Alberta betting on pipelines to balance budget

Alberta’s path to balanced budgets is built on hopes for construction of three new pipelines, including the controversial Trans Mountain expansion, plus reaping extra revenue generated by the federal carbon tax.

NDP reveals a portion of carbon taxes will be used for general spending starting 3 years from now

The finance minister and premier embrace after the budget speech in 2018.
Minister of Finance Joe Ceci and Alberta Premier Rachel Notley hug after delivering the budget in Edmonton on Thursday. (Jason Franson/The Canadian Press )

Alberta's path to balanced budgets is built on hopes for construction of three new pipelines, including the controversial Trans Mountain expansion, plus reaping extra revenue generated by the federal carbon tax.

But the five-year plan unveiled Thursday in the province's 2018-19 budget will also see accumulated debt climbing from $54 billion in the coming year to a whopping $96 billion by 2023.

Titled "A Recovery Built to Last," the budget forecasts a reduction in the annual deficit each year until it reaches a $700-million surplus by 2023-24.

The plan rests on the assumption the proposed Trans Mountain pipeline expansion from Edmonton to Burnaby — currently facing legal challenges from First Nations and environmental groups, plus opposition from B.C.'s NDP government — will get built.

The government is also factoring in revenue from the Enbridge Line 3 and Keystone XL projects.

"The pipelines will get built," Finance Minister Joe Ceci insisted at a news conference prior to reading the budget. "They will get built because they're important for Canada, they're important for Alberta."

By the time the government eliminates the deficits, it will have accumulated an estimated $95.7 billion in debt, with $3.7 billion in annual debt servicing costs, and a debt-to-GDP ratio of 21 per cent.

None of those figures appeared in the budget documents tabled Thursday, but were provided by finance officials in response to questions from journalists.

Ceci seemed defensive when asked by reporters how long he thought it would take the province to pay off $96 billion.

"I'm focused on balancing, thank you, first. Once we get to balance we will continue to work and come up with plans to address our debt," he said.

A protester is pulled from a piece of heavy equipment being delivered to Kinder Morgan in Burnaby, B.C., on March 19. The Alberta government's plan rests on the company's controversial Trans Mountain pipeline expansion. (Darryl Dyck/The Canadian Press)

Jason Kenney, leader of the Official Opposition United Conservative Party, slammed the NDP government for putting Alberta on track to $96 billion in debt. 

"If there was any indication the NDP was going to change its course and become fiscally responsible that was blown out in a spectacular way in today's NDP budget," he said. 

Kenney said the revenue projections aren't plausible either. 

"This is one part recklessness, one part completely unrealistic projections, higher taxes, massive increases in debt, all of which will burden future generations of Albertans," he said. 

$1B into general revenues

There currently is a $30 per tonne tax on carbon, which Albertans pay on home heating bills and gasoline, for example. All the revenue is now spent on rebates and emission-reduction programs.

When the tax, which the federal government ordered provinces to impose, reaches $40 a tonne in 2021, Alberta intends to still use $30 for projects intended to reduce carbon footprints, the remainder will go to general spending purposes.

That will translate into an additional $1 billion per year being pumped into general revenues by 2023-24.

The government continues to emphasize that adoption of the federal carbon plan is tied to go-ahead of construction of the Trans Mountain expansion.

The budget has very few goodies for the average Albertan, and most major spending projects have already been announced.

They include a tax credit to encourage gaming and digital media companies to locate in Alberta, and a grant and loan program to encourage companies to build two to five partial bitumen upgraders.

There are no changes in personal and corporate income tax rates, nor are there increases for liquor and tobacco.

The government is expanding two social programs promised in the 2015 provincial election, which were rolled out on a limited basis over the last two years. The school lunch program will expand from 5,000 to 30,000 students, while a $25-a-day childcare program will be hiked by 4,500 spaces.

There's also money to build 20 new schools and hire 600 new teachers. And the province is also allocating $11 million to organizations that help survivors of sexual assault.  ​

Child intervention services will get an additional $800 million.

The government intends to hold spending below population growth plus inflation, Ceci said. There are no major cuts in services.

The government is slowing down infrastructure spending and is expecting zero salary increases from its major public service unions. The Alberta Teachers' Association, United Nurses of Alberta and the Health Sciences Association of Alberta have already agreed to zero increases.

Negotiations with the Alberta Union of Provincial Employees are still underway.

The deficit forecast for the 2018-19 fiscal year is $8.8 billion, with $47.9 billion in revenue and $56.2 billion in expenses.

The debt is forecast at $54.2 billion by the end of the fiscal year, a figure that is 15.4 per cent of the province's gross domestic product. Interest costs on that debt are estimated at $1.9 billion a year from now.


Michelle Bellefontaine

Provincial affairs reporter

Michelle Bellefontaine covers the Alberta legislature for CBC News in Edmonton. She has also worked as a reporter in the Maritimes and in northern Canada.