By MorinvilleNews.com staff
Edmonton – Alberta’s Minister of Finance, Lloyd Snelgrove, announced Wednesday that higher oil prices and near-record land sales have lowered Alberta’s expected deficit for 2011-2012 to $1.3 billion, a 60 per cent decrease from budget projections released last spring.
In a release issued Aug. 17, the province forecasts 2011-2012 revenue at $38.3 billion, an increase of $2.7 billion from the budget. While revenues are up, so too are expenses by $650 million, a number the province attributes to disasters and emergencies. When combined, the province is now forecasting a $2.1 billion reduction to the forecasted deficit of $3.4 billion.
“The first-quarter results are encouraging and confirm we are on the right path,” Snelgrove said in Wednesday’s release, adding the province must remain cautious and remain prudent in fiscal matters. “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.”
The province’s new projected revenue is attributed to strong land lease sales and higher oil prices, while the majority of the $650 million increase in expenditures is attributed to disaster relief in Slave Lake and other emergency funding, including forest fire-fighting.
The deficit will be covered by the province’s Sustainability Fund, built up during boom years to fund priority public programing. The province projects 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 province attributes the increase to the lower deficit; cash transferred to the account from last fiscal year’s results and positive changes in capital or other cash adjustments.
But while the government paints a rosier picture than they predicted in the budget, opposition parties were quick to criticize the announcement.
NDP leader Brian Mason said Minister Snelgrove was in Wonderland with his rose-tinted, pre-election quarterly update.
“Given the economic turmoil since the first quarter, Minister Snelgrove’s predictions of $97-per-barrel oil and 3.8 per cent economic growth are out of touch with reality,” Mason said in a release Wednesday. “Albertans can’t trust the PCs with the economy. They’re using obsolete data which precedes the latest market volatility to attempt to fool Albertans into thinking everything is alright before an election. They’re more worried about looking well than doing well by Albertans.”
Mason said current oil prices are $10 per barrel below the figure the PCs are relying on in order to balance the budget by the next fiscal year end.
“The PCs have not diversified our economy, so our fortunes still float with the price of oil,” Mason said, adding an NDP government would use Alberta’s wealth to invest in green jobs and other new economic sectors.
But the NDP were not alone in criticizing the report. The Wildrose also accused the Conservatives of a political manoeuvring. Wildrose Finance Critic Rob Anderson said Snelgrove’s report was a 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,” Anderson said in a party release Wednesday. “The fact is oil prices have recovered and land sales are soaring and these guys are still running a massive deficit.”
The Wildrose said the PCs numbers still do not add up and do not take into account an additional $2.9 billion in capital expenses that are part of the province’s true cash shortfall.
“Only the Alberta Progressive Conservatives would consider running a $4 billion cash deficit while raking in near-record revenues as a point of pride,” Anderson said.
Like the NDP, the Wildrose believe the province is using unrealistic oil pricing in their projections. The Wildrose suggest some sources are indicating oil to bottom out at $60 per barrel by the end of the fiscal year.
“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.”