EDMONTON – Alberta Finance Minister Joe Ceci met with key economists Wednesday to look ahead to 2017, with the consensus being the worst is over for the provincial economy.
But Avery Shenfeld, chief economist of CIBC, said how much things will improve is still up in the air and tied to the price of oil.
Ceci and the economists discussed a range of issues, including Alberta’s looming carbon tax.
Shenfeld said while taxes are always a balancing act, the upside of the carbon levy is that it will be recycled back into the economy and is likely less harmful than, say, a higher direct tax on oil producers.
Mary Webb, with Scotiabank Economics, said what’s good about the carbon tax is that Alberta has tailored it to suit its needs rather than having one imposed from the outside.
“All of Canada is going to be adjusting to a carbon price,” said Webb.
She said when it comes to oil, they have to take into account not only supply, but also what the future demand will be given the growth in renewable energy.
“Renewable energy is obviously an area where we’ve seen already huge strides in technology that has impacted the price. It’s now more affordable,” said Webb.
The carbon tax takes effect on Jan. 1, hiking the cost of gasoline at the pumps and home heating bills to create a multibillion-dollar fund that will invest in green projects, such as rapid transit.
Shenfeld also acknowledged the government debt is set to reach $58 billion by the end of the decade, and that future steps to rein in budget deficits will have an inevitable impact on growth.
But he said Alberta was in a good financial position when it began heavier borrowing under Notley, adding “going into deficit initially was something that was probably necessary to keep the economy from an even deeper recession.”