EDMONTON — Alberta’s big-surplus Cinderella economy officially turns back into a deficit pumpkin Tuesday, but Finance Minister Iris Evans says the chances of a happy ending are much better compared with the last time the province’s boom went bust.
“Albertans aren’t paying interest on debt. They’ve got cash in the bank. They’ve got accounts to help pay for infrastructure and they’re paying the lowest taxes in the country,” said Evans in an interview.
“Although 2009 will be a tough year in most parts of the world, our budget will still be a good-news story for Albertans.”
Evans has said the province expects to bring down its first deficit budget in 16 years Tuesday.
That’s on top of a current budget that conservatively forecast a $1.6-billion surplus last April, but is now on track for a $1.4-billion deficit.
But Evans noted that unlike the early 1990s, when then-premier Ralph Klein inherited a $23-billion debt and an underperforming oil and gas industry, Alberta enters the current economic downturn with the red ink wiped out thanks to years of multibillion-dollar budget surpluses.
And while oil and gas still drive the economy, Evans noted the province has diversified into areas such as medical high tech and nanotechnology.
She said the plan is to use the province’s $7-billion Sustainability Fund to pay off the deficits while keeping spending at a level that will keep humming an economy stung so far this year by close to 30,000 job losses.
“It would be dangerous to anticipate reducing (spending) too much because we’ve got so much that we’ve been building. And we’re trying to build that capacity on an already-strong foundation in Alberta,” she said.
Dave Taylor, finance critic for the Opposition Alberta Liberals, said the issue will not be the budget but the follow-through.
“Whatever path (the governing Tories) choose, they should choose it and stick with it,” said Taylor.
“These guys don’t have any credibility with fiscal discipline.”
Taylor said Albertans are paying for years of mismanagement by the Tories. Klein, on his way into retirement in late 2006, admitted his government did not have a plan to cope with the hundreds of thousands of newcomers who had moved to Alberta during the boom.
“We have a spending problem in this province,” said Taylor, noting recent years of ballooning spending hikes peaked this budget year at a record $37 billion — for a population under four million.
“That’s unsustainable spending, I don’t care who you are,” said Taylor, adding that while the Liberals want to see fiscal discipline, they don’t want a budget that cuts core services or tries to reduce red ink by penalizing seniors and those in need.