There may be green shoots to Alberta’s economy, but the Province is drowning in red ink with no plan to get back in the black.
The provincial government expects Alberta’s economy to grow by 2.4 per cent in 2017, while the Conference Board of Canada forecasts Alberta will lead the country in economic growth.
It’s welcome news, but it comes with a downside that could leave a lasting impact on Alberta’s finances. Finance Minister Joe Ceci announced last week the Province is on pace to end the fiscal year with a $10.8 billion deficit, $444 million more than in last year’s budget. Meanwhile, spending is now expected to be $2.6 billion higher.
Bringing a $10.8 billion budget deficit back into balance will not happen quickly, or easily, but the Province needs a clear plan how it intends to do it. It’s something Ceci was not able to do during his third quarter update last week. He said the budget will eventually be brought back into balance, by 2023-24, and it will begin to repay the money it has borrowed. He also said the Province will ensure the process is a smooth one, protecting education, health care and essential services.
Tough times call for difficult measures. Alberta has suffered through a harsh recession and the government needed to take measures to protect Albertans, just as it should take a delicate approach as the economic recovery takes root.
However, the Province must bring spending under control. For example, Alberta spends approximately $2,400 per person more than the B.C. government. It’s a fair comparison. According to 2016 census numbers, only half-a-million more people call Alberta’s neighbor to the west home.
Alberta’s economy may be set to turn the corner, but the province’s future prosperity must be set on a firm foundation.
This means setting some restraint on spending and bringing the budget back into balance.
