Premier Rachel Notley and Finance Minister Joe Ceci speak before delivering the 2016 budget in Edmonton.
Alberta Finance Minister Joe Ceci will table the NDP government’s third budget on Thursday, as the province continues to struggle with a high deficit and oil prices that have only marginally recovered over the past year. Still, there are signs the economy is improving, with an unemployment rate that has inched lower in recent months and projected GDP growth that will be among the highest in the country this year.
Gary Mason: Alberta NDP’s budget offers hope – and ammunition for opposition
Here’s what you need to know before the budget is tabled.
Premier Rachel Notley’s government has already signalled it doesn’t expect to balance its budget until 2024, meaning the latest budget will include the third consecutive deficit. The projected deficit for the current year has increased since last year’s budget, most recently projected to be $10.4-billion. As for making up some of those deficits, the province is not expected to introduce a new sales tax, as some experts have called for, though it will press ahead with its controversial carbon tax.
THE GLOBE AND MAIL, SOURCE:ALBERTA TREASURY BOARD AND FINANCE
A decade ago, oil and gas royalties would routinely bring in more than $9-billion a year for the Alberta government, accounting for the single largest source of revenue for the province. Royalties now make up just a small fraction of the government’s income, falling behind even alcohol and gambling.
3. Oil prices
Benchmark oil prices have been at or below $50 (U.S.) per barrel since late 2015, dipping below $40 a year ago. Things have improved since then and the New Democrats have hinted they believe the energy market is rebounding, but there have also been less optimistic signs from within the industry – notably Royal Dutch Shell PLC’s recent decision to sell its oil sands business to Canadian Natural Resources Ltd.
The slump in the oil patch has meant thousands more Albertans are out of work, with the unemployment rate hitting a high of 9 per cent last November. That rate has decreased in recent months, but it’s still well above the national rate of 6.6 per cent. As well, nearly 100,000 people received employment insurance cheques last November – a 57.4-per-cent increase from a year earlier.
5. Economic growth
One bright spot for Alberta is that it’s projected to go from the lowest GDP growth last year to among the highest in the country. A recent RBC report projected GDP growth of 2.1 per cent this year – a dramatic shift from a decline of about 3 per cent last year. The RBC report said a projected increase in oil prices was behind its assessment.
6. Health care
As with other Canadian provinces, health care now makes up the largest single expense for the Alberta government. The health ministry is expected to account for 41.6 per cent of all provincial spending in 2016-17.
Health spending in Alberta is expected to continue to grow, as are health transfers from the federal government – but under a different formula. Ottawa has announced a series of health deals directly with provincial governments, including Alberta, that set out funding increases, as well as money for mental health and home care. Rather than 6 per cent annual increases in health transfers, which have been in place since 2004, the transfers will increase by 3 per cent annually, or by a three-year average of nominal GDP growth, whichever is higher. Alberta’s agreement included $1.3-billion for mental health and home care over 10 years.
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