Provincial government to post operating surplus
Province: Highwood MLA wants plan to pay off debt
Wednesday, Mar 05, 2014 02:53 pm
Alberta is on track for an operating surplus as the provincial government prepares to unveil its 2014/15 budget this week, but it’s receiving criticism from the opposition for borrowing billions to pay for new infrastructure.
Alberta finance minister Doug Horner announced last week the Province saw an operational surplus after the third quarter of the 2013-’14 fiscal year. After the third quarter, the province has an operational surplus of $1.2 billion and the government expects to end the fiscal year with a $1.4 billion operating surplus. The surplus exceeds expectations with last year’s budget expecting a $372 million deficit after the third quarter.
Albertans will see the Province’s financial plan for the next year when Horner announces the 2014 provincial budget on March 6.
Horner said at a press conference last week he is cautiously optimistic things are looking up. He said the government is not going to start spending now that is appears to be going back into a surplus.
“As you can see we’re turning the corner, but we know that we must still be careful about what still lies ahead,” said Horner. “We need to be ready for what we can’t see around that corner.”
He said Alberta’s economy is outperforming the rest of Canada and the U.S. after the third quarter. Horner said the province’s economy grew by an estimated 3.3 per cent in 2013, more than the 2.9 per cent forecasted last year.
He said the government is responding to growth pressures while remaining fiscally responsible.
“We’re growing by more than 100,000 people every year,” he said.
Horner said the Province is spending $3.5 billion on capital projects, including $2.7 billion it has borrowed.
He said the Province is being responsible with its borrowing plans and is only taking out loans for capital projects, not for programs and services.
Horner said it makes financial sense to borrow when the Province is able to access interest rates just under 3.7 per cent on average. On the other hand, he said the province’s Heritage Fund is getting 11.6 per cent interest on savings.
Highwood MLA Danielle Smith wants the provincial government to show Albertans how it plans to pay off the debt.
The Wildrose Party leader said the government would be able to reinvest in its frontline workers once it has a surplus.
“You end up constantly behind if you’re trying to finance things based on debt,” said Smith. “The more debt you’re racking up, the more dollars get eaten up in interest charges and you fall further and further behind.”
She said the government’s claims of having an operating surplus don’t include the fact the government is still borrowing billions.
Smith said the government has a spending problem and it’s hoping for windfall oil and gas revenues to bail it out.
The Wildrose Party has released 16 recommendations it would like to see in this week’s budget.
The party argues its suggestions would save the Province $1.9 billion without requiring any reductions to front-line services or important infrastructure projects.
Suggestions include, reducing the size of provincial cabinet to 16 ministers and eliminating associate ministers and their staff for $6 million in savings. Cut the size of the public affairs bureau in half for $10 million in savings. Limiting bonuses for senior public sector executives and managers to save $35 million.
“Let’s put first things first, lets cut the pay for cabinet ministers, the premier and MLAs, let’s cut and limit the compensation for our senior managers, let’s reduce the number of senior managers and then you actually create credibility with your frontlines when you’re asking them for efficiencies,” said Smith.
The Wildrose also wants to eliminate corporate subsidies to save $450 million and use savings to pay down debt.
Smith said the changes can be made without affecting the government or its ability to keep up with growth
She said taking steps to find efficiencies, eliminating corporate waste, finding another way to build capital projects to get better value for their money will allow the province to free up funds to invest in other priorities.
“As the government spending continued to grow, they just weren’t prioritizing in the right areas, so we’ve seen layers and layers and layers of senior management bureaucracy grow and it’s starving resources away from the frontlines,” said Smith.