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Alberta Premier Rachel Notley has an ambitious few months ahead of her.JASON FRANSON/The Globe and Mail

Undeterred by an ever-deepening fiscal crisis caused by the cratering of world oil prices, Alberta Premier Rachel Notley says she will press ahead with environmental reforms that will begin bending the arc of the province's ever-rising greenhouse gas emissions curve in the opposite direction.

But Ms. Notley warned that her climate-change initiatives are almost certain to disappoint environmentalists, who will insist they do not go far enough, while simultaneously angering industry, which will assuredly insist the measures are too aggressive and amount to ill-timed job killers.

"In my view, this means we've probably struck the right balance," the Premier said in an interview with The Globe and Mail in her legislative office.

"We're going to work to bend the curve. It may not be as fast as you're seeing in other jurisdictions, but it will be in the right direction, and you'll see that we're making that progress and we will stop going in the wrong direction."

The Premier's remarks come as fears are growing that the economic engine of the country has not just stalled, but could sputter for some time. This reality has added pressure on the inexperienced NDP government, which nonetheless wasted no time instituting hikes to corporate and personal income taxes that were part of a progressive agenda the electorate affirmed in May, ending 40-plus years of Progressive Conservative rule. Those measures have provided campaign fodder for federal Conservative Leader Stephen Harper, who suggested this week that NDP policies in Alberta have made the recession there worse.

Nearly four months into her first term, the province's first NDP premier has an ambitious few months ahead of her. In late October, she will table her government's first budget. A month later, her climate-change advisory panel will recommend ways the province can begin cutting the rate of growth in GHG emissions. That report will form the basis of policy changes Ms. Notley will discuss at the world climate summit in Paris in December. She says she hopes a positive reception to her plan will begin rehabilitating the province's environmental reputation globally. Later that month, a panel reviewing the province's royalty regime is also expected to report.

The Premier's immediate priority, however, is the budget, the first by an NDP government in Alberta and one that is certain to be awash in red ink given the 60-per-cent plunge in oil prices over the past year. Ms. Notley would not say what the deficit will be, but a recent update by the finance minister indicated it is on track to be about $6.5-billion for the current fiscal year. Many economists assume the deficit next year could be as high or higher barring severe cuts to programs and services.

It does not appear that is coming.

"Albertans have told us, 'Don't make draconian dramatic changes that are going to make matters worse,'" Ms. Notley said. "The budget won't be a lovely rose garden of gifts, but neither will it be a scorched-earth policy."

The Premier would not say if the NDP still intends to return the budget to balance by 2018, as it pledged to do during the provincial election campaign. She did say that many of the economic assumptions used to write the party's fiscal platform have been radically revised given the continuing deterioration of the economy. Ms. Notley said she believes Albertans will support a plan that includes increasing the debt to get the province through a rough patch economically.

"But long-term, Albertans are not going to tolerate an Ontario-esque kind of fiscal framework," the Premier said in reference to the rising debt in the Central Canadian province. "People who believe in the value of government services and the ability of government to contribute to the quality of life of its citizens understand that you can't do that if you are held hostage by a large debt."

The Premier also said:

– The "drama" within the Progressive Conservative Party over the past four years as it dealt with scandal and controversy "meant there was not a lot of governance happening." Consequently, pressure has built inside government to deal with issues that have been ignored for too long, adding to the burden her own young government faces. (On this front, the Premier has lamented the Tories' failure to address infrastructure needs);

– The change in the province's fiscal situation is severe. "It is not a question of just tinkering with what Jim Prentice did before us [in his budget] because the land is shifting underneath us at a rate which is much more than most governments deal with in a four-year term, let alone in the first four months of a brand-new term."

– The hack-and-slash debt-reducing policies of former premier Ralph Klein in the 1990s to get rid of rising debt would not fly now because they came at the expense of capital investment. "We can't have infrastructure falling apart around the very people we are asking to come to our province to build a life. I think most Albertans get that and most would reject the Ralph Klein plan now."

The NDP used interim supply measures this summer to restore cuts to health care, education and human resources. However, the Premier cautioned that the rate of spending increases in some of these ministries cannot be sustained. "The rate of increase in health care is too great," she said. "We can't sustain a 6-per-cent increase every year. I think there is a halfway point between that and where Prentice was going."

She said she believes a rate of growth in health-care spending close to the average rate of inflation – about 2 per cent – is more practical.

As for the need to diversify the economy that she has championed recently, the Premier said some of it may happen organically. During good times with massive profits, industries are not compelled to be particularly innovative. During tough times, they are. "Necessity is the mother of invention," she said. "And I think that is where we are right now in Alberta."