Alberta’s growing debt ‘absolutely manageable,’ according to the premier
Laying off thousands of workers and delaying hospital and school construction to balance the provincial budget would do more harm than good in the long term, Alberta Premier Rachel Notley said Friday.
Incurring a $10.3-billion deficit in 2017-2018 to maintain the province’s $54.9-billion budget is a careful and responsible approach, Notley said at a news conference held outside a south Edmonton school.
“We know people are worried about it,” Notley said of the forecasted $71.1-billion debt by 2019. “We also know that’s the choice that we have to make and we also know that it is prudent, careful, and absolutely manageable.”
Replacing and repairing aging public buildings and keeping health and school programs intact allows Alberta to “take part” in economic recovery, Notley said.
“We know (fiscal responsibility) matters to Albertans, too. But you have to have a steady hand and plan carefully, to do it carefully, while protecting Albertans, giving them the services they need, making life more affordable, stimulating job growth, and making sure services like we see here today right in this school are available for families in the future,” Notley said.
The Wildrose Opposition warned Friday Alberta’s increased debt load could lead to another downgrade of the province’s credit rating.
Running another deficit and accumulating more debt is bad for the province’s credit, rating agency Moody’s said in a Friday statement.
“Alberta’s rapidly rising debt burden, protracted deficits and above-inflation expense growth continue to put significant pressure on its rating,” Moody’s assistant vice-president Adam Hardi said in a news release.
Credit rating agency DBRS said in a Friday statement the government’s plan to take on more debt may erode its advantage over other provinces, and may be too much red ink to keep its AA (high) rating.
You have to have a steady hand and plan carefully, to do it carefully, while protecting Albertans, giving them the services they need.
“While DBRS takes comfort in Alberta’s currently low debt burden and expected economic recovery, the fiscal plan demonstrates a lack of willingness to contain debt growth, which may exhaust flexibility within the province’s current ratings in the near to medium term,” said a company statement.
A Wildrose news release Friday said Albertans could be on the hook for even higher interest payments if the province’s credit rating takes another hit.
“The saddest part is that the NDP doesn’t seem to care,” Wildrose Leader Brian Jean said in the statement.
Notley said Alberta’s growing debt load must be considered in the national context.
The province has the lowest debt to gross domestic product ratio in the country, and should have the second-lowest ratio by 2019, she said.
“As much as the opposition would like to pretend that everybody can have it all, you have to make choices,” Notley said.
On Friday, NDP cabinet ministers were out defending and promoting goodies in the provincial budget.
Finance Minister Joe Ceci told an Edmonton Chamber of Commerce luncheon that growth driven by oil and manufacturing exports gives him cautious optimism for the provincial economy.
Broad-based recovery in the manufacturing sector was already apparent at the end of 2016 and is expected to continue into 2017, he said.
The government has forecast 2.6 per cent GDP growth this year.
Notley and Education Minister David Eggen were at Monsignor Fee Otterson K-9 school Friday morning to explain the repercussions of reducing school fees — particularly for suburbanites whose children must take long bus rides to school.
If approved, the government’s Bill 1: An Act to Reduce School Fees would prevent schools from charging for basic school supplies and for school bus rides longer than 2.4 kilometres.
Parent Danielle Morimoto said she would save more than $300 a year for her six-year-old son Stanley to ride the yellow bus to school if the bill succeeds.