EDMONTON â€” Albertaâ€™s surplus is forecast to grow by $300 million to nearly $1.4 billion this year, enabling the province to slash $2.8 billion in planned borrowing for its capital plan, Finance Minister Doug Horner said Wednesday.
â€œWeâ€™re investing more cash into building infrastructure, which is reducing the amount of money weâ€™re borrowing,â€� he said as he released the provinceâ€™s first quarter fiscal update at the legislature. â€œAlbertans have told this government loud and clear that we must continue to build the infrastructure to meet the demand for schools, hospitals and roads that we need now.â€�
The governing Tories had planned to borrow about $4.9 billion this year to build roads, hospitals and schools, but now expect to borrow only $2.1 billion due to improved 2013-14 operational results, cash borrowed but not spent last year and the increase in this yearâ€™s forecast surplus.
The controversial borrowing plan, which has put Alberta back into the red again after former premier Ralph Klein cleared the slate in 2005, is expected to sink the province into a $21.6 billion hole by 2017.
The decision to slash borrowing this year will save Alberta $51 million annually in debt servicing costs.
The province is slated to spend a total of $7.3 billion on infrastructure this year.
The projected revenue boost is based largely on a $506 million hike in bitumen royalties and a $226 million hike in conventional oil royalties.
Horner said Alberta is on solid financial ground.
â€œWe did not get here by accident,â€� he said. â€œWe made thoughtful, deliberate and sometimes difficult decisions and we took action.â€�
Revenues are up $915 million to $45.3 billion due to higher energy price forecasts and stronger corporate taxes, but that â€œdoesnâ€™t mean weâ€™ll be turning on the spending taps,â€� Horner said.
Expenses are up $328 million to $40.8 billion due to increased funding for post-secondary schools, spending for the new Canada-Alberta Job Fund, rescheduling of flood assistance spending and more funding being earmarked for the war on the mountain pine beetle in Alberta forests.
The first quarter update was far more comprehensive than Hornerâ€™s previous updates, including an operational surplus, a fiscal plan surplus and a fully consolidated surplus. The new format was called for by the auditor general after complaints by the opposition parties, former provincial treasurers and the Canadian Taxpayers Federation that the PC government attempted to mask the deficit in previous fiscal updates.
â€œThis hybrid approach provides the most comprehensive financial picture that we can paint … and at the end of the day, no matter how you analyze the numbers, our strong surplus position does not change,â€� Horner said.
However, both the Wildrose and the Canadian Taxpayers Federation rejected the format and claimed the province still has a $3 billion deficit.
Wildrose Leader Danielle Smith said the latest format is more confusing than ever because it provides three surplus numbers and by her calculation is still $3 billion short.
â€œWeâ€™re at a time where weâ€™re getting record revenues â€” weâ€™re getting $10 billion a year in resource revenue â€” and we have a government that is still not able to live within its means,â€� she said. â€œWeâ€™re on track to have $11 billion in debt by the end of this year.â€�
Smith said Albertans are opposed to the province going back into debt because the interest payments swallow up money that could be used for programs and services, and because the province doesnâ€™t have a credible plan to pay the money back.