EDMONTON – Premier Rachel Notley faced pointed questions on credit risk Monday, a day ahead of a budget that is expected to propel Alberta’s debt levels even higher to pay for infrastructure projects.
Wildrose Leader Brian Jean, citing recent comments from the DBRS rating agency, credit raters may have to revisit Alberta’s top-shelf AAA rating if debt approaches 15 per cent of Alberta’s gross domestic product.
“A lowering of the rating will increase the interest we have to pay on debt,” Jean told the house in the first question period of the fall sitting.
“That makes debt much more expensive and takes away money from programs and services that Albertans are so relying on.”
Notley said Jean will have to wait to see Tuesday’s budget for answers, but added: “I think they’ll find their concerns are allayed.”
The premier also pointed out that instability takes many forms.
“You know what else hurts jobs and security for Albertans?” she asked the house rhetorically.
“A $3.5-billion cut to services. Laying off tens of thousands of employees and front-line service workers, and undercutting our education and our health care.
“We are not going to do that. Our budget will be a shock absorber and yet it will still engage in good, sound accounting measures, which I am sure (Jean) will be pleased to see.”
Notley’s government has already signalled it will continue debt financing for capital construction that began under the former Progressive Conservative government and was projected to hit $31 billion by 2019.
It’s part of what is going to be the deepest red-ink budget in provincial history as the NDP grapples with low oil prices, thousands of public-sector job losses, a growing population and an infrastructure deficit left to Albertans by the PCs.
Finance Minister Joe Ceci has already said the budget deficit will be just under a record $6.5 billion.
The province is also running out of options. It will draw $3 billion from its contingency account this year to keep the deficit at $6.5 billion. That will leave $3.5 billion in the fund.
With the budget, the government will also release a report from former Bank of Canada governor David Dodge on how best to leverage the current economy to pay for capital projects.
Notley’s government has already made changes to increase revenue. It has increased corporate taxes, raised income taxes on the well-to-do and boosted the minimum wage.
Ceci declined to comment last week on new revenue measures but said: “There is not going to be any significant, big (tax) surprises in this budget.”
PC Leader Ric McIver criticized Notley during question period for waiting almost six months after the May 5 election to present a budget, “causing tens of thousands of unnecessary job losses.”
Notley replied: “We could have had a budget already if the previous government had chosen to pass the budget before they called an election a year earlier than called for in legislation.”
Former premier Jim Prentice presented a budget in March that hiked a raft of fees and taxes, but his party was defeated at the polls before it passed.
As a result, Tuesday’s budget is for a 2015-16 fiscal year that is already close to seven months old.