With the Alberta economy showing signs of improvement, Premier Rachel Notley says her government has room to focus on reining in its $10-billion-plus deficit – and the belt-tightening will include a pullback in infrastructure spending.
As Albertans look for a specific plan on how the NDP government will balance the books in the next five budgets, Ms. Notley said in a year-end interview that some of the savings needed could come from examining capital projects that are "planned but not committed yet."
Without giving any examples of what could be cut from the province's nearly $30-billion capital plan to 2021, she said "there will be some re-profiling of the capital investment" that would mean future projects are not started or completed as quickly as planned.
But the Alberta Premier said "vulnerable" Albertans and working-class families won't feel the effects of budget restraint. In keeping with a political strategy that sees her working to portray her party as a steady economic hand compared with the United Conservative Party – which is calling for a period of sustained fiscal restraint – the Premier emphasized "we're going to be very conscious of how it's felt at the kitchen table."
Alberta is shakily emerging from economic contraction to a position of growth, but it's a deep hole to climb out of. As the debt-rating agency Standard & Poor's notes, Alberta's finances are more volatile than other provinces because of the strong correlation between provincial revenues and oil and natural gas prices. Alberta has not seen a full jobs recovery – unemployment still sits at 7.3 per cent, and the government building in downtown Calgary where Ms. Notley was being interviewed is surrounded by partly empty corporate office towers.
While revenues have plummeted over the past three years, the Notley government has taken a "stimulative" strategy, by maintaining and sometimes increasing public sector work, and borrowing billions to finance both day-to-day operations and infrastructure projects. Alberta debt is expected to reach $71.1-billion by the 2019-20 fiscal year.
Opposition parties, banks and the credit rating agencies that have downgraded the province's debt rating say the government should have moved earlier and more decisively to control deficits – even during the downturn. They have also criticized the NDP government for largely focusing on improved oil prices to achieve a promised balanced provincial budget in the 2023-24 fiscal year.
Ms. Notley announced last month that next year's budget will be the point at which the government "carefully and compassionately" tightens its belt. This week, she said that Albertans will see a clear government strategy laid out. "We're pretty confident that we're going to be able to introduce a thoughtful path to balance."
It is in these fiscal matters where Alberta's conservatives believe the NDP is vulnerable. UCP Leader Jason Kenney has frequently made the point that B.C.'s per capita spending is about 20 per cent less than Alberta's. He has said the province's spending must be brought in line with other provinces.
While the NDP says the UCP would slash public-sector jobs and services to reach this goal, Mr. Kenney's says freezing any spending increases would allow Alberta to fall in line with other provinces over a number of years – when combined with economic growth of 3 per cent a year.
The government is responding to the pressure that Mr. Kenney is bringing to bear ahead of a 2019 election. As 85 collective agreements for more than 178,000 public sector workers in fields such as health care, education and postsecondary hang in the balance, Alberta Finance Minister Joe Ceci has already indicated that he will be pushing for wage freezes. This week, the Premier also said the upcoming agreements will be "restrained."
"We're working with them at the table, but we're hopeful that we will be able to come to some agreements that are responsible," she said.
Ms. Notley added that there have been intense discussions with municipalities about what spending is reasonable given the state of the province's finances. She acknowledged that not everyone was happy with her government's move to keep spending going even as Alberta's economic fortunes plunged with the oil-price drop that began in 2014. But she maintains it was the right choice, and 2017 is a turnaround year for Alberta.
With Alberta GDP forecast to grow as much as 6.7 per cent this year, far outpacing every other province, according to the Conference Board of Canada, Ms. Notley said "we started behind, and now we're set to lead the country."