Alberta boom a big positive for Notley

It’s been a long haul for Albertans since the price of oil took a dive three years ago, but it appears they can now bank on better days ahead.

That was the good news from Joe Ceci, the province’s finance minister, when he presented a third quarter budget update last week.

Not only is the government expecting that the economy will have grown by 4.5 per cent for the 2017 fiscal year — faster than any other provincial economy — but unemployment for 2018 is expected to drop to 6.8 per cent, almost a percentage point lower than previously predicted.

Another good sign: For the first time in two years, net interprovincial migration shifted to the positive side, which means people are once again moving to Alberta from other parts of Canada.

“We are forecasting that we will be at prerecession (economic) levels by 2019,” Ceci said during a media conference.

According to Trevor Tombe, an economist at the University of Calgary: “The recovery is stronger and more robust than most forecasters expected — government and private sector alike,” he wrote in a column for CBC.

This is especially good news for Rachel Notley’s NDP government, and the timing couldn’t be better. An election is likely to be held in 2019. If Notley can cruise into it with strong economic winds behind her, the chances of a second term for the NDP will be much higher. But it’s not all clear sailing.

In the face of the recession brought on by lower oil prices, the government’s share of royalty revenue dropped significantly. But instead of reducing spending, Notley and her team chose deficit budgets and rapidly accumulating debt.

Laying off public sector employees would only make matters worse, Notley argued. And the latest economic stats seem to prove her right.

But then there’s that enormous debt, which now stands at $42 billion and is expected to grow over the next few years. Ceci says the government plans to balance the budget by 2023, but so far he has not revealed exactly how that is going to come about.

And while the benchmark price for oil (West Texas Intermediate) has almost doubled since 2015 to about $55 (U.S.) a barrel, most Alberta producers are not getting that much because pipelines into the U.S can’t handle the production increases from the oilsands. That leaves an oversupply in storage tanks, which lowers prices for producers and means less royalties for the provincial treasury.

That’s one of the reasons Notley is pushing so hard to get the Trans Mountain pipeline through B.C. and to the coast, so Alberta’s oil can be sold to Asian markets at a higher price

If Notley and the NDP are to have another shot at governing, they need construction of that pipeline to begin well before the election campaign.

In the meantime, former federal cabinet minister Jason Kenney, the newly minted leader of the province’s official opposition — the United Conservative Party (UCP) — is pushing hard to prove that Notley and the NDP have inflicted severe economic damage on the province.

If they win the next election, the UCP would abolish the carbon tax and many other aspects of the NDP’s climate leadership plan in order to reinvigorate the oil industry. They have also promised spending cuts in order to eliminate future budget deficits and eventually wipe out the debt.

Of course, neither party is talking about introducing a sales tax — Alberta is the only province without one. Yet if Alberta levied the same provincial sales tax as Saskatchewan — 5 per cent — Alberta would raise about $5 billion annually, about half the current budget deficit.

The Legislature resumes sitting this week. And for the first time since Kenney was elected leader of the official opposition, he and Notley will debate face to face their respective positions on economic recovery. Given that both of them are seasoned and fiery debaters, that should be quite the spectacle.

In the meantime, Albertans can feel somewhat more confident that the worst of the recession is behind them and happier days are on the horizon.