Horner makes budget pitch to chamber
Business group shares concerns about borrowing, revenue mix
Alberta’s finance minister defended the government’s 201314 budget Monday in the face of worries over plans to borrow billions for construction and calls for the government to rethink the province’s revenue mix.
Finance Minister Doug Horner spoke to Edmonton’s Chamber of Commerce Monday as part of the Redford government’s ongoing budget sales pitch.
As he introduced Horner, chamber chairman Lindsay Dodd said though there was much to like in the 2013-14 budget, the business organization is concerned about how much debt Alberta should take on, given its current dependence on fluctuating natural resource revenue.
The government has warned that a drop in the price of Alberta oil will cost $6 billion in the coming fiscal year, but expects those prices to improve in future years.
“Despite a promised improvement of non-renewable revenue forecast, Edmonton’s business community remains concerned that measures may still not be enough to alleviate pressures associated with volatile nonrenewable resource revenue,” Dodd said.
“That omission of the future need for potential revenue sources will have a serious negative impact on Alberta’s financial stability,” he said.
“So we’re hopeful the province is reviewing options for other potential revenue sources which can, in due course, increase the stability of our cash flows, increase the stability of our economy. Something business people really enjoy: stability.”
This is not the first time that Alberta’s business leaders have called on the province to make changes to the province’s tax structures.
Bob Ascah, director of the University of Alberta’s Institute of Public Economics, said several chamber members have gone on record supporting a retail sales tax in recent years.
“There’s some good empirical evidence to suggest having a sales tax is an important tool for the minister of finance to have in lessening the abrupt changes that we’re forced into as a province when oil revenues fall,” Ascah said.
“The importance of having more stability in our revenues has been demonstrated in the last three or four years where you’ve had (resource) revenue going from $12 billion to $7 billion,” Ascah said. “We’ve been able to finance the deficit through the sustainability fund, but that’s virtually gone.”
Horner told Edmonton chamber members that Alberta law requires any provincial sales tax to be voted on in a referendum. The Redford government has no plans to change that, he said.
He also disputed the need to immediately change Alberta’s tax structure or add new taxes, despite having to cut programs and freeze wages in the 201314 budget.
“We said to Albertans we would look to our own house first before we started talking about digging into their pockets,” Horner said. “I think this budget is a plan in the right direction to do that.”
Horner told reporters after his speech that others may keep talking about changing taxes, but it will be a discussion that happens outside of government.
“What we’ve presented is a three-year plan that doesn’t have any tax increases in it,” he said.
NDP Leader Brian Mason said Monday that Albertans will continue to face program cuts and large deficits until the government turns to more dependable forms of revenue.
Mason said the fact that even the fiscally conservative Wildrose said last Friday that it could not see how to balance the 2013-14 books without running a deficit and making massive cuts indicates that Alberta’s finances face a structural problem, and not just a spending problem.
“We will be facing deficits and cuts to services as long as those two right-wing parties stick to their positions that corporations shouldn’t pay their full share and that wealthy Albertans shouldn’t pay their fair share,” Mason said.
Wildrose Leader Danielle Smith said she does not believe the government will keep its promise not to increase taxes. She also questioned Monday how the province will repay the $17 billion it plans to borrow over the next three years for roads, schools and healthcare facilities.
While her party does not believe the government should increase taxes, it also believes construction should be paid for with cash in the bank.
“How are they going to actually get themselves to a position where these dollars are going to be paid back?” Smith said.
“I think what we’ll actually end up seeing is that they’ll just roll the debt over. They’ll not put enough money away. When the debt comes due, they’ll just roll it over.”
Horner said that the government’s debt-repayment plan is plain for the public to see in the budget.
“We have a line in the document right before we go to operating revenue where we take the cost of borrowing off the top, which is something Albertans told us to do,” Horner said.
“They said, ‘Take your savings out first. Take your expense for any debt repayments you’re going to do before you start talking about wages and everything else.’
“It would be irresponsible to say we don’t have a responsible debt-repayment plan,” Horner said.