Economic growth exceeds expectations; deficit drops

Alberta’s economy is leading the country with growth in nearly all sectors. In the thirdquarter fiscal update, GDP growth is revised up to 4.5 per cent and the deficit dropped by $1.4 billion.

Economic growth continues to exceed expectations with 2017 GDP growth forecasts increasing for the third time and 2018 growth projected to be stronger. Growing exports, a strong rebound in consumer spending and confidence, and improvement in oil prices show a broad-based recovery of Alberta’s economy.

More Albertans are working— nearly 90,000 full-time jobs were added over the last year, driven largely by private-sector growth. The unemployment rate forecast for 2018 has been revised lower to 6.8 per cent, from 7.6 per cent at Budget 2017.

As a result of more Albertans working, housing activity and consumer spending and confidence are up. The manufacturing sector bounced back in part because of the resumption of activity at a beef-packing plant in Balzac and the opening of the Joffre polyethylene plant expansion. Conventional oil and gas investments far exceeded expectations.

“Alberta’s economic growth and broad-based recovery show that we made the right choice in the face of the worst recession in a generation. Our choice to invest in Albertans, build infrastructure and carefully find savings—without firing thousands of teachers and nurses—is paying off. Nearly 90,000 full-time jobs were created over the last year and Alberta’s GDP growth led the country at 4.5 per cent in 2017. Our thoughtful and prudent approach has led to Alberta’s deficit dropping and the economic recovery strengthening. We will continue to work hard to ensure this recovery reaches all Albertans.”

Joe Ceci, President of Treasury Board & Minister of Finance

Deficit down at third quarter The deficit dropped sharply and is now forecast to be $9.1 billion, down $1.4 billion from budget. The drop in the deficit can be attributed to continued efforts to constrain costs and improved revenues, including resource revenue and investment income.

The West Texas Intermediate (WTI) forecast price has been revised to US$54/bbl, and the light-heavy differential is now forecast at US$14.50/bbl for 2017-18. With the end of 201718 fiscal year fast approaching, the remaining $250-million risk adjustment has been removed.

Cost containment Government has taken significant steps to carefully find savings while continuing to support and protect the public services Albertans rely on. These measures include:

• Negotiating practical agreements, with no raises in return for job stability, with public sector unions, such as the Alberta Teachers’ Association and United Nurses of Alberta.

• Freezing salaries until September 2019 for all nonunion staff and management across the public sector. Since it was imposed in April 2016, the freeze has saved $29 million a year in the Alberta Public Service alone. • Ongoing hiring restraint in the Alberta Public Service, which has saved $204 million since the beginning of

2015. • Reducing health-care costs by $100 million over three years by lowering generic drug prices plus $28 million from the operational best practices review in 2017-2018

• Cutting the salaries and eliminating bonuses for the highest-paid executives of Alberta’s agencies, boards and commissions, saving nearly $16 million annually.

• Reviewing public agencies, boards and commissions, resulting in a number of amalgamations and dissolutions, saving $33 million over three years.

transforming • Consolidating government and corporate services, such as communications and IT, finance and HR, saving $15 million to $20 million annually once fully implemented, while achieving better results. • Limiting departmental

discretionary spending is expected to see a 10 per cent reduction for 2017-18 from the previous year—a savings of approximately $8 million.