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By Bob Ascah

The Notley government appears to have embraced the mantra that capital spending is good. In a speech to the Alberta Urban Municipalities Association, Premier Rachel Notley noted that with a depressed economy, increased spending on capital projects would help maintain jobs in the short term and improve the economy’s competitiveness in the long run.

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She added: “This is a time when there may be some capacity available in our construction industry, and when capital is relatively inexpensive — in moderation!”

Spokespersons for the Alberta Construction Association and the Consulting Engineers of Alberta enthusiastically supported more public-sector construction.

The overall positioning of capital spending is attractive for a number of reasons, but caution is warranted. One advantage is that borrowing costs have never been lower. Second, Keynesian economics suggests in recession (and there is no doubt that Alberta is now in a recession), governments ought to increase spending to cushion the impact of decreased investment.