ONLY $8 BILLION
Alberta deficit lower than expected
A reinvigorated economy buoyed by higher oil prices helped the Alberta government begin tidying its balance sheet last year as the province posted a better-than-projected $8 billion deficit.
While opposition parties dismissed the improved bottom line as a stroke of luck for an NDP administration that has failed to sufficiently control spending, Finance Minister Joe Ceci said the evidence shows his government’s stable investments have the province headed toward prosperity.
“I can say we did very well. We have kept our spending at reasonable levels,” he said Thursday in revealing the government’s financial results for 2017-18.
The $8 billion deficit, though still one of the largest shortfalls in Alberta’s history, is better than the $10.1 billion of red ink projected at budget time, and a significant improvement on the $10.8-billion deficit recorded in 2016-17.
Much of the improvement was due to a jump in non-renewable resource revenue sparked by rising oil prices. Income from that stream increased to nearly $5 billion, about $1.9 billion more than the previous year and an increase of $1.2 billion from budget projections.
The West Texas Intermediate oil price averaged US$53.69 per barrel last year — up from US$47.93 — while the average Western Canadian Select heavy oil price moved to Cdn$50.38 from Cdn$44.67.
Ceci noted Alberta still needs to work on diversifying the economy.
Also on the revenue side, improving global markets in early 2017 helped the government bring in $933 million more than expected in investment income.
The bolstered energy sector allowed the province’s gross domestic product to rise by a country-leading 4.9 per cent last year, although Ceci was quick to say the recovery has yet to reach every “kitchen table” — as evidenced by continued weak revenue from corporate and personal income tax.
The province took in $402 million less than expected from personal income taxes and had a $470 million shortfall in corporate income taxes.
On the expense side, overall government spending of $55.3 billion last year was about $400 million more than estimated, though Ceci noted operational spending came in slightly under budget.
United Conservative Party finance critic Drew Barnes said the weak tax revenue stream is prime evidence the NDP’s carbon levy and other policies have stymied Albertans’ financial growth.
Alberta Party finance critic Greg Clark said the government could have reduced its deficits by more than $2 billion just by staying on budget, while Liberal Party Leader David Khan blasted the NDP for failing to reduce the province’s vulnerability to busts and booms of the oil sector.
Alberta borrowed $5.4 billion for its infrastructure plan, and $4.5 billion to help cover operating costs last year. That brought the total debt to $43.4 billion at year end.