Alberta's budget will be delivered next week with what the Progressive Conservative government hopes will be some much-needed good news in the form of higher energy prices, and a lower Canadian dollar that grants the province's finance minister a measure of "comfort."
But Doug Horner said even if there are positive economic signs for Alberta – including higher natural gas prices and a less dramatic discount on Canadian heavy oil – he's not about to deviate from a long-term plan of fiscal restraint and getting the province's finances closer to balanced.
"We have to change the culture that 'if we've got a whole bunch of money we better spend it,' " Mr. Horner said in an interview.
"There's not maybe as much room as people might think."
Last year's budget was described as austere, but the province still rang up a deficit of almost $2-billion, its sixth deficit in a row. In recent weeks, a number of cabinet ministers have already signalled the province is aiming to produce a steady-as-she-goes budget on March 6, holding the fiscal line with only minimal increases in spending in key areas such as health and education.
But there are positive signs on the royalties and revenue front for the fossil fuel-dependant province. Thanks in part to a cold North American winter, natural gas prices are up. The discount that Alberta must accept on its transport-challenged bitumen is still significant but has eased. The lower Canadian dollar benefits oil and gas producers because – like Canadian NHL players – they're paid in U.S. currency.
Mr. Horner said that change in the value of the Canadian dollar this year "adds a bit of comfort" and may give the government additional room to maneuver, but also will help him replenish province's almost-depleted contingency fund – meant to help ride out volatile resource revenue peaks and valleys.
The Redford government is wanting for good news on the dollars and cents front. Any claim of fiscal restraint on the part of the government has been blemished by the storm this month surrounding Premier Alison Redford's expenses.
They include Ms. Redford's $45,000 trip to South Africa for Nelson Mandela's funeral in December, her executive assistant's $9,000 tab for 42 nights at Fairmont Hotel Macdonald in Edmonton since last spring, and rampant scuttlebutt that the final bill for her government's trip to India and Switzerland earlier this year ballooned well above the original $120,000 estimate.
The Official Opposition Wildrose party continues to call the Alberta government's policy of dividing operational and capital expenditures – allowing the government to claim no deficits on the operational side accumulating debt on the capital side – a "shell game." Critics say the new format introduced in last year's budget intentionally makes the true deficit more difficult to discern, or compare to previous years.
Even Alberta's auditor-general said last July that his office's best accountants found the budget documents "challenging."
But the Redford government argues the fast-growing province is in desperate need of billions of dollars' worth of spending for buildings, roads, and bridges. Mr. Horner insists the new format is closer to the accounting systems of major corporations. Consolidated financial statements to be released at the end of each fiscal year will provide a basis for comparing the budget numbers with actual results, and past years. He said quarterly reports actually provide more transparency than before by talking about real, up-to-date numbers instead of projections (and the third quarter update for the 2013-14 fiscal year comes Wednesday).
However, others also take exception to the government's new tack. Jack Mintz, director of the University of Calgary's School of Public Policy – and an expert in public finance who has argued for revenue-neutral tax reform to provide greater financial stability in the low-tax province – said the government has made a mistake in promising absolutely no tax increases.
He also questions why a province with so many non-renewable assets in the ground needs to be borrowing to pay its way, saying the current political situation reminds him of the years when former premier Don Getty governed, and his government ran a successive line of deficits that were only addressed with a series of painful public sector cuts in the mid-1990s.
"That's like borrowing from the future," Dr. Mintz said.
Kelly Cryderman is a reporter in The Globe's Calgary bureau.