MLA Dave Hanson believes provincial Finance Minister Joe Ceci has an all too rosy view of the Alberta economic picture given Ceci’s announcement last week that the recession is over.
Hanson told the Journal Friday the province has a long way to go to get its house in order. And while some recovery in oil prices is reason for optimism, Hanson maintains the “trickle-down effect is far from reaching the whole economy.” He believes, when “pendulum starts swinging the other way,” it will take some time before the average Albertan sees an improvement.
The Alberta government is forecasting the economy will grow by 4 per cent this year, which is up from the 2.6 per cent forecast in its budget. The 2017/18 deficit is now forecast to be $10.3 billion, $183 million less than originally forecast. Total expense is forecast at $54.7 billion, $180 million lower than budget, according to information presented by the government last Tuesday.
“For the second time this year, we are upgrading our economic growth projections for 2017. With the recession behind us, Alberta’s economy has returned to growth,” Ceci said in a media statement.
Hanson noted that one day after Ceci said the Alberta economy was looking up, rating agency DBRS Ltd. downgraded the province’s credit rating from AA(high) to AA, which makes Alberta less attractive to outside investment.
“The worst part of it is (the government) is trying to paint a rosy picture. We were downgraded for the sixth consecutive time since the New Democrats took power,” Hanson said. “Two and a half years ago, there was no debt. This year alone, we will pay $1 billion in interest – that’s money that’s gone. It doesn’t build roads or schools. By 2020, $3 billion a year, if interest rates stay the same, to service the debt load.”
“DBRS has maintained the negative trend because the province has yet to demonstrate any real willingness to address the weakest budget outlook among all provinces, despite high levels of per capita spending and the lowest tax burden in the country,” DBRS stated in a press release Nov. 29.
“DBRS is concerned that the plan to return to balance relies on a recovery in resource revenues, rather than fundamental adjustments to the budget. As a result, debt will continue to rise and there is no clarity as to when the credit profile will stabilize.”
Alberta has added over 70,000 full-time jobs since mid-2016, mostly in the private sector, according to government stats. The number of drilling rigs has doubled last year’s levels and “retail sales have recovered to pre-recession levels,” Ceci noted in his media statement.
Ceci said the government is maintaining its forecasts based on $49/bbl. US. Fiscal year-to-date prices as of Nov. 24, have averaged $49.42 US.
In response to the credit downgrade from DBRS, Ceci pointed out, “Alberta’s credit rating remains among the highest in the country and our balance sheet is the strongest among provinces, with the lowest debt-to-GDP ratio.”
Ceci announced that as the government moves forward with 2018 strategic planning, it will be looking to Albertans for input on “their priorities for controlling costs and to identify services and programs that should be protected.”
Ceci maintained the government has achieved $300 million towards its goal of $400 million in savings through administrative efficiencies described as “managing vacancies and discretionary costs, program demand adjustments and one-time savings around capital grants.”
A salary freeze, which began last year for management and non-union government employees, is being extended an additional 18 months to Sept. 30, 2019. This together with ongoing hiring restraint and reductions in discretionary spending is expected to save the government about $100 million annually.
Talk of a hiring freeze in the public sector drew immediate reaction from the Health Sciences Association of Alberta (HSAA), which represents some 25,000 health care workers.
“A hiring freeze will put the health of citizens at risk,” HSAA president Mike Parker said in a release. “Our health care sector is already struggling to cope with existing demands and will be unable to provide the service that Albertans demand if we don’t have the required resources.”
