Notley dismisses bad-news forecast by federal budgetary watchdog
Premier Rachel Notley is dismissing a report from the Parliamentary Budget Office that raises the alarm over the state of Alberta’s finances.
In a review of the federal government’s and each of the provinces’ books, the independent office of Parliament warned that Alberta’s finances are not sustainable in the long run because of the fiscal gap between taxation and revenue.
Notley’s NDP government — grappling with low oil prices since it took office in 2015 — has posted back-to-back deficits in excess of $10 billion as it refrains from cutting services as revenues are hammered during the recession.
But speaking at an event in Calgary, Notley said the PBO’s analysis looks at decades down the road.
“It has never been the position of our government that the current strategy will be in place for that period of time,” she told reporters.
“What we have said very clearly is that at this time of an economic downturn — which starting in 2015 slowly turned into the biggest recession that this province has seen since maybe the ’80s and possibly the ’30s — that our government would stand behind Albertans, we would not pile on top of them. So we made a very considered decision to invest in Alberta.”
The PBO estimated that permanent tax increases or spending reductions amounting to $14.1 billion would be needed to achieve fiscal sustainability in Alberta. Without a change in course, the province’s debt-to- GDP ratio could grow from 27 per cent this year to 99 per cent by 2040, and public debt charges could rise from $1.3 billion to $10 billion within a decade.
But Notley said the PBO report does not take into account the massive level of revenue volatility that has long been a hallmark of Alberta’s finances due to its reliance on energy royalties.
She said she was confident the NDP would meet its target of balancing the province’s books by 2024. “To pick one point in time and then make projections 30 or 50 years out, it’s an interesting academic exercise. It has really no value in terms of projections.”
The opposition United Conservative Party however, has used the report to bludgeon the government over its financial acumen.
“NDP mismanagement of Alberta’s finances has created a mess that will take generations to clean up,” said UCP interim leader Nathan Cooper in a news release.
Cooper said the province should start by cutting health spending, which he said is 20 per cent higher than British Columbia’s.
Notley was speaking Friday at the inner-city Connaught School, where she was highlighting the $75-million classroom improvement fund.
As part of the government’s labour deal with the Alberta Teachers’ Association, which contained no pay raise for the province’s educators, the classroom improvement fund can be used to create new teaching positions or education programs.
The province says 225 teaching positions and 175 support positions have been funded under agreements so far between 45 school boards and teacher groups.