Alberta is considering a plan to balance its budget in 2018 but it won't be at the expense of competitiveness in Canada's third largest provincial economy, Premier Rachel Notley said.
Her government, which drew criticism for raising some taxes as the province grapples with an oil-industry downturn, may cut levies in some areas and won't introduce a sales tax during its current mandate, she said Wednesday at Bloomberg LIVE's Canadian fixed income conference in New York.
Balancing the budget must be done "within the context that Alberta maintains its current position of being one of the most competitive places to invest in Canada," Notley said.
Alberta expects its biggest-ever deficit this fiscal year as slumping oil prices send the western Canadian province into a recession. This year will be the first recession for Alberta since 2009.
Notley is juggling the oil price crash and job cuts in Alberta's most important industry with the need to spend on roads, schools and hospitals that have been neglected in recent years as the population grew at one of the fastest rates in Canada. Her government has raised income taxes to compensate for declining oil and natural gas royalties.
The provincial government cut its economic growth forecast for next year to 1.3 per cent, the finance ministry said in August. That forecast doesn't reflect the recent drop in crude prices that sent West Texas Intermediate below $40 a barrel in August.
"We're going to look at how we balance the budget" as the oil price projections come in at the end of the year, Notley said. "The drop in the price of oil has caused a price shock for the people of Alberta and we need to be the shock absorber."
The premier, whose party came to power in May to end a four-decade reign by the provincial Conservative Party, said she supports Kinder Morgan Energy Inc.'s Trans Mountain pipeline and TransCanada Corp.'s Energy East pipeline, saying TransCanada's Keystone XL, which would carry Alberta crude to the Gulf Coast, would restrict the province's access for its resource to one market.
Alberta has begun a review of its oil and natural gas royalty regime, which Notley said Wednesday the province will manage with a "light touch." Dave Mowat, chief executive officer of Alberta Treasury Branches, was appointed to lead a panel that includes ARC Financial economist Peter Tertzakian.
The industry lobby group, the Canadian Association of Petroleum Producers, has said uncertainty because of the review is holding back investment in new projects.
The oil sands are Canada's fastest-growing source of the climate-changing gas, and Alberta is the country's largest emitter. The province plans to introduce a new climate strategy before the end of the year and is considering all the options to help reduce emissions.
Pressure from investors and other governments is forcing Notley to act, she has said. The California State Teachers' Retirement System and investors overseeing a total of $3.5-trillion are calling for the Alberta government to introduce a "credible" price on carbon as well as a climate strategy to prevent economic disruption.
A climate strategy will provide "assurance to investors," especially in the energy sector, and allow companies to transition to a future with lower greenhouse-gas emissions, the investors said Sept. 9. Alberta is raising its current requirement that large emitters pay $15 a metric ton for emissions that don't meet their reduction targets.