Alberta-governing NDP’s pledge to get the province off the proverbial ‘royalty roller-coaster’ is simply an empty promise. In conjunction with tabling their second straight $10+ billion deficit, Alberta’s NDP forecasts to reduce future deficits from $10.3 billion this year to just over $7 billion by 2019/20. One would assume this would be based on solid fiscal management: preferably curtailing spending or at least keeping growth in line with population or even inflation. But upon closer examination, the NDP has gambled Alberta’s economic health on the price of oil.
Hat-tip to University of Calgary professor Trevor Tombe, who summarized NDP projections using a couple of simple charts:
So as clearly demonstrated, the NDPs plan to reduce the deficit relies 100% on the price of oil. Time after time, Alberta NDP leadership has called out past Alberta government’s guilty of ‘not diversifying the economy’ or ‘relying on one commodity for revenue’–however, their budget and forecasts are solely dependent on the price of oil.
Ideally, Alberta should be budgeting for $0/bbl oil–all royalties should go to the Heritage Fund or be separated from operating and capital expenditures–but that would involve fiscal restraint, which is against NDP religion. Furthermore, even if there is oil price appreciation, who’s to say NDP future spending does not also increase?