Ask the Alberta Legislature Expert – Ric McIver

AlbertaLegislatureExpert

The World is teaching our Government a Lesson. Will they learn it?

I have been critical of the NDP government. They were however elected fair and square and must be allowed to make some mistakes as long as they are not fatal to our financial or social well-being.

Even as an optimistic person it is obvious that economic conditions are difficult now for many Alberta families. Layoffs and slowing of sales makes it harder just to pay the mortgage and get the kids through school.

The world of finance does not play favourites for Alberta or any jurisdiction. That is why it matters when Standard and Poor’s downgrades Alberta’s credit rating and when Moody switches Alberta from AAA stable to AAA negative on the outlook side. That means we are at risk of much bigger tumble. How much bigger cannot be said but in a low interest rate environment a small adjustment could be huge.

For example, a 2% interest rate jump from an 8% starting place amounts to a 25% increase in interest payments. A 2% interest rate jump from a 3% starting place which is more like today could mean a 67% increase in interest payments. If those payments cannot be met the credit rate falls further and the damage compounds accordingly. With a planned $50 billion debt on the way that could change everything.

There is time for this government to turn away from disastrous consequences of poor fiscal policies including skyrocketing debt and job killing taxes. I only hope our government learns the lessons being taught before the real consequences become fatal to our financial and social well-being.

Here is a link to my November 16 question in the house on jobs policies.:

http://www.abpcmla.ca/blog–ric-mciver-mla-calgary-hays

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