"It is no big secret that Alberta is booming in terms of construction, infrastructure, and base-level economic staples consumption. This region is one of North America's most aggressively growing areas in every measurable way. I'd like to see if SLJB can be a part of that (growth) and if the products and services we provide can benefit the company and the area," said Sulja.
Alberta budget comes with deficit warning
Province presents its first budget under new premier Ed Stelmach, a plan that tries to cope with extreme economic growth by massive spending increases
DAVID EBNER
Globe and Mail Update
theglobeandmail.com
EDMONTON — Alberta, the country's only debt-free province, is warning of a potential deficit as the province presented its first budget under new premier Ed Stelmach, a plan that includes massive spending increases to cope with extreme economic growth.
Immediate needs such as schools, roads and health facilities are the priority, said Finance Minister Lyle Oberg.
"We have to deal with what is happening in Alberta today," Mr. Oberg told reporters Thursday at a press conference at the legislature in Edmonton, where a spring snowstorm soaked the capital.
The province is spending more but making less — and saving very little.
Mr. Oberg called it the "price of prosperity" and his budget doles out an additional $3.5-billion in fiscal 2007-08 compared with a year earlier — a 12-per-cent increase. That heady hike comes as revenues are expected to fall by 5 per cent or $1.7-billion, mostly because of declining oil and natural gas money, a trend that is projected to continue.
Alberta is still budgeting for a surplus — $2.2-billion — but it isn't putting a single penny of its non-renewable resource money into its long-term savings plan, the Heritage Fund. About $300-million generated by the fund is being reinvested but the dollars represent less than one per cent of the budget's $35.3-billion in revenue, of which oil and natural gas accounts for $10.3-billion, about a third.
In his budget speech, Mr. Oberg spoke hopefully of a bright future but warned that declines in energy dollars will be a big challenge for Alberta.
"The facts are clear. Hiking our [spending by 12 per cent]—as we're doing this year — can't continue. If we did that, we would have a deficit. Government deficits are illegal in Alberta and will continue to be," Mr. Oberg said in the speech, wearing new black Calgary-made cowboy boots for the occasion.
The budget is particularly significant because it's the first since the iconoclastic 14-year reign of former premier Ralph Klein ended last December and comes as the governing Conservative party is in its 37th consecutive year in charge of the province.
However, with a growing sense among citizens that the best days might be over, and questions about quality of the Conservatives' leadership, several political commentators are saying opposition parties could make notable advances in the next election.
Alberta's economy is so strong that it's not far behind China's. Growth was 7 per cent in 2006, the unemployment rate hovered around a minuscule 3 per cent and almost 60,000 new residents moved to the province. There is a housing crunch throughout Alberta, and the health care system everywhere is stretched, particularly in the oil sands, where a recent report suggested hundreds of millions of dollars is needed to prevent "collapse."
The problems are all part of a huge backlog of infrastructure projects that were ignored earlier this decade as Mr. Klein single-mindedly used oil and gas money to pay down debt.
The province is paying for that mistake now, one which Mr. Klein acknowledged last year when he said his government didn't have a plan for the boom. He said nobody could have predicted it, which is what Mr. Oberg repeated Thursday.
Alberta plans $18.2-billion in capital spending over the next three years, including money to finish building 71 schools and start a newly announced hospital in the town of Grande Prairie, an energy hub in the northwest part of the province.
Capital spending is up $4.9-billion — 37 per cent — from the $13.3-billion three-year estimate from the last budget. Compared with the plan two years ago, the total price tag has doubled.
One striking problem, faced by everyone else in the province, is it is simply much more expensive to building anything, from an oil sands mine to a house, with inflation soaring in the construction market in part because of a shortage of workers. About a quarter of the increase in capital spending, $1.3-billion, was blamed on inflation.
Mr. Oberg, in his speech, outlined measures to control spending, such as carefully using extra dollars from unexpected surpluses, and promised to rein in the situation in years ahead. Under Mr. Klein, Alberta generally spent its multibillion surpluses outside of a precise budget framework.
"We must reduce our spending increases," Mr. Oberg said.
theglobeandmail.com
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