A reminder of how destructive the accumulated debt by a government can be came after the city of Detroit declared bankruptcy Thursday under the weight of a massive $18-billion debt.
Last summer while celebrating the 100th anniversary of our family farm, my American cousin, who is a retired Ernst and Young V.P., had forewarned that Detroit’s financial demise would be imminent. Unfortunately, he was right.
With a declining population of just more than 700,000, the debt has become unmanageable prompting the city to seek bankruptcy protection sending shock waves through the U.S. and Canada.
At one time, the city of Detroit was a symbol of power and stability, but successive year over year deficits have outpaced taxes, which are the highest in the state of Michigan. This has caused a continually compounding deficit, which has had far reaching and serious consequences to basic services in the city.
Examples of the repercussions of the poor long-term planning have seen 40 per cent of Detroit’s streetlamps out of service, 210 of its 317 public parks closed permanently, wait times of an hour for police to respond to a 911 call and only one third of its ambulances operational. A local realtor was reported to have offered houses on sale for a $1 and incredibly there was not a single taker.
The significance of a major North American city declaring bankruptcy can serve as a monument to debt and careless financial planning by a government.
In Alberta, the government presented its sixth successive deficit budget with no tenable end in sight according to the government’s own financial predictions.
In contrast to the conservative values of Albertans, Alberta’s debt is also being compounded from year to year following the same trail of financial ruin the city of Detroit blazed all the way to bankruptcy.
Already mired in compounding deficit and with our sustainability fund’s bones picked clean, we are left with even more deficit financing caused by the spring floods throughout southern Alberta. The irony of our rainy day fund not being there for when it really did rain is going to be an expensive lesson that could have been avoided.
The Wildrose Official Opposition has proposed our 2013 Financial Recovery Plan to clear the debt, rather than leaving it to compound into an unsustainable burden.
Last spring when Alberta’s sixth straight deficit budget was being presented nobody could have predicted the sudden need that was created — however being caught financially unprepared was simply a failure to plan.
John L. Beckley, American founder of the Economics Press Inc., American author and businessman, coined the phrase “people don’t plan to fail: they fail to plan.”
That’s what was missing with the spending promises made by the current government, before during and after the last election. What was their plan?
Was the plan just to hope it didn’t happen? Another year of successive and cumulative debt will contribute to the next disaster that awaits Alberta if they keep failing to plan.
— From the Legislature