At a time when governments across Canada are tightening belts and looking for cuts, Alberta Premier Alison Redford is rolling out a budget filled with spending increases and forecasts of surplus.
The provincial budget, released a day after census data showing hundreds of thousands of people have flocked to energy-rich Alberta, accentuates the widening gulf between the West and the rest of Canada, a sign of how uneven a playing field Confederation has become.
Ms. Redford is pouring hundreds of millions more into education, health care and family services (such as a heavily expanded child-care credit) without raising taxes or cutting a single department budget. The new services will meet needs created by the province’s boom – new schools, roads and health services for an expanding population.
She’s hiring more police officers, funnelling money into research and innovation, spending billions on infrastructure and signing long-term funding deals with schools and universities to make Alberta an education leader. Underpinning it all is her goal to lure the best and brightest students and workers to Alberta, furthering the province’s advantage. All this with a provincial election two months away.
“Albertans want us to be talking about reaching out globally,” Treasury Board President Doug Horner said. “Looking outward, not inward.”
Driving the rosy vision of Ms. Redford’s first budget as Premier are a savings account, which she’ll drain $5-billion from over the next two years, and economic projections considered overly optimistic by some, including nine-per-cent average annual revenue growth. (She was dubbed “Alison in Wonderland” by a chief rival.)
The province is banking on an immediate return to boom times, with lofty projections of double-digit increases in personal and corporate taxes this year and long-term figures showing oil sands royalties doubling as that once-fledgling sector hits its stride. Total revenue is forecast to jump from $38-billion to $49-billion in three years without new taxes.
By then, the province (which has no debt or sales tax) projects a $5-billion surplus driven by $9.9-billion in annual bitumen, or oil sands, revenue. Total non-renewable resource revenue is projected at $15.9-billion that year, a record level. That year also budgets for $1.1-billion in additional federal health transfers as Ms. Redford seeks a new deal for her always-have province.
“Everyone knows that we’re going into an election campaign, and yet this is not a budget that is laying out a whole bunch of things the province can’t afford,” Finance Minister Ron Liepert told reporters Thursday. “On the other hand, this is not a budget where you are going to see deep cuts into things like health and education.”
Alberta voters, however, will be faced with a stark choice. In the middle is Ms. Redford, who is as centrist a Progressive Conservative leader as the province has had since Peter Lougheed, who kicked off the party dynasty in 1971.
To the left are the NDP and the Liberals, whose Leader, Raj Sherman, wants to raise corporate taxes and personal taxes for wealthy Albertans, and to the right is Danielle Smith, the cut-spending, no-new-taxes head of the Wildrose Party.
The opposition parties all said it’s ridiculous Alberta is still running a deficit. On paper, the province hopes to return to surplus by 2013-2014, as previously expected, but with “cash adjustments” and infrastructure spending, it will be drawing down its savings fund for another year. Over the next three years, the province will see a net deficit of $2.7-billion removed from its rainy day fund despite the resource boom.
It’s all “pipe dream projections” by an overspending government, the Wildrose Leader said.
“There’s no possible way that there is any validity to the projections,” said Ms. Smith, who is not an MLA but whose party is considered the PCs’ biggest challenger. “They are overstating the expectation that they have on revenue to be able to manufacture a surplus rather than do what they need to do, which is focusing in on the spending side.” New Democrat Leader Brian Mason called it a “pre-election goodie budget.”
The resource revenue projections are largely considered optimistic – billions more than what some analysts expect. Others say it’s personal and corporate taxes revenue, each projected to jump at least 10 per cent in one year, that are too optimistic.
“Those are huge numbers,” said Canadian Taxpayers Federation spokesman Scott Hennig. “The economy’s going to have to be very hot for those numbers to come true, and they’re well above what the private sector’s forecasting.”
Overall spending increases are 3.3 per cent, in line with projected GDP growth (3.8 per cent) and – as the government hoped – lower than the sum of inflation and population growth. Health funding, however, will jump 7.9 per cent to $15.9-billion, some of it earmarked to create family-care clinics and for programs to tend to addictions, mental health and home care.
Education funding will rise 3.4 per cent while post-secondary funding will go up 2.7 per cent.
Ms. Redford, as promised in her leadership campaign, boosted payments to Assured Income for the Severely Handicapped (AISH) program recipients by $400 per month at a total cost of $271-million per year.
The Alberta Seniors Benefit was also hiked 6.6 per cent at a cost of $351-million. Agencies that support vulnerable children, families and those with developmental disabilities will be given more cash to help recruit and retain staff.
Another $500-million was earmarked for student financial assistance and more than $300-million in funding and tax credit for research and development.
Government officials shrugged off suggestions they should rein in spending, saying those are all prudent investments.
“Albertans want us to be talking about what Alberta can be,” Mr. Horner said.
The Alberta budget by the numbers
Forecast revenue for 2012
75 per cent
Amount of total budget headed toward health, education and human services
Record resource revenue forecast for 2015
New household income ceiling to qualify for childcare subsidy
Cost of Finance Minister Ron Liepert’s new Budget Day shoes from Winners, to be auctioned off for charity
3.8 per cent
Economic growth forecast for 2012, almost double expected growth for Canada and the United States