EDMONTON – New numbers show Alberta’s economy continues to dig itself out of the deep hole caused by crashing oil prices as Premier Rachel Notley’s government both spends and saves more.
Finance Minister Joe Ceci says the province is on track for a $9.1-billion deficit when the budget year ends March 31. That’s $1.4 billion lower than the deficit expected when Ceci tabled this year’s budget last spring.
Ceci notes forecasts also point to an economic rebound as production goes up and unemployment falls.
“Nearly 90,000 full-time jobs were created over the last year and Alberta’s GDP growth led the country at 4.5 per cent in 2017,” Ceci said in a statement Wednesday after releasing the third-quarter update to the 2017-18 budget.
“We will continue to work hard to ensure this recovery reaches all Albertans.”
The province is expected to take in an extra $1.9 billion this year for a total of $46.9 billion in revenue – mainly due to higher than expected oil revenue and returns on investments.
Spending is also rising to $55.9 billion – about $1 billion more than projected at budget – to cover increases in services for children, people with disabilities, and for employment and income supports.
The debt is going to hit almost $42 billion this year. Debt payments will be $1.4 billion.
Alberta anticipates $883 million from crude oil royalties, almost double what had been expected, although revenue from bitumen royalties will be $2.4 billion – about $188 million less than projected.
Oil revenues were hampered this year by the price discount Alberta’s blended bitumen sells at compared with the benchmark North American West Texas Intermediate price.
The discount is tied mainly to pipeline bottlenecks that drive up the price of getting Alberta’s heavy oil to U.S. refineries and ports.
The NDP has been running high deficits throughout its term in government. It says slashing budgets and jobs would only worsen the situation and kill an economic recovery.
The province has been saving money by negotiating contracts with zero pay increases for teachers and nurses and other health professionals. It has also axed redundant agencies and committees and consolidated other programs and services.
Alberta has been hit with multiple credit downgrades, however, which have increased the cost of borrowing. Ceci has promised to present a more detailed plan to get the budget back in balance by 2023.
The update says investment in the province, apart from the conventional energy sector, is still lagging, especially in construction.
Total real business investment is forecast to fall 1.9 per cent this year after a one per cent increase in 2017.
Drew Barnes, finance critic for the Opposition United Conservatives, said the NDP’s fiscal policies and red tape in areas such as revised labour standards are to blame.
“Capital is mobile,” said Barnes. “If you have your option to put your investment dollars in a jurisdiction with a more favourable regulatory burden (and) a likelihood of getting a higher return, a lot of businesses are going to do it.”
New Alberta Party Leader Stephen Mandel said the extra $1 billion in spending has laudable aims, but he suggested it’s poor fiscal management to spend and fund on the fly.
“I find it quite amazing that each time we have an update it’s like a new budget,” said Mandel.
“(And) in a government that focuses on low carbon attitude, low carbon vision – every time we get more revenue from the energy industry, they find a way to spend it.”
The house resumes sitting March 8. Ceci is to bring in the 2018-19 budget on March 22.