The provincial government released their plan for provincial finances on Thursday March 22nd. The details of the budget probably were not of surprise to most, and they certainly are not a cause for celebration.
The current government was a serious critic of the past government’s reliance on the “royalty rollercoaster” and for fair reasons. Unfortunately they appear to be finding just how difficult it is to reduce government’s reliance on revenues from the cyclical and highly unpredictable oil & gas sector. This budget and the 2023 path to balance relies heavily on oil prices remaining upwards of $60 a barrel and the completed construction of the Kinder Morgan pipeline.
If these rosy assumptions prove to be true, by the time the budget is balanced Alberta will be faced with a $96 billion debt with an interest cost upwards of $5 billion dollars per year. Many hoped that with stronger than expected energy prices, the deficit would be far less than the $8.8 billion announced.
While you would never know from talking to the Finance Minister, many Alberta businesses continue to struggle. The economic recovery is not being felt by all and our economy is still a shadow of its former self. Costs layered upon business have eroded their competitiveness while the United States of America has increased it’s energy independence and slashed personal and corporate tax rates.
We held a glimmer of hope that the budget would take some measure to address our lagging competitiveness and give business a break in some form or another such as delaying the next scheduled increase to the minimum wage or carbon tax. As such, many businesses will continue to struggle with higher costs and flat revenues, forcing them to adopt cost cutting measures that include layoffs and reduced capital spending.
If there is a good thing about debt fueled government spending it’s the financing of capital projects. Unfortunately Red Deer was basically exempted from the five year capital plan. The plan did include the previously announced construction of the long overdue courthouse as well as a measly $1 million to go towards the Red Deer Regional Hospital. Far from the millions required to provide meaningful help to an overcapacity and underfunded hospital in Alberta’s third largest city.