The Bank of Canada announced a one per cent interest rate increase this week and Westlock-Morinville-Barrhead MLA Glenn van Dijken says it should be a warning flag.
van Dijken’s comments come on the heels of a July 12 Wildrose press release in which opposition leader Brian Jean expressed doubt that the provincial government was fiscally-responsible.
The Bank of Canada’s decision to increase its overnight rate by 0.25 percentage point to 0.75 per cent is the first in seven years and is used to determine the rate at which banks lend money to each other on a regular basis.
“The uncertainty of structural debt, meaning debt without a repayment plan, leaves the province very vulnerable to interest rate increases,” van Dijken said, adding every dollar spent on operational debt is another dollar not available for needed services.
“This NDP government has turned a blind eye to the fact that they are spending far beyond their means and are saddling future generations with ever-increasing levels of debt. Future generations will have bills of their own to pay without having to pay for the irresponsible nature of spending from Rachel Notley and her crew,” he said.
van Dijken said he believes the interest rate increase is a double whammy for taxpayers.
“This new increase will cost upward of $57.5 million and the Canadian exchange rate on this rate increase, costing taxpayers around $215 million, is the result of the announcement,” he said, adding credit rating agency downgrades have also contributed to ballooning interest payments.
Jean agreed.
“The last thing Albertans want is to spend more money to finance the ever-increasing debt load but that’s what is happening here. This will mean even less money going to the hospitals, schools and the roads that the tax dollars should be going towards,” Jean said in the press release.
In addition, the Bank of Montreal and the Bank of Nova Scotia indicate the next interest rate hike is expected in October.
Wildrose Shadow Finance Minister Derek Fildebrandt said the rate hike was an indicator the economy is turning around.
“As the economy rebounds, we should anticipate more rate hikes in the future and each one has million, if not billion dollar implications for our province. The prudent thing for this government to do is get our province on a path to balance immediately,” Fildebrandt said.
“Hoping oil prices increase is the only plan this government has for getting back to a balanced budget,” van Dijken added.
