Red ink swam before opposition parties’ eyes last week, as the NDP government introduced its third consecutive deficit of $10.3 billion, borrowing to continue spending, while not bringing in new taxes or tax increases.
In his budget speech last Thursday, Finance Minister Joe Ceci argued the NDP government is steering a road to diversifying the economy, while sheltering Albertans from the shock of a loss in natural resource revenue.
“When the oil price shock hit our economy, Albertans were faced with a choice. Some said – and still say – that government should make deep cuts to public services, such as health care and education,” he said, adding these suggestions would have led to worsening conditions for Albertans. “That’s why our government made a different choice. We stayed focused, and we are executing a plan to diversify our economy and help families through the downturn.”
He said there are “green shoots” that suggest economic growth, with the Conference Board of Canada predicting Alberta’s real GDP will grow by 2.8 per cent, the fastest among the provinces. Ceci said the government would work to keep spending growth lower than the combined rate of inflation and population growth, and noted “our debt-to-GDP ratio is the lowest among the provinces.”
But opposition parties voiced their alarm at the spending in the budget.
David Hanson, MLA for Lac La Biche – St. Paul – Two Hills, said he was disappointed by a string of planned deficits and “no real plan to get back to a balanced budget in the foreseeable future.”
Alberta’s debt is projected to rise to $45 billion this year, rising again to $71.1 billion by 2019-20, with debt servicing estimated to cost $2.3 billion by then, a number which Hanson cites as a major concern for him.
“That’s the equivalent if you combine the Justice ministry, Energy, Children’s Services and Environment. So you’ve got four major ministries that you could be running for free if you weren’t running $2.3 billion in debt servicing,” he said.
The government’s goal to produce a balanced budget by 2023 hinges on rebounding oil prices of $68 per barrel in 2020 and increased production based on new pipelines, but Hanson said he doesn’t have expectations that the NDP will balance the budget, given its spending.
Ceci noted the government must work to bring down the growth of government spending. In his speech, he noted the government has cut Alberta’s agencies, boards and commission CEOs’ salaries and bonuses, streamlined programs, frozen civil service wages, and signed an agreement with doctors that saves up to $500 million over two years, all of which has led to half a billion dollars of in-year savings and reductions of expenses.
Hanson acknowledged that while these were steps in the right direction, he suggested there has to be a wage freeze and reductions across the board, particularly in the layers of management of Alberta Health Services. Health spending is up in this budget, to a record $21.4 billion expense.
“We’ve got a way to go. It’s going to be painful, there’s no doubt about it, but we need to start somewhere instead of passing this (debt) off to future generations.”
And while new schools and a hospital were announced for Edmonton to fanfare, Hanson doesn’t expect to hear any big news for the Lac La Biche – St. Paul – Two Hills riding.
“I don’t foresee any major projects in our area. Oil and gas are going to come back in a vengeance in the next 10 years, I think – we’re going to need that infrastructure down the road.”
The budget held the line on education spending, increasing total spending from $7.9 billion last year to $8.2 billion this year, and committing to keep funding in line with enrolment growth, which came as welcome news to city schools that are seeing increases in student numbers.
However, St. Paul Education Regional Division chair Heather Starosielski noted there were still a lot of unknowns in the impact to the local school division. For instance, with funding tied to enrollment, “you could actually see a decrease in some areas, if we see a decrease in enrollment in some of our schools.”
Last year, the division saw a slight decline in enrolment, most noticeable in the Two Hill and Elk Point area schools, she noted.
The budget also will include funding for 24 new and modernized schools. While Mallaig and New Myrnam Schools are top on the division’s list for modernizations, the government has not yet made announcements on whether any local schools will receive capital funding.
The school board was concerned in regards to Bill 1, in which the province is investing up to $54 million in an effort to eliminate mandatory school fees, that the division would have to absorb the loss in revenue. However, Starosielski said that the Minister of Education David Eggen has since made it clear – “If Bill 1 does proceed, those fees would be offset by a new grant.”
There are a couple of questions on school boards’ minds as they plan their budget, the biggest of which is the carbon levy. The carbon levy added $7,000 in costs of natural gas alone to the division in February, said Starosielski. Boards were hopeful the minister would announce grants to offset the increased costs on things like heating and transportation, but “it doesn’t appear that’s going to be the case,” she said, adding that schools may get some funds from the climate leadership plan, but these will not be meant to offset the carbon levy.
Central bargaining is another question on the division’s mind; teachers have been without a contract since August of 2016, and the government is still in negotiations to ink new contracts.
“They’ve committed if there’s any (salary) increase, then it will be fully funded by the provincial government,” she said, adding however, it is unclear if local divisions will be on the hook for any other changes made at the negotiating table that aren’t related to salaries.
“It does affect us as we go into budget planning for 2017/2018 if we don’t know what the cost implications of those are.”
Portage College welcomed news for a two per cent increase in funding for post-secondary institutions, which will translate to an increase of $446,000 in funding for the college, and an additional $1 million for campus infrastructure. This will help the college maintain its workforce, with the college stating it will aim balance the books by reducing its operational expenditures by $1.1 million.
"Existing cost pressure means we will make operational changes,” said Dr. Trent Keough, president and CEO for the college, in a press release. “More critically important is that we are maintaining our workforce and continue to provide a high level of training with increased opportunity for education.”
