding up a Paid in Full sign,” he said Friday. “Now we have the largest deficit in the province’s history and we’re about to be $100 billion in debt.

“It’s so important, especially now, to get the most value out of our tax dollars. But higher debt interest costs makes that much harder. This year we’re going to lose out on $2.5 billion that can’t go towards services or tax relief because it’s going to bond fund managers on Bay Street to service the debt.”

And on Friday, DBRS Morningstar, a major global credit ratings agency, sent out a release saying: “the fiscal and economic impact of the pandemic and the precipitous decline in oil prices have had a more profound impact than was first anticipated by DBRS Morningstar.

The Province plans to release a budget update in November 2020, including a three-year fiscal outlook and preliminary plans to begin addressing the shortfall. The government continues to voice its aversion to tax measures, leaving expenditure constraint as the preferred tool for fiscal consolidation, although given the magnitude of the problem, it’s unclear how meaningful progress will be made

.”

Unless things start to improve, it looks like Alberta could see it’s credit rating fall, just as Canada’s federal government credit rating has, meaning the cost of borrowing money will increase.

In June,

Fitch Ratings downgraded

Canada’s credit rating to AA+ from AAA, citing the federal government’s move to borrow about a quarter of a trillion dollars to prop the economy up during the COVID-19 lockdown.

Prime Minister Justin Trudeau

has hinted

that he is going to bring in sweeping social welfare reforms, possibly including a

guaranteed annual income

— that, depending on how it’s structured, can have devastating impacts on productivity as it can demotivate people —

particularly young people entering the workforce.

“This is our chance to build a more resilient Canada, a Canada that is healthier and safer, greener and more competitive, a Canada that is more welcoming and more fair,” Trudeau said after last week’s

cabinet shuffle.

Trudeau says his government’s speech from the throne on Sept. 23 will invite a confidence vote to allow his minority to be given a mandate for its post-pandemic plans.

Melbourn is concerned about what the feds are going to do.

“It’s no secret that COVID is a motivation behind a lot of this spending, but the spending began a long time before that, we all know that and it’s very worrying for my generation,” says the University of Alberta student entering his fourth year of towards a history degree, with the goal of attending law school next year.

“We’re seeing politicians plugging holes with money and we’re in a sinking ship, to be quite honest.

It’s time we really get our fiscal house in order and for governments to take action to end the intergenerational inequality that we’re facing.”

It’s clear Alberta’s

provincial government intends

to do that, but the spending spree appears to be just ramping up on the federal side, which means in the long run, we’re all going to be screwed.

Licia Corbella is a Postmedia columnist in Calgary. [email protected]

Twitter:

@LiciaCorbella

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