The Alberta government gave their 2015-16 first quarter fiscal update on Aug. 31, which showed the province’s total expenses to be $50.2 billion on a fully consolidated basis. The report forecasts revenue to be $44.3 billion, in turn showing a $5.9 billion deficit for the 2015 fiscal year.
Since the report only shows information in the three months leading up to the end of July, there’s a good chance the deficit could be much worse when taking into account situations that have occurred since that time. That includes oil prices dropping even further in the last month that could also have an impact.
“I want to underline that this may not be the final number. The last month has been volatile for the energy sector. A revised forecast and economic outlook will be presented with our budget in October but it is clear that the revenues have dipped even further these past weeks,” said Finance Minister Joe Ceci.“If current conditions continue, the final deficit will be in the range of $6.5 billion.”
Ceci says the report forecasts the price of oil to average just under $56 per barrel in 2015, but in the last month it has dropped to around $40, about 30 per cent lower than it was in June. The big challenge, according to Ceci, is commodity prices the government can’t control.
He also mentioned financial trouble passed on from the previous PC government, which he says threw away the province’s chance to prepare for these situations when they didn’t balance the budget during five of the last six years when oil was averaging $90 per barrel. And despite the poor financial situation in the province, the NDP say they have no plans on cutting public sector jobs.
See “Deficit,” Page 3
“During the election Albertans asked that the government protect public services. Our government moved quickly to return stability to our healthcare, invest in education and protect core services that families rely on.”
Richard Starke, Progressive Conservative MLA for Vermilion-Lloydminster, was unimpressed with the finance minister’s update speech and says it’s time that the NDP stop passing the blame. Starke was also disappointed that the government aren’t concerned with any jobs outside of the public service and seem to have no concern about protecting those who work in the private sector.
“Everything is blamed on the past government, that was very clear from his remarks and he took no responsibility himself. The time has come for this government to start taking ownership for the decisions it’s making,” he said.
“We know full well that oil prices being low is not the fault of the government. We understand that completely but their response to say that the only jobs we need to protect in Alberta are the ones that exist in the public service is a pretty sad statement for all of the thousands of people in the private sector who have lost jobs as a result of the down turn in the economy.”
Paige MacPherson from the Canadian Taxpayers Federation says the government should cut spending, and considering the size of the deficit, thinks they should do it soon. The government didn’t wait for their budget to raise taxes and MacPherson thinks they shouldn’t wait for it in this matter either. She acknowledges that the NDP made promises in their campaign to keep frontline workers and says they can keep those promises while still make substantial cuts elsewhere.
“I think that there is a lot to cut at the top. When it comes to frontline workers and services in Alberta, you don’t need to cut there. We have so much spending concentrated at the top in our bloated bureaucracy in the province, that you could cut there and it wouldn’t have an impact on frontline services.”
On the upside, the fiscal forecast shows that Alberta will see positive GDP growth in 2016 and other sectors in the economy are “showing some strength”. Housing starts and tourism are still active in the province and the low Canadian dollar has boosted exports. The finance minister also says they intend to go into all the different government departments to ask where they can trim a little fat, a suggested MacPherson says the CTF made in the past.
“We did hear the government talk a little bit more seriously about trimming some spending. That’s a really positive development but just hearing the finance minister talk about cutting spending, for really what’s been the first time since they’ve been elected, I think that’s a really positive thing that we’re even hearing that right now.”