BUDGET A LEAP OF FAITH
Remember when the Alberta government planned its yearly budgets based entirely on the projected price of a barrel of oil, a forecast considered to be dubious at best? Who could have known we might look back on those budgets as the good old days of grounded fiscal planning, now that the province is banking its record $56.2-billion blueprint on a sweeping set of even shakier assumptions. To start, Finance Minister Joe Ceci is relying heavily on the Trans Mountain pipeline to bring Alberta’s books back to black. The expansion would boost market access for the province’s landlocked bitumen.
The province estimates that Trans Mountain, and the Enbridge Line 3 replacement pipeline, will reduce pipeline bottlenecks in 2020 and 2021 and boost Alberta’s GDP by up to two per cent by 2023 compared to a scenario without new pipelines.
The problem is, Trans Mountain, is the subject of daily protests on the West Coast, ongoing obstructionism from a hostile B.C. government and half-hearted backing from Ottawa. As part of his “path to balance,” Ceci is also betting heavily on a diversified economy to generate new revenues. The government has invested in value-added energy production, high technology, small breweries and digital media.
But while those seeds may be planted, it could take decades for those shoots to bear any fruit, if at all. Past governments have tried in vain to wean Alberta off resource revenues.
Finally, Ceci’s budget counts on Alberta’s economic recovery to continue and boost revenues with more personal income tax, higher oil prices, fuel taxes and the tourism levy. That’s yet another best-case scenario that may not transpire, given global economic turbulence, including creeping trade protectionism and the potential end of NAFTA.
At least this year, Ceci does have a plan. That’s a departure from previous years, when the minister came under fire from critics and credit rating agencies for presenting pie-in-the-sky visions to balance the books.
Many will be pleased at more spending on health and education in the budget to serve a burgeoning population, while others will worry about reductions to infrastructure maintenance.
Not wanting to inflict deep cuts, the government has resorted to pinning its hopes on a shaky foundation of high-risk gambles. For this budget, Albertans might have hoped for a plan that didn’t rely so much on hypotheticals.
Most worrying is that even if all the gambles pay off, and the books get balanced as planned by 2023-24, Albertans will still be stuck with an accumulated debt of $96 billion.
We stand to lose even if we win.