Alberta economy improving, but no change to $10.8B deficit
Update shows on track, but $1.5 million in gains are offset by an extra $2.6 billion in spending.
EDMONTON — A rebounding oil sector is delivering an extra $1.5 million to the Alberta government this year, but Finance Minister Joe Ceci says that money – and more – has already been spent and the deficit will remain at $10.8 billion.
Critics say no matter whether times are good or bad Premier Rachel Notley’s government lacks the will and the fibre to make hard decisions needed to balance the books.
“We’re still very early in the recovery phase. Alberta families are worried about the basics and the government is focused on basics,” Ceci said the third-quarter update for 2016-17 was released.
“We’re here to make life better for Alberta families.”
The update shows Alberta is on track to take in $42.9 billion this fiscal year, which ends March 31. But $1.5 million in gains are offset by an extra $2.6 billion in spending.
The province, at the suggestion of the auditor general, is booking a $1.1-billion accounting expense now for payments to be made to operators over the next 14 years to move the electrical industry off coal-fired power by 2030.
The province is also spending $774 million more than planned to cover higher operating costs, mainly in health, education and social services. There is another $818 million for disaster assistance needed after severe flooding in 2013 and last spring’s Fort McMurray wildfire.
To keep the deficit from ballooning to $11.5 billion, the province is throwing in a $700-million cushion it had kept to guard against low oil prices.
Ceci said the province is still committed to reducing the deficit and debt and decreasing the cost of government.
“We’re looking at all areas to reduce expenditures and in the (2017-18) budget coming up next month we’ll even have more of those identified,” he said.
Government borrowing, including money to pay operating and capital costs, is expected to reach $32.3 billion against $19.7 billion in the Heritage Savings Trust Fund.
Debt servicing costs this year are pegged at just over $1 billion.
Ric McIver, interim leader of the Progressive Conservatives, said the government does not have the will to rein in spending.
“They can’t make the tough decisions that Albertans need them to make,” he said. “They can’t differentiate between what Alberta needs and what they would like to offer up to get them re-elected (in 2019).”
Wildrose critic Glenn van Dijken said Alberta’s debt will reach $56 billion by the end of the decade.
“Finance minister Ceci refuses to admit that the size of our government is a problem,” said van Dijken. “The government will continue to run massive deficits and pile up debt, which will eventually drain billions away from hospitals and schools.”
Economic indicators presented by Ceci suggest Alberta is out of a recession caused by a trough in oil and gas prices that gutted thousands of jobs. Higher oil and manufacturing exports are expected to propel growth by 2.4% in 2017.
Provincial exports hit $8 billion last December, 47 per cent above the low point in April 2016.
Further economic good news arrived from the Conference Board of Canada. The think tank reported that Alberta is expected to have the strongest economic growth in the country this year due mainly to a resurgence in the oil sector.
The province reported 199 rigs drilling in January, the highest level in the last two years, and resource revenue has increased $1.1 million to $2.4 billion.
The oil price benchmark West Texas Intermediate was expected to average US$42 a barrel this year, but has since been revised to hover at US$48 a barrel. It is currently above US$54.News from © Canadian Press Enterprises Inc. 2016