“In the face of the oil price collapse and the economic impact of the wildfires, our government continues to take a prudent approach, controlling our spending, protecting critical public services and taking action to create jobs and diversify our economy”, Ceci said.
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“This year those headwinds are blowing even harder as a result of the Wood Buffalo wildfire”.
“We’re not going to make knee-jerk cuts”.
Alberta’s economy is headed for the largest two-year contraction on record, as private sector investment continues to fall, by a projected 16 per cent this year, and the government’s deficit balloons to nearly $10.9 billion. The province said a big part of that increased borrowing comes from over $860 million needed to balance the books past year in the 2015-16 fiscal period.
The finance minister’s quarterly update takes into account $452 million in financial assistance from the federal government to help pay for the wildfires.
The Fort McMurray numbers come on top of gloomy forecasts as low oil prices continue to depress Alberta’s economy, although a modest recovery is predicted for 2017.
Cuts might seem like a good idea initially, he said, but their impact would be felt in a few years.
In April, Ceci said the budget would not be balanced until 2024 at the earliest.
In combination with a handful of other factors, a slight rise in oil prices – to US$45 per barrel from a budgeted US$42 per barrel – will boost government revenues by $708 million, to a total of $42.1 billion.
It was more than soft oil prices being blamed for the increase – the province said the wildfires in the Fort McMurray area had a fiscal impact of around $500 million. “Many are suffering significant hardship”, Ceci said Tuesday at a news conference where he released the latest numbers. Blazes that devastated parts of Fort McMurray idled about 1 million barrels per day worth of regional oil production.
“While clean-up and reconstruction efforts will provide a positive contribution to GDP growth in the coming years, the disruption to capital projects and oil production will outweigh those effects in 2016”, notes the fiscal update.
The forecast calls for the economy to shrink by 2.7 per cent this year. It fell 3.7 per cent past year. “We need to reverse course on the NDP’s risky economic agenda, start saving pennies on every dollar spent across government, and restore the Alberta Advantage so we can get Albertans working again”.
He explains debt servicing costs are up another $257-million this year and now total more than $1-billion per year.
In a rare bright spot, Alberta said revenue forecasts had increased by C$708 million, partly due to its raising the forecast for the benchmark USA oil price to $45 a barrel from $42 a barrel.
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“If we don’t act now, it will only mean higher taxes for future generations and less services”, said van Dijken.
