Airdrie-Chestermere MLA Rob Anderson came out against the provincial government’s fiscal update released on Aug. 17.
The update stated, “An improved forecast for revenue, largely due to higher oil prices and near-record land sales, have lowered Alberta’s expected 2011-12 deficit to $1.3 billion, a decrease of 60 per cent from budget.”
“With a strengthening economy, more Albertans working and a smaller deficit forecast, the province is in good shape,” said Premier Ed Stelmach.
“We put the Way Forward plan into action in 2009, and this plan has served Albertans well through the recession and recovery. We continue to manage our spending, have made carefully considered investments in infrastructure and key priority programs, and will use our savings in the Sustainability Fund to cover the deficit until we return to balanced budgets.”
Anderson called the release “a political stunt by a desperate government wanting to pad their budget numbers with wishful thinking and pipe dream projections.”
“This is little more than a vain attempt to salvage the legacy of a government that has destroyed Alberta’s balance sheet and shredded our reputation as leaders in fiscal responsibility. The fact is oil prices have recovered and land sales are soaring and these guys are still running a massive deficit,” said Anderson, who noted the government’s deficit number still doesn’t take into account the additional $2.9 billion in capital expenses.
“Only the Alberta Progressive Conservatives would consider running a $4-billion cash deficit while raking in near-record revenues as a point of pride.”
Revenue is projected to be $2.7 billion higher than forecast at budget due to strong land lease sales and higher oil prices. Investment income is also forecast to be higher.
Expense is forecast to increase $650 million from budget, with the majority ($456 million) related to disaster and emergency funding, including for forest fire-fighting and assistance to Slave Lake. Operating spending is up slightly by $62 million, with nearly half the increase going towards increased lump sum payments for employees of community-based agencies that provide care on behalf of government for children and people with disabilities.
The deficit will be covered by Alberta’s savings account, the Sustainability Fund. Government built up this account with money from its past savings to help fund priority public programs and services, maintain significant capital spending and keep taxes low during difficult economic times. The Sustainability Fund is forecast to end the year with $9.7 billion in assets, an increase of $4.4 billion from the budget estimate. The increase is due to the lower deficit, cash transferred to the account from last fiscal year’s results and positive changes in capital or other cash adjustments.
“The first-quarter results are encouraging and confirm we are on the right path,” said Lloyd Snelgrove, minister of finance and enterprise.
“We must remain cautious and continue to be prudent fiscal managers. Mounting government debt problems in the U.S. and Europe, and fluctuating oil prices and exchange rates, demonstrate how volatile and interconnected the global economy is, and Alberta’s prospects are significantly influenced by the global situation.”
Anderson said Snelgrove even went so far as to predict a balanced budget for the next fiscal year despite widespread predictions of an impending economic downturn.
Even if oil averaged $87.50, the deficit would still grow by $1.4 billion by the end of the year, he added.
“These guys are using phony numbers to try and boost their fortunes before they pick a new leader and take us to a fall election,” Anderson said.
“They know that by the time these numbers are exposed, the election will already be over.”
