Alberta taking steps to fix ‘fiscal structural problems,’ says Finance Minister
The next budget is expected to post the biggest deficit in Alberta's history; critics say 'triple-A' credit rating is at risk
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EDMONTON—Alberta’s NDP government is set to reset the economic game plan, choosing from a menu of unpalatable alternatives brought on by a core economy deep in the dumper of low oil prices
“We’ve got a budget billions of dollars (in) the hole,” Finance Minister Joe Ceci said in an interview.
“We have a fiscal structural problem in this province that needs to be repaired and we’re starting to take steps to do that.”
The budget is the centrepiece of a fall legislature session that begins Monday.
The budget is expected to feature the biggest deficit in Alberta’s history. Ceci has already projected it will be just under $6.5 billion.
On top of that, there are expected increases in capital spending for a province squeezed in the vise of a growing population, thousands of private-sector job layoffs, and shrinking revenues.
Ceci said it will be a longer-term blueprint to create jobs, grow the economy, and balance the budget by 2020 while protecting core services in areas like health and education.
The government has already signalled it will continue debt financing for capital construction that began under the Tories and is projected to $31-billion by 2019.
“We want to see if we can ? bring in some programs and capital programs that will help stimulate the economy,” said Ceci.
But Ceci said the government is looking for places to cut without sacrificing critical front-line jobs, like teachers and nurses.
“We’re going to get the rate of program growth under control,” he said.
“We are continuing a hiring restraint initiative that was started in January. (And) we’re going to be carefully looking at all the (300-plus) agencies, boards and committees that are out there.”
Wildrose Opposition Leader Brian Jean said Alberta is flirting with a debt-to-GDP ratio that will cost it its valued triple-A credit rating.
Lose that rating, said Jean, and the dominoes fall: the province needs to spend more to borrow, causing it to hike taxes to pay for it.
“The NDP are putting our credit rating at risk and it’s a very, very serious issue,” said Jean.
Progressive Conservative finance critic Manmeet Bhullar urged the NDP to tread carefully on sweeping initiatives like its plan to eventually hike the minimum wage to $15 an hour by 2018.
“Ideological pursuits and wishful thinking will not solve our problems,” said Bhullar.
Making good on other campaign promises, the NDP has already hiked the corporate tax rate, the minimum wage and personal income tax rates on high end earners.
Alberta Party Leader Greg Clark said the NDP needs to work smarter, reduce administrative overlap and free up public sector workers up for other tasks.
“What I would like to see is a real effort to do more with less,” said Clark. “Let’s create that culture of innovation.”
West Texas Intermediate, the benchmark price for Alberta’s oil, has been in a deep funk for more than a year. It peaked at more than US$100 a barrel last June, but slid quickly by the fall and has been in a trough ever since. It is now under US$45 per barrel.
The budget is for the 2015-16 fiscal year, which began April 1 and is already more than six months old.
The province has been paying the bills after passing spending warrants in the spring session.