Alberta’s finances are awash in red ink after the most recent fiscal update.
The Notley government wrapped up the 2016-17 fiscal year with $10.8 billion in debt but Finance Minister Joe Ceci said that the government has a plan to balance the budget in six years.
The annual report released on Thursday showed that the province had incurred debt from borrowing for capital construction and operating costs. The deficit came in at $10.8 billion, which is $263 million higher than they predicted in the 2016-17 budget.
Spruce Grove-St. Albert NDP MLA Trevor Horne said despite the red ink the economy is showing signs of recovery.
“While we are not out of the woods yet we are starting to see good indicators that we are on our way out of the woods,” Horne said.
Opposition parties sharply criticized the government for the spending, including Wildrose leader Brian Jean.
“Their tax hikes were reckless, their legislation scared billions of investment away and their dangerous levels of spending and billions wasted on failed energy experiments will be a stain on this NDP government Albertans won’t soon forget,” Jean said.
The St. Albert Chamber of Commerce was also unimpressed with the government balance sheet. Brian Bachynski, chair of the chamber and also publisher of the St. Albert Gazette, criticized the government spending.
“We’re barrelling down the debt road with reckless abandon. At some point all Albertans will have to pay the piper. The province is spending $1 billion a year, and climbing, on debt servicing. Programs will suffer. At some point taxes, or fees, or both, will have to go up. That means there will be less disposable income in the economy, and that will have a negative impact on businesses,” Bachynski said.
The capital spending, which went towards the construction of schools, hospitals and roads, clocked in at $4.7 billion. Another $8.7 was borrowed for the day to day operations of the government, such as salaries, health and education spending.
The climate leadership plan cost $1.4 billion and there was an additional $1 billion incurred in debt servicing costs.
The GDP shrank by 3.5 per cent during the year and follow a reduction of 3.6 per cent in 2015.
Ceci said the government plans to pay off the debt by 2023 but was shy on the specific details.
“The plan is to have smaller and smaller deficits year on year on year going out and balance in 2023. The plan is built on supporting Albertans through this recovery into growth,” Ceci said.
Ceci said that while there was increased revenue from resource royalties the Wood Buffalo fire drove down corporate and personal income tax revenue.
Horne said the government can either make very drastic cuts or invest in the services that Albertans rely on. Horne said his government is diversifying the economy to try and make it more resilient to the volatile oil prices.
Budget 2017-18 banked on oil prices rising to $55 per barrel of oil. When the budget was released the price of oil was sitting at $48. As of now the WTI price sits at $45 per barrel.
The most recent fiscal update leaves Albertans with a provincial debt per capita of $8,113.74.