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Alberta Premier Rachel Notley, centre, speaks with small business owners and non-profit businesses during a prebudget meeting attends a prebudget meeting at the Alberta School of Business in Edmonton on Wednesday. (JASON FRANSON/THE CANADIAN PRESS)
Alberta Premier Rachel Notley, centre, speaks with small business owners and non-profit businesses during a prebudget meeting attends a prebudget meeting at the Alberta School of Business in Edmonton on Wednesday. (JASON FRANSON/THE CANADIAN PRESS)

Alberta discards timeline for balanced budget Add to ...

Alberta’s Finance Minister says he has no idea when the province’s budget will be balanced, months after promising the deficit would be eliminated before the end of the decade.

The governing New Democrats will post deficits for an indeterminate period as revenues languish because of the crash in oil prices and as the public need for services grows, Joe Ceci said in an interview with The Globe and Mail.

There is no longer a hard-and-fast target date for balance, he said.

“It’s just wishful thinking if you think you can identify that date. I think if I were to put a pin in a timeline and say this is when we’re going to return to balance that it would mean some drastic cuts across the board in this province.”

Mr. Ceci has said his 2016-17 budget, set for April 14, will include a shortfall of $10.4-billion, Alberta’s largest since the early 1990s. In an interim budget last October, the government set a target of 2019 to get back into the black.

The NDP is promising to protect health care, education and other services. The energy-market collapse has prompted tens of thousands of job cuts in the oil patch, putting more pressure on the government to maintain basic services.

The deficit disclosure comes one day after federal Finance Minister Bill Morneau tabled his first budget, backing away from an election pledge to balance the books by 2019 and offering no new target to do so. He projected a $29.4-billion deficit in 2016-17, triple what the Justin Trudeau Liberals promised in the election.

The federal deficit is projected to fall to $17.4-billion in 2019-20, when the next election will be held.

Like Alberta, the federal government is trying to deal with a weak economy, caused partly by skidding oil prices. Both levels of government have pledged multibillion-dollar infrastructure programs as stimulus. Mr. Ceci has laid out a plan to spend $34.5-billion over five years on bridges, roads, schools and hospitals, funded by debt.

“There’s a lot of mirroring of circumstances going on here,” Mr. Ceci said of his budget and the one tabled by Mr. Morneau. “And I just feel that’s the reality we’re in as governments right now and we need to have a long-term vision on how to get back to some sense of balance.

“We’re going to carry a $10.4-billion deficit this year. There’ll be another deficit the year after that, and not unlike Morneau, we’re going to have to look in the long term to sort this out.”

Alberta’s governments have struggled to balance the books over the past decade, even when oil was above $100 (U.S.) a barrel, rather than today’s level of around $40. Since the financial crisis in 2008, a number of Progressive Conservative premiers returned only one balanced budget, a $1.1-billion (Canadian) surplus in 2014-15.

After campaigning on a promise to shield Albertans from drastic cuts to services, Premier Rachel Notley boosted social spending while raising both corporate taxes and income taxes for those making more than $125,000 a year.

The NDP’s 2015 election platform included a pledge to balance the province’s budget by 2018. After months of persistently weak oil prices, October’s budget pushed that target to 2019.

Mr. Ceci ruled out any further revenue increases, such as a sales tax or higher income taxes, but he said his budget will not weaken health and education services. It’s a sharp philosophical contrast to former premier Ralph Klein’s PC government in the 1990s, which cut deeply to balance the books.

“Albertans need to know that those are all solid things that they can continue to count on,” he said.

After he tables his budget, Mr. Ceci will explain his spending plan to investors and bond-rating agencies, which have already raised red flags about rising debt levels. Before Alberta’s next general election, set for 2019, the province will begin borrowing money to finance the day-to-day operations of government – something it hasn’t done since 1994. Mr. Ceci will need to persuade creditors that the province is a solid investment.

“We have to lay out a plan that is reasonable, responsible, and stick to it,” he said. “We’ve got the lowest, or one of the lowest debt-to-GDP [ratios in Canada] – we’re good. It’s going to go up and there is no way around it, but if we can deliver on our plans, I think we’ll be all right.”

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